Yesterday, US government bond yields fell quite sharply, after peaking above 5% for the 10-year maturity. This is a sign that the market's perception of monetary policy has changed somewhat. At the same time, two emblematic bearish figures in the bond market, Bill Ackman and Bill Gross, have reversed their strategy and made it known (on X-Twitter). It's hard to decide whether this is a self-fulfilling prophecy or a case of chicken and egg, but both Bill's statements have accelerated the fall in yields and the rise in bonds. Nevertheless, the justification for the change in direction is not very upbeat. Ackman believes that the economy is slowing down much faster than the market thinks, and Gross even predicts a recession in Q4, while believing that the Fed's mantra of "higher rates, longer" is already history.

Equity markets could get a boost later from the results of Microsoft and Alphabet tonight after the Wall Street close. Aside from this market backdrop of key rates, economic speculation, corporate results and armed conflicts, there are three items of particular interest. First, the ongoing consolidation in the oil sector. Exxon Mobil was the first to pull the trigger on Pioneer Natural Resources. The announcement was made less than two weeks ago, for $59.5 billion. Chevron retaliated yesterday by announcing the purchase of Hess for $53 billion. When majors buy out their fellow underdogs, it's because they have great confidence in the sector's prospects. Ironically, it was BP Plc that paid the price. The British company, weakened by the departure of its CEO, has been Europe's weak link in the sector for several years, leading to speculation that Chevron might take it over. BP shares lost 2.4% yesterday, the price of mourning such a transaction.

A second development to watch out for is Nvidia, which is said to be developing a chip based on ARM technology. Written like that, it sounds like nothing, but it means that the group is taking on the duopoly between Intel and Advanced Micro Device on PC processors (CPUs). Intel fell by 3% yesterday, while Nvidia regained 3.5%. This Reuters rumor illustrates that semiconductor industry players can have very different dynamics, even within the same specialty. That said, Intel and Nvidia shareholders already knew this, given the performance of both stocks in recent years.

Thirdly and finally, bitcoin rose to the $35,000 mark, after a major rally. The market is speculating on the appearance of the first ETFs holding the most famous of cryptocurrencies. The pressure has been mounting for the past few days, with the multiplication of hints and rumors on the subject. From what I understand, the appearance of a BlackRock Bitcoin ETF on the listings of US clearing house DTCC has reinforced the feeling that things are moving behind the scenes.

Today's session also include October PMI activity indicators. Given the recent difficulties for the market to interpret macroeconomic data, I don't know whether weaker-than-expected statistics will be seen positively on Wall Street, because they would pave the way for greater flexibility in monetary policy, or negatively, because they would constitute confirmation of the recession that is just around the corner but never arrives. The same applies if the statistics are better than expected: it's all a question of interpretation. The answer for the US will come at 9.45 am ET.

The PMis for the eurozone have already been released. Business activity in the block contracted by more than expected, especially in Germany, but European indices remain quite resilient. This strengthens the case for a pause in rate hikes for the European Central Bank, which meets on Thursday,

On Wall Street, futures were in the green in premarket trading, as investors welcomed the drop in 10-year US Treasury yields.

Today's economic highlights:

PMIs for Japan, the eurozone, Germany, France and Britain have already been released, while the US PMI is unveiled at 9.45am ET.  On the agenda, we also have the Chicago Fed's national activity index and the Richmond Fed's manufacturing index.

The dollar rises 0.5% to EUR 09421 and 0.4% to GBP 0.8196. The ounce of gold is slightly down to USD 1965. Oil loses some ground, with North Sea Brent at USD 88.73 a barrel and US light crude WTI at USD 85.53. The yield on 10-year US debt falls back to 4.84%. Bitcoin is trading near USD 35,000.

