The German share price index DAX graph is shown at the stock exchange in Frankfurt, Germany, on September 27, 2023. German and Spanish inflation data, as well as European consumer confidence data, are expected today but are unlikely to have a significant impact on the current market downturn. The recent spike in oil prices has contributed to selling in the bond market and strengthened the dollar, while global stocks have been declining for nine consecutive sessions. The dollar is now at a 10-month high against other major currencies, and 10-year Treasury yields are at a 16-year peak.

There is a deadlock among lawmakers on Capitol Hill, putting the U.S. just days away from its fourth partial government shutdown in a decade. This could prompt Moody’s to respond with a ratings adjustment. The Republican presidential candidates’ debate on Wednesday did not produce any significant changes in the race, which has been dominated by Donald Trump for months.

China is about to begin a week-long holiday, during which the yuan is under pressure. Evergrande, the most indebted developer in the world, has had its shares suspended again, and industrial profits in China have been declining. Additionally, a record number of Chinese citizens are choosing not to travel overseas during the holiday. Evergrande’s liquidity crisis has created an unprecedented situation in China’s property sector, which accounts for a significant portion of the country’s economy.

Asian stocks fell on Thursday, with the Nikkei dropping nearly 2% due to several Japanese companies going ex-dividend. The rising U.S. bond yields have widened the 2-year U.S.-Japan spread to over 500 basis points, and the dollar/yen exchange rate is approaching 150. There has been no intervention from Japan so far, but the cautious movements in the currency pair indicate nervousness among traders.

In addition to the data releases, the market will be closely watching Fed Chair Jerome Powell’s comments when he speaks at 2000 GMT. Some key developments that could impact the markets today include Germany’s CPI inflation data for September, the Eurozone confidence survey, and Powell’s speech.

This article was written by Tom Westbrook and edited by Edmund Klamann.