Tuesday's session looked like a form of capitulation, visible in both a marked correction in equity indices and a massive takeoff in bond yields. Several stock markets lost more than 1%, including New York. The S&P500 and Nasdaq fell by more than 8% from their annual peaks, proof that appetite is waning as the "blue sky" scenario - a cut in key interest rates in the near future – fades away. Instead, the world is heading for a longer period of high interest rates.

Yesterday, the JOLTS survey of job openings for August came in higher than expected. It showed that the US labor market is still tight, with far more job openings than previously thought. Yet overheated employment is one of the Fed's main criteria for not letting its guard down. In other words, it gives more weight to the theory of keeping rates high for longer. Analysis of futures contracts shows that the market is only paying lip service to a further rate hike by the US central bank, but is above all modifying its underlying bets by increasingly delaying the potential date of the first rate cut. This explains the surge in the US 10-year yield at the start of the week, up to 4.84% yesterday. What's more, the cost of debt for all the world's economies is rising under the impetus of T-bonds.

Today's picture is not exactly inspiring, although Wall Street futures were all in the green in pre-market trading, after the publication of another job report, this time more reassuring. Private sector employment increased by 89,000 jobs in September and annual pay was up 5.9 percent year-over-year, according to the September ADP National Employment Report. This shows a steepening decline in jobs this month, as well as a steady decline in wages in the past 12 months.

The United States not only has a rate problem, but also a political one. Yesterday, Republican dissension led to the historic impeachment of their leader in the US House of Representatives, Kevin McCarthy. This is a first for Congress, and does not bode well for future budget negotiations. The slap in the face was made possible by the dissent of the most conservative fringe of the Republican party, which resulted in a vote of 216 in favor of impeachment versus 210 in favor of staying in the lower house. To top it all off, and unsurprisingly, the VIX market stress index is on course to rise to 20 points, a sign of the current tense situation.

At the same time, other minor inconveniences are emerging. The first are linked to interest-rate tectonics: the yen, for example, is collapsing, increasing speculation that the Bank of Japan will intervene on the foreign exchange market. Emerging-market equities are stunned by the rising greenback. In China, the slide continues in Hong Kong, due to the lack of economic recovery. Mainland China escaped the purge this week only because markets were closed for the National Day holiday. The way things are going, it may be in Beijing's interest to extend the festivities until Christmas.

We'll probably have to wait for the first quarterly corporate earnings releases next week to turn our attention away from the macroeconomy. In the meantime, we have another set of monthly US employment data on Friday.

Today's economic highlights:

Composite and Services PMIs for Japan, France, Germany, the Eurozone and the UK are on the agenda, as well as the US ADP Employment report, Composite and Services PMIs, Durable Goods and Industrial Orders, ISM Services and DOE Crude Inventories. The full agenda is here.

The dollar is slightly down to EUR 0.9525 and GBP 0.8247. The ounce of gold is stabilizing at USD 1825. Oil is down again, with North Sea Brent at USD 89.37 a barrel and US light crude WTI at USD 87.60. The yield on 10-year US debt reached 4.84%. Bitcoin is trading at USD 27,600.

In corporate news:

