✅ Daily Market Analysis - MONDAY SEPTEMBER 11, 2023

Key events:

UK - BoE MPC Member Pill Speaks
USA - 3-Year Note Auction

Last Friday, the S&P 500 eked out a modest gain, albeit closing significantly below its session peak. Regrettably, all three of Wall Street's primary indices recorded weekly declines, as investors wrestled with worries about interest rates and anxiously anticipated forthcoming US inflation data.

S&P 500 daily chart

Investors have been increasingly alarmed by the sharp rise in oil prices, and their anxiety has grown even more pronounced in anticipation of the release of the Consumer Price Index (CPI) for August, slated for September 13. This report is eagerly awaited as it is anticipated to offer valuable insights into the potential steps that the Federal Reserve may take regarding interest rates.

United States Effective Federal Funds Rate

United States Consumer Price Index

Although yields on the benchmark US 10-year Treasury notes experienced a decline, the increase in US 2-year Treasury yields on Friday appeared to put pressure on the stock market.

US02Y treasury yield

US10T treasury yield

Apple Inc (NASDAQ: AAPL) seems to remain undeterred by concerns about declining demand in China, despite reports indicating that China has extended its ban on iPhones to encompass local government employees and state-owned enterprises.

This development follows recent news that Beijing had restricted the use of foreign devices, including iPhones, by central government workers due to national security concerns.

Apple stock daily chart

Nonetheless, some voices on Wall Street are arguing that the Apple share selloff triggered by these China-related concerns might be overblown. Wedbush, for example, commented that "Any China government agency iPhone ban is way overblown." They emphasized that the ban by a China government agency would only impact "less than 500,000 iPhones out of roughly 45 million" expected to be sold in China over the next year.

In the currency markets, the Japanese yen experienced a significant surge on Monday, driven by remarks from Bank of Japan (BOJ) Governor Kazuo Ueda that raised hopes of a departure from negative interest rates in Japan. This yen upswing contrasted with a weakening US dollar, influenced by the anticipation surrounding the upcoming US inflation data.

USD/JPY daily chart

The yen demonstrated impressive strength, surging over 1% to reach a one-week high of 145.99 per dollar following Ueda's remarks. He indicated that the Bank of Japan (BOJ) might contemplate ending its negative interest rate policy once it comes closer to achieving its 2% inflation target, potentially by the year's end.

In a similar vein, the euro also made gains, rising by 0.36% to $1.0738, marking the end of an eight-week losing streak. Conversely, the dollar index, which had enjoyed eight consecutive weeks of gains, retreated by 0.31% to 104.53.

EUR/USD daily chart

In European stock markets, there were cautious expectations of a modest opening gain. Investors were treading carefully as they awaited the European Central Bank's policy-setting meeting scheduled for later in the week.