Bitcoin Hard Fork eCash Goes Live By Month's End — Market Talk
1105 ET - A new hard-fork of bitcoin called eCash is expected to go live by the end of the month, providing new features and modernizing a blockchain that has seen only sporadic changes since its inception nearly 20 years ago. In a note, analysts with CoinDesk say that eCash (ECX) will activate seven new sidechains for users that opt in. "eCash brings an app platform to Bitcoin, with seven sidechains going live at mainnet launch, from payments and privacy to prediction markets, identity and tokens," says CoinDesk. The fork will take place at block 973,728, says CoinDesk, crediting users with eCash tokens on a 1:1 basis with whatever bitcoin they hold. Bitcoin is up 1.2% to $81,878. ([email protected])1104 ET - Headline and core measures of inflation in Canada were softer than expected in September, which would make an interest rate increase next week hard to justify without undermining a data-based approach to policymaking by the Bank of Canada, suggests Citi's Veronica Clark. Annual inflation ticked up to 3.1% but due almost entirely to higher gasoline prices, and officials may be encouraged by surprising muted food prices, Clark says. The economist continues to think soft demand with an economy in excess supply will keep price pressures contained, and interest rates on hold through the rest of the year. ([email protected]; @RobbMStewart)1101 ET - Germany's debt concerns are increasingly similar to France, Commerzbank's Joerg Kraemer says in a note. Germany has adopted the approach of responding to crises such as surges in energy prices with public spending, he says. "Unlike during the oil-price shocks of the 1970s, the federal government introduced a fuel tax rebate twice, even though it also benefits many affluent people and reduces incentives to save energy." There are also growing political similarities, given Germany's ruling coalition has a narrow majority and is divided on economic policy, Kraemer says. The budget deficit will rise to 4% of GDP this year, not far below France's 5%. Germany should prioritize public finances and improve competitiveness to boost growth, he adds. ([email protected])1056 ET - The cost of insuring euro-denominated high-yield credit against default rises to its highest in six months as concerns over unrest and fiscal troubles in France cause French sovereign-bond yields to rise and European equities to fall. Cost-of-living protests in France spiraled over the weekend, underscoring the difficulties facing any attempts to curb public spending. In addition, concerns over debt-funded AI investments, prospects of interest-rate rises and inflation worries dampen sentiment further. The pan-European Stoxx 600 index falls 1.1% while France's CAC 40 index loses 1.4%. The iTraxx Europe Crossover index of euro high-yield credit default swaps rises 5 basis points to 320 basis points, S&P Global Market Intelligence data show. ([email protected])1042 ET - Treasury yields are higher as investors size-up the Fed's approach ahead of its policy setting meeting at the end of the month. In a week light on economic reports, the CME FedWatch tool is currently indicating a 17% likelihood of a fed hike. BMO rate strategists see challenges for Chairman Warsh to deliver a momentum-setting pause while ensuring the market keeps a December hike fully priced in. "The hike-pause-hike pattern implies January will also see a hawkish pause; leaving March as 2027's first truly live meeting. Of course, this is something of an oversimplification and the performance of the real economy will ultimately determine the flexibility policymakers are afforded in further normalization," they say in a note. The 10-year Treasury yield is 5.127% versus Friday's 5.097%, the 2-year Treasury yield is 4.757% compared with 4.734%. ([email protected])1030 ET - Canada's softer-than-expected inflation in September reaffirms KPMG Canada's expectation that the Bank of Canada will remain on hold at October's meeting, though it continue to anticipate a rate increase is in the cards in the near future and possibly as early as December. The Bank of Canada increasingly faces a difficult trade-off, economist Peter Shannon says. Soft employment, an economy still operating below capacity and slow population growth argue against tightening. But energy prices have risen sharply since the central bank's last meeting and headline inflation is likely to remain around 3% well into 2027 absent a meaningful de-escalation in the Middle East, he says. ([email protected]; @RobbMStewart)1027 ET - Canadian inflation for September was a touch softer than expected, raising the likelihood the central bank will hold interest rates steady next week instead of raising by a quarter percentage point as anticipated, Oxford Economics' Michael Davenport says. The economist expects the rate decision will still be a very close call, and forecasts the policy rate will rise a half point by January to ensure the spike in energy prices doesn't caught sustained higher inflation. He adds excess slack in the economy and slower shelter inflation should prevent core inflation from rising sharply and lessen the need for the Bank of Canada to tighten monetary policy more aggressively. ([email protected]; @RobbMStewart)1025 ET - Inflationary pressures in Canada have yet to show any clear signs of broadening out despite persistently high energy prices, Desjardins' Royce Mendes notes. Headline CPI inflation rose 0.1% on-month and 0.35% in seasonally-adjusted terms, taking the annual rate to 3.1%. Headline numbers were each a tick lower than expected by economists. Given the recent slowdown in the economy the Bank of Canada may still be able to argue that inflation will return to target without raising interest rates this month, Mendes says.([email protected]; @RobbMStewart)1023 ET - Easing core price pressures in Canada paired with recent weak labor force data should keep the Bank of Canada from raising interest rates next week, despite recent hawkish comments from Gov. Tiff Macklem, argues Capital Economics' Bradley Saunders. No change would be at odds with market pricing, but Saunders expects that theme to continue over the next year as spare capacity in the economy and trade-related uncertainty mean the central bank tightens monetary policy by less than investors anticipate. ([email protected]; @RobbMStewart)1010 ET - Buyers are gaining leverage in the U.S. housing market, Realtor.com says, but higher mortgage rates are cutting their purchasing power. Mortgage rates rose 74 basis points in just over a month, from 6.66% in late August to 7.40% on Oct. 8. For a buyer with a $2,000 monthly principal-and-interest budget, that means 7.2% less purchasing power--more than $22,000 less in home price. Buyers can likely negotiate harder on price and terms, but higher financing costs keep homes harder to afford. More buyers can negotiate in more markets, but a bigger negotiating advantage doesn't always mean more affordability, Realtor.com says. As rates rise, the same monthly budget supports a lower home price. Market leverage and purchasing power are moving in opposite directions right now. ([email protected])1010 ET - The Canadian dollar could fall in the near-term as Monday's lower-than-expected Canada inflation data for September argue against the Bank of Canada raising interest rates, Monex Europe's Nick Rees says in a note. "With underlying inflation headed lower, we see little justification for monetary tightening, expecting policy to remain untouched on October 28." The market prices a 67% chance of a rate rise next week, LSEG data show. The U.S. dollar falls 0.3% to 1.4102 Canadian dollars, compared to 1.4075 before the data which showed core prices decelerated to 1.9% in September from 2% in August. Monex expects the U.S. dollar to reach 1.43 Canadian dollars if rate expectations for next week's meeting are trimmed. ([email protected])1004 ET - Markets that were leaning heavily toward a Bank of Canada rate increase will get little satisfaction from mild core inflation readings, Bank of Montreal's Douglas Porter says. Market pricing has pointed to a rate rise, driven by hawkish comments from BoC Gov. Tiff Macklem on the fact energy price continue to rise. Yet core inflation for September looks to be anchored around 2% or lower, and is exhibiting zero evidence that the energy price shock is spreading, Porter says. Still, the central bank looks forward, "so one tame current inflation result won't necessarily stay their hiking hand," the economist says. ([email protected]; @RobbMStewart)