MARKET WRAPS

Watch For:

Canada Retail Trade for July; Jerome Powell, Michelle Bowman and Lael Brainard speak at virtual Fed Listens event

Opening Call:

Stock futures were falling, while Treasury yields were a little off multiyear highs, as investors remained on edge following the latest Federal Reserve interest-rate rise and signs that it will continue to raise rates for some time.

Forex:

EUR/USD fell to its lowest since 2002 early in the European session and Danske Bank expects it to drop to 0.95 in 12 months due to a weak eurozone economy and broad dollar strength.

It said the forecast reflects "a combination of a substantial negative terms-of-trade shock to Europe vs U.S., the coordinated tightening of global financial conditions, broadening dollar strength and downside risk to euro area economic growth."

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The pound weakened to its lowest level since 1985 and is vulnerable to further falls, with any bounce from the announcement of a large fiscal stimulus package--including caps on U.K. energy bills and tax cuts--due on Friday unlikely to be sustained, MUFG Bank said.

"A combination of fiscal expansion and tighter monetary policy is currency positive. However, for the pound, that fiscal expansion does not look sustainable while the BOE's tightening lags behind half of the G10 central banks despite the U.K. having the highest inflation across G10."

Bonds:

Societe Generale said higher yields will start attracting investors to bonds, "as economies are slowing down, geopolitics remain tense and risky assets are shaky."

As the European Central Bank is determined to tame inflation and front-load interest-rate rises, Societe Generale expects it to continue to raise interest rates in the first half of 2023. This implies that Bund yields shouldn't peak yet and have room to overshoot above 2%

The Bund yield was trading 6 basis points lower at 1.926%, having risen above 2% briefly earlier in the European session for the first time since September 2013.

Energy:

Oil prices extended losses in European trade, and remained on course for their fourth consecutive weekly decline.

Oil has continued its steady decline, confounding analysts' forecasts that prices would rise. For now, concerns about demand are outweighing expectations of possible additional supply cuts from OPEC and a European Union ban on Russian oil imports which could constrain global supplies.

"The outlook is highly uncertain," Fitch said, "bearish demand-side drivers overtaking bullish supply-side ones."

Metals:

Base metals suffered broad losses in Europe as risk appetite continued to wane after a wave of central banks lifted interest rates this week.

"The slew of central banks tightening monetary policy raises the risk of weaker economic growth," ANZ said.


TODAY'S TOP HEADLINES


Tesla Countersues California Agency That Filed Racial Discrimination Lawsuit

Tesla Inc. has countersued the California agency that filed a racial discrimination lawsuit against the company, alleging that the government organization violated state law in bringing about the suit.

The electric-vehicle maker, in the suit filed Thursday in Alameda County Superior Court, said the California Civil Rights Department-previously known as the California Department of Fair Employment and Housing-violated state rules by filing the lawsuit without seeking public comment or holding a public hearing.


Credit Suisse Shares Drop After Report of Fresh Capital Raise

Credit Suisse Group AG shares fell sharply in early Friday trading after a media report said that the Swiss bank is considering another capital raise as it looks to move on from recent scandals and financial losses.

At 0815 GMT, shares traded down 7.1% to CHF4.31.


Snap Hires New Compliance Chief From Peloton

The head of compliance and risk at Peloton Interactive Inc. has left the company and joined Snapchat parent Snap Inc.

Bertrand Lanciault III, who goes by Lance Lanciault, joined Snap in August as the new chief compliance officer, overseeing its compliance and integrity efforts, according to a spokesman for the technology company. He joined Peloton in February 2021 after spending more than six years at Walmart Inc.'s e-commerce team, serving as the chief ethics and compliance officer there, according to his LinkedIn profile.


Airbus Shares Rise After Management Backs Production, Dividend Goals

Shares in Airbus SE traded higher Friday after the plane maker backed its delivery targets despite the challenges it faces in its supply chain, and said it was committed to growing shareholder returns.

At 0833 GMT, shares traded 3.3% higher at EUR95.39.


China Evergrande Onshore Bond Holders Grant Six-Month Payment Extension

Holders of an onshore bond issued by China Evergrande Group have agreed to extend the interest repayment date by six months as the embattled property developer struggles to meet its debt obligations.

