UNITED STATES

Slowing job creation figures added to the weakening manufacturing data to send US stocks tumbling, posting their worst start to a quarter since 2008. A private-sector employment report from Automatic Data Processing showed 135,000 jobs were created in September to send average job growth to 145,000 for Q3 compared to 214,000 over the same period last year. The DOW closed 1.86% lower while the S&P and the NASDAQ shed 1.79% and 1.56% respectively. Treasury yields also fell with 2Y and 10Y USTs closing at 1.4780% and 1.5992%.

UNITED KINGDOM

Prime Minister Boris Johnson’s latest proposal to the EU fell just short of being dismissed by the EU as it is viewed as economically damaging to the EU and very difficult to implement in under two years. While the document proposes that both sides firmly commit to never impose checks at north-south border, it will be predictably difficult to minimise trade frictions on the island. European Commission President Jean-Claude Juncker, after a call with Boris, said there was a series of “problematic points” on the proposal including demands that Northern Ireland vote on whether to stick with the EU single market every 4 years. The pound closed slightly unchanged at $1.2303 while yield on 10Y and 30Y UKTs closed higher at 0.5015% and 0.9846% respectively.

EUROPEAN UNION

$7.5 billion worth of EU exports to the US – ranging from cheese to whiskey to large aircraft – will be hit by tariffs starting October 18 following a ruling by the World Trade Organisation that the EU had unfairly subsidised Airbus. The WTO announcement, which ends a 15-year fight over the subsidies, will see aircraft being hit with a 10% tariff while other products will be subject to a 25% tax. The latest escalation in trade tensions will increase the damper economic growth, heightening prospects of a global recession. The euro maintained its winning streak against the dollar however, closing at 1.0959 while yield on 10Y and 30Y DBRs closed higher at -0.546% and -0.038% respectively.

ASIA

Asian stocks opened lower following fresh worries about an economic slowdown. This follows unprecedented losses on Wall Street – worst start to a quarter since 2008 – as data showed slower job creation and weaker manufacturing while trade tensions worsened with the US slapping 25% tariffs on European imports. The ASX and NIKKEI slid the heaviest, closing 2.07% and 2.01% lower while the HANG SENG was down 0.62% in the afternoon. The CSI remains closed in observance of a week’s holiday to commemorate the 70th anniversary of communism.

TURKEY

Turkey inflation fell below 10% for the first time in over 2 years after Thursday’s Turkstat release showed consumer prices registered 9.3% growth from a year earlier. The figure is markedly lower than the 15% registered in August and is below the 9.7% forecast by economists in a Bloomberg survey. The slowing is attributable to a more stable lira and the fading effect of last year’s price hikes. The slowdown leaves Turkey’s real rate to above 7%, one of the highest in emerging markets and potentially sets up a showdown between the central bank and President Erdogan: Governor Murat Uysal had previously hinted that there exists limited room for further monetary easing after cutting 750bps in two meetings while Erdogan is keen on even lower rates. The lira closed firmer at 5.7010 to the dollar while TURKEY 29s and 47s closed lower, trading in the high 105s and high 85s respectively.

LATAM

Brazil’s pension reform bill passed the first of two Senate votes to leave it with just one voting round before it becomes law. The bill that will toughen access to retirement benefits passed the first vote by a tally of 56 to 19. Senate is expected to pass a second vote on the bill next week if other senators are in agreement according to Senate President Davi Alcolumbre. The bill was however subject to further amendments that trimmed savings as senators backed a proposal to maintain an annual bonus to low-income earners. The real closed firmer against the dollar at 4.1297 while BRAZIL 29s were about flat, trading in the low 104s.

SSA

Concerns are beginning to grow over Zambia’s latest budget after an unaccounted $515 million is listed as exceptional revenue. The amount, representing 10% of the budget, could stretch the nation’s finances if it does not materialise. A Finance Ministry spokesperson said that an announcement regarding the figure would be made after a process attached to the figure is completed. Nearly a third of the budget will be financed through loans and grants with the IMF warning that debt-to-GDP ratio will surge to 91.6% this year. Nonetheless, Finance Minister Bwalya Ng’andu forecast that the deficit will narrow to 5.5% deficit from this year’s 6.5%. The kwacha closed slightly weaker at 13.1150 while ZAMBIN 27s were lower, trading in the low 69s.