The unexpected decline in the output value of the US manufacturing industry in September may reflect the pressure on the manufacturing industry from the backlog of supply chains and the shortage of raw materials. Data from the Federal Reserve on Monday showed that manufacturing output fell by 0.7% in September, which was revised to a 0.4% drop in August. The overall industrial output value, including mining and utilities, fell by 1.3%.

The U.S. Treasury yield curve flattened sharply on Monday, and soaring energy prices triggered concerns about inflation, raising market expectations for the Fed to raise interest rates as soon as next year. The difference between the 5-year and 30-year Treasury bond yields once shrunk to 84.5 basis points, reaching the lowest level since April 2020, triggering concerns about slowing economic growth. Since then, the yield gap has rebounded to around 88 basis points. The yield on the 5-year Treasury bond rose by 4 basis points to about 1.168%. At 12:36 noon in New York time, the yield on the 30-year Treasury bond fell by about 1 basis point to 2.03%.

As the global economy recovers, OPEC+'s oil production is once again below the target level, exacerbating the supply shortage. According to people familiar with the matter, OPEC+ last month's output was 15% lower than planned, and August and July were 16% and 9% lower than planned, respectively. This reflects the inability of some member states, including Angola, Nigeria and Azerbaijan, to increase production to the agreed level due to lack of investment, exploration and other problems. In theory, OPEC+ could have increased its daily output by 747,000 barrels in September and kept it within the agreed production quota.

Russia is maintaining a firm control of the European energy market. Although President Vladimir Putin has indicated that it is prepared to increase supply, the country has no plans to send more natural gas to Europe. In the first two weeks of October, Gazprom's exports to major markets fell to the lowest level since at least the same period in 2014, and the increase in its output was mainly absorbed by domestic demand. The auction results for pipeline capacity in November did not show that Russia plans to increase exports to Europe. Although Putin insisted last week that Russia is “ready to discuss further measures” to stabilize the energy market, the country still restricts supply.

The premium of the London Metal Exchange's (LME) copper spot contract over the 3-month copper futures contract exceeded $1,000, the highest since at least 1994. In recent days, due to the decline in LME copper stocks, the price gap between spot copper and 3-month copper futures has widened substantially. In an email statement sent to Bloomberg, the LME stated that “LME has noticed the recent fluctuations in the copper market and we will continue to monitor developments. If necessary, we have further options to ensure the orderly operation of the market”.

According to the latest data from the U.S. Treasury Department, foreign holdings of U.S. Treasury bonds increased to a record US$7.56 trillion in August, and Japan’s U.S. Treasury holdings set a record high. The total amount of U.S. debt held overseas increased by US$12.8 billion in August, marking the fifth consecutive month of increase. The proportion of outstanding U.S. debt is still lower than its peak more than a decade ago. China's holdings of US debt is second only to Japan, and it fell by US$21.3 billion in August to US$1.05 trillion, the lowest since 2010. Japan’s U.S. debt holdings climbed by US$9.6 billion, increasing for the third consecutive month, reaching a record high of US$1.32 trillion.

Well-known Bitcoin bull Tom Lee said that the upcoming Bitcoin futures US Exchange Traded Fund (ETF) is hyped and may attract more than $50 billion in capital in the first year. “We believe that demand for Bitcoin will exceed the inflow of funds from QQQ,” Fundstrat Global Advisors co-founder Lee wrote in a report on Monday. QQQ refers to the ETF giant Invesco QQQ Trust Series 1 fund linked to the Nasdaq 100 Index.

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