A motion for the interest repayment extension of the 2020 bond has been passed in a bondholder meeting, Evergrande said in a filing to the Shenzhen stock exchange Friday.


Middle-Income Households Feel Bigger Pinch From Inflation, Report Finds

Middle-income households in 2022 have seen inflation eat into a greater share of their incomes compared with low- and high-income households, according to a report released Thursday by the nonpartisan Congressional Budget Office.

The report's analysis considered an average basket of goods and services purchased by households in each fifth of the income distribution in 2019, before large shifts in consumption patterns during the Covid-19 pandemic. It found that households in the second, middle and fourth income quintiles have seen the share of their income-derived from labor, business and other nongovernmental sources-that would purchase that basket increase in 2022. Meanwhile, households in the lowest and highest quintiles have seen their share of their income that would purchase the basket fall this year.


Eurozone Flash PMIs Point to GDP Contraction in 3Q

The Eurozone economic downturn deepened in September with business activity contracting for a third consecutive month, S&P Global said.

The eurozone composite purchasing managers index fell to 48.2 in September from 48.9 in August, according to the preliminary reading. This is in line with the forecast of economists polled by The Wall Street Journal.


Chief of Latin America's Top Development Bank Faces Dismissal Vote Over Misconduct Allegations

Leading member states of the Inter-American Development Bank are expected to vote to dismiss bank president Mauricio Claver-Carone after an investigation found misconduct over an undisclosed romantic relationship between him and a bank staffer, according to senior government officials of countries with large voting stakes at the bank.

People familiar with the matter said the bank's shareholders unanimously supported removing Mr. Claver-Carone after a law firm conducting an investigation for the bank found evidence that he had been in a relationship with a bank staffer who reported to him. The investigation also found that Mr. Claver-Carone approved a 45% base pay raise for the senior staffer in less than one year, the people said.


Hong Kong Ends Hotel Quarantine Requirement for Travelers

Hong Kong is ending its controversial hotel quarantine policy for travelers, as pressure builds on the city to ease Covid-19 restrictions to shore up its economy and defend its longtime position as a global business capital.

John Lee, Hong Kong's chief executive, said arrivals starting Sept. 26 will no longer need to isolate in a hotel, dropping a previous requirement for a three-day quarantine. Travelers' ability to move around the city will be restricted during a self-monitoring period of three days, down from four currently. A requirement for a preflight PCR test will be dropped in favor of a preflight rapid test.


Russians Fear a Wider Call-Up After Putin Orders Reservists to Mobilize

MOSCOW-Russians began reporting to military collection points in the thousands while others tried to flee the country as it emerged that the call-up for troops to fight in President Vladimir Putin's war in Ukraine could be wider than initially thought.

Road traffic surged at border points leading out of Russia on Thursday, according to local media reports, and airline tickets are now sold out for days after Mr. Putin announced the call-up on Wednesday. At least four Russian regions announced that they had barred exit for men without the approval of their local military recruitment offices.


Florida Lawmaker Sues to Stop DeSantis From Using State Funds to Fly Migrants From Texas

A Florida legislator has filed a lawsuit against Gov. Ron DeSantis and other state officials, challenging the legality of the state's use of public funds to fly nearly 50 migrants from Texas to Martha's Vineyard last week.

In a suit filed late Thursday in state court in Tallahassee, state Sen. Jason Pizzo, a Democrat, alleged that the move by the Republican governor violated the terms of an appropriations bill legislators passed earlier this year, which permitted the state to spend up to $12 million on a program to move "unauthorized aliens" from Florida. The legislation also required the state to receive at least two bids to carry out the effort.


Covid-19 Unemployment Fraud May Have Topped $45 Billion, Watchdog Estimates

Criminals potentially stole an estimated $45.6 billion by making fraudulent unemployment insurance claims meant for people laid off during the Covid-19 pandemic, a government watchdog said.

The new tally is nearly three times last summer's estimate of over $16 billion in fraudulent payments.


Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

None scheduled

Economic Indicators (ET):

0830 Jul Retail Sales


Expected Major Events for Friday

07:15/FRA: Sep France Flash PMI

07:30/GER: Sep Germany Flash PMI

(MORE TO FOLLOW) Dow Jones Newswires

09-23-22 0545ET