  • A U.S. federal judge has ruled that Walt Disney should face consumer lawsuits accusing the media giant of anti-competitive business practices.
  • Meta Platforms plans to offer its European users a $14-a-month subscription to access Instagram and Facebook without advertising, according to a proposal submitted to regulators, the Wall Street Journal reported Monday.
  • Boeing plans to increase production of its 737 to a record level of at least 57 units per month by July 2025, reflecting increased orders and recovering demand after two accidents in 2019, according to two sources with knowledge of the matter.
  • US President Joe Biden's administration's proposal to raise fuel economy standards until 2032 would cost General Motors $6.5 billion in fines and Stellantis $3 billion, according to a letter from the American Automotive Policy Council read by Reuters.
  • HP Inc lost 1% before the opening, Berkshire Hathaway having sold around 5.1 million of its shares between September 28 and October 2.
  • Private equity firm Carlyle plans to stop investing in US consumer, media and retail companies, in order to focus on other sectors such as technology and financial services, according to a source close to the matter.
  • Eli Lilly will acquire Point Biopharma Global in a cash transaction valuing the target at $1.4 billion, or $12.50 per share, the two companies said Tuesday. POINT BIOPHARMA GLOBAL gained 82.5% to $12.20 before the opening.
  • Delta Air Lines said Monday it had been informed by one of its service providers that a "small number" of engines contained parts that did not meet documentation requirements.
  • Payment processor Visa on Monday launched a $100 million venture capital fund to invest in generative artificial intelligence start-ups.
  • WeWork said Monday it had decided not to pay interest totaling about $95 million on some of its bonds, as it attempts to improve its capital structure. The company has the necessary liquidity to make these payments and may decide to make them "in the future", the company added.
  • ComputerShare said it had reached a definitive agreement to sell its US mortgage business to Rithm Capital for $720 million.
  • Airbnb lost 1.7% before the opening, Keybanc having lowered its recommendation to "online weighted". Florence, one of Italy's leading tourist destinations, has also banned new short-term residential rentals on platforms such as Airbnb in its historic center.

Analyst recommendations:

  • Aston martin: Goldman Sachs maintains its buy recommendation and reduces the target price from GBX 424 to GBX 417.
  • Biogen inc: RBC Capital maintains its outperform rating and reduces the target price from USD 357 to USD 351.
  • Boohoo group plc: Canaccord Genuity downgrades to sell from hold with a price target reduced from GBX 47 to GBX 18.50.
  • Bt group plc: Numis downgrades to hold from sell with a target price of GBX 105.
  • Burberry group: BNP Paribas Exane maintains its neutral recommendation with a price target reduced from GBX 2360 to GBX 2260.
  • Canadian pacific: Barclays maintains its overweight recommendation and reduces the target price from CAD 120 to CAD 115.
  • Cbre group inc-a: Raymond James maintains its strong buy recommendation and reduces the target price from USD 100 to USD 95.
  • Csx corp: Barclays maintains its overweight recommendation and reduces the target price from USD 40 to USD 38.
  • Delta air li: Citi maintains its buy recommendation with a price target reduced from USD 64 to USD 56.
  • Diamondback ener: JP Morgan maintains its overweight rating and raises the target price from USD 169 to USD 174.
  • Enbridge inc: Morningstar upgrades to buy from hold with a target price of CAD 52.
  • Gilead sciences: RBC Capital maintains its sector perform recommendation with a price target reduced from USD 84 to USD 78.
  • Glencore plc: Liberum maintains its buy recommendation and reduces the target price from GBX 660 to GBX 610.
  • Gsk plc: BNP Paribas Exane maintains its neutral recommendation with a price target raised from GBX 1550 to GBX 1640.
  • The Home depot: Telsey Advisory Group maintains its market perform recommendation with a target price reduced from USD 335 to USD 330.
  • Jet2 plc: Numis resumes coverage with a buy recommendation and raises the target price from GBX 1970 to GBX 2200.
  • Lowe's cos inc: Telsey Advisory Group maintains its market perform recommendation with a price target reduced from USD 230 to USD 225.
  • Meta Platforms: JP Morgan maintains its overweight recommendation and reduces the target price from USD 425 to USD 400.
  • Norfolk southern: Barclays maintains its equalweight recommendation and reduces the target price from USD 235 to USD 215.
  • Nxp semiconducto: BNP Paribas Exane maintains its outperform rating and reduces the target price from USD 257 to USD 244.
  • On semiconductor: BNP Paribas Exane downgrades to neutral from outperform with a price target reduced from USD 130 to USD 95.
  • Southwest air: Citi maintains its neutral recommendation with a price target reduced from USD 32.75 to USD 28.50.
  • Tesco plc: Barclays maintains its overweight recommendation with a price target raised from GBP 3.25 to GBP 3.35.
  • Union pac: Barclays maintains its overweight recommendation and lowers the target price from USD 285 to USD 275.
  • United airlines: Citi maintains its buy recommendation and reduces the target price from USD 84 to USD 76.
  • Yellow cake plc: Liberum downgrades to hold from buy with a target price raised from GBX 540 to GBX 610.