European markets stay rangebound as traders await Fed decision

Headlines:

Markets:

• WTI crude oil declined 0.65% to $101.10
• Gold edged up 0.01% to $4016.00
• The New Zealand dollar outperformed while the euro underperformed
• The S&P 500 gained 0.29%, closing at 7737
• The US 10-year Treasury yield slipped 1 basis point to 4.97%
• Bitcoin dropped 0.35% to $79,713

Trading remained mostly sideways during the session, with markets staying defensive due to the absence of major fundamental catalysts and the wait for the FOMC decision. On the economic data side, French consumer confidence plunged to 80 in October, well below expectations of 85 and down from a revised 85 in September, hitting its lowest level since 2013.

Fiscal uncertainty, worries about public finances and social unrest weighed on sentiment, as households reported worsening past and expected financial situations and living standards. Inflation expectations also deteriorated, with the future prices index rising to its highest since May, while unemployment fears climbed to 61, the highest since March 2021. Overall, the report pointed to a sharp weakening in the French consumer outlook, adding to concerns after already disappointing French PMI data.

The most significant development came late in the session, when Iran's state media reported that Iran's security chief met with Supreme Leader Khamenei. Khamenei stressed in the meeting the importance of pursuing Iran's interests and implementing its conditions with the aim of ending the war and the "no war, nor peace" situation.

The headline provided little substance, but markets reacted positively, apparently eager for any good news. As Adam noted, the narrative must be that Iran's security chief could be bringing the leader some kind of deal framework. Markets may also be very sensitive to deal developments given the proximity to the US midterm elections, though it would not change anything at this point.