Market Update: Tuesday, October 2, 2018


Daily Insights

  • LPL Research on CNBC. Senior Market Strategist Ryan Detrick was on CNBC Squawk Box with Joe Kernen yesterday, talking markets in October, bullish fourth-quarter seasonality, and midterms.

  • USMCA lowers, but doesn’t eliminate, trade uncertainty.  The U.S. and Canada reached an accord overhauling NAFTA, which President Trump has dubbed the U.S.-Mexico-Canada Agreement (USMCA). Since all three countries have 60 days to review and finalize the agreement, any shift in the composition of leadership following the U.S. midterm elections could affect momentum for the deal. Also, the intent is for the deal to be signed by November 30, the last day in office for Mexican President Pena Nieto. Assuming that happens, the next step is a U.S. International Trade Commission review until March 15, 2019, followed by congressional approval. If the legislative outlook is altered significantly, the process would be drawn out further.

  • 10-year Treasury holding above 3%. The yield on the benchmark 10-year Treasury remains above 3% since pushing through that psychologically important level following the Federal Reserve (Fed) rate hike last week. While headlines may be emphasizing that inflation is now above 2%, the Fed’s target level, keep in mind that the Fed remains flexible given there is little evidence to suggest a near-term ramp-up in inflation: Wage growth remains mild by historical standards, while economic growth remains strong.

  • Oil touches 4-year high.  WTI crude oil is holding steady this morning after reaching its highest level in four years yesterday, topping $75/barrel, as a slowdown in American drilling added to concern over potential supply losses from the upcoming U.S. sanctions against Iran set to take effect November 4, and a continued decline in Venezuelan production. Despite the recent run-up in prices, we remain neutral on the energy sector given U.S. producers’ increasing agility in responding to higher prices.


Click Here for our detailed Weekly Economic Calendar


  • Eurozone PPI Report (Aug)
  • Nikkei Japan Services PMI (Sep)


  • ADP Employment Report (Sep)
  • Markit US Services PMI (Sep)
  • Markit Eurozone Services PMI (Sep)
  • Eurozone Retail Sales (MoM, Sep)



  • Trade Balance (Aug)
  • Change in Nonfarm Payrolls (Sep)
  • Unemployment Rate (Sep)
  • Japan Leading Index (Preliminary, Aug)


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Index data obtained via FactSet


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