In corporate news:

  • General Motors on Tuesday dropped its earnings forecast for 2023 and its near-term electric vehicle production outlook in the face of strike-related costs, but reported better-than-expected third-quarter performance.
  • RTX reported a quarterly loss of nearly $1 billion on Tuesday, as the aeronautical equipment manufacturer suffered from problems affecting the quality of its Geared Turbofan (GTF) engines. The company also indicated that it had approved a $10 billion share buyback program, which would begin almost immediately. The stock gained 2.6% before the opening.
  • Coca-Cola raised its full-year sales forecast on Tuesday, and now expects organic sales growth of 10% to 11% for the full year, compared with 8% to 9% previously forecast. The stock gained 1.7% before the opening.
  • Verizon raised its annual free cash flow forecast on Tuesday, as promotions and the wireless operator's 5G network helped it attract more subscribers than expected in the third quarter. The company now expects annual free cash flow to exceed $18 billion, up $1 billion on its previous forecast. The stock gained 1.8% before the opening.
  • General Electric on Tuesday raised its full-year earnings forecast on the back of strong demand for jet engine parts and services, and good performance in the renewables business. The company now expects adjusted earnings per share in 2023 of $2.55 to $2.65, compared with a previous forecast of $2.10 to $2.30.
  • 3M Co raised its full-year adjusted earnings forecast on Tuesday, and now expects adjusted earnings per share of between $8.95 and $9.15, compared with a previous forecast of $8.60 to $9.10 per share. The industrial group's shares rose by around 4% before the opening.
  • Synchrony Financial - On Tuesday, the bank reported net interest income for the quarter of $4.36 billion, compared with $3.93 billion a year ago.
  • Dow - The chemicals manufacturer reported adjusted earnings of 48 cents per share for the quarter ended September 30, against analysts' average estimate of 44 cents per share.
  • International Flavors & Fragrances is considering a sale of its pharmaceutical solutions business, Bloomberg News revealed on Monday. The division could fetch around $3.5 billion on sale.
  • Campbell Soup said Monday that its $2.33 billion acquisition of Sovos Brands was postponed until next year after the U.S. Federal Trade Commission requested more details on the deal.
  • Nucor reported higher-than-expected quarterly earnings on Monday, albeit down year-on-year. The steelmaker's third-quarter sales were down 16% year-on-year at $8.78 billion, but above consensus at $8.31 billion.
  • Brown & Brown said Monday that total revenues rose 15.1% in the third quarter to around $1.07 billion, as the insurance broker earned more commissions and fees. The stock was up 1% in after-hours trading.

Analyst recommendations:

  • 3m co: Morningstar maintains its buy recommendation and reduces the target price from USD 131 to USD 123.
  • Cadence design: Morningstar upgrades to hold from sell with a price target raised from USD 161 to USD 209.
  • Dollar general c: Daiwa Securities maintains its neutral recommendation with a price target reduced from USD 142 to USD 119.
  • Editas: Citi upgrades to buy from neutral. PT up 76% to $11.
  • Enphase energy: Daiwa Securities downgrades to neutral from outperform with a price target reduced from USD 145 to USD 100.
  • First quantum: Paradigm Capital upgrades to buy from hold with a target price of CAD 39.
  • Fmc corp: Goldman Sachs downgrades to neutral from buy with a price target reduced from USD 135 to USD 59.
  • Indivior plc: Liberum upgrades to buy from hold with a target price raised from GBX 1930 to GBX 2010.
  • Ingersoll-rand: Stifel upgrades to buy from hold with a target price of USD 73.
  • Ivanhoe mines lt: Paradigm Capital upgrades to buy from hold with a target price of CAD 15.
  • Johnson & johnson: Societe Generale maintains its hold recommendation with a price target reduced from USD 176 to USD 157.
  • Okta: President Capital Management Corp downgrades to neutral from buy with a price target reduced from USD 90 to USD 78.
  • On Holding: Redburn initiated coverage with a recommendation of buy. PT set to $33.
  • Pets at home: Shore Capital downgrades to hold from buy.
  • Primary health: Peel Hunt maintains its buy recommendation and reduces the target price from GBX 130 to GBX 110.
  • Rio tinto plc: Barclays upgrades to overweight from equalweight with a target price of GBP 63.
  • Solaredge techno: Zacks maintains its underperform recommendation and reduces the target price from USD 333 to USD 73.
  • Thermo fisher: Morgan Stanley maintains its overweight rating and reduces the target price from USD 640 to USD 600.
  • Wise: BNP Paribas Exane maintains its neutral recommendation with a price target raised from GBX 630 to GBX 780.