
Closing post
Time to wrap up…after a surprisingly strong US jobs report reignited speculation that US interest rates will be raised even higher to cool the economy, despite risks of a recession.
Here’s today’s main stories:
The US Federal Reserve will be “agonising” about how high it should push US interest rates, says Charles Hepworth, Investment Director at GAM Investments:
Hepworth says:
“The US jobs report for September smashed all expectations with 336,000 new additions to the workforce, compared to a forecast of a much more modest addition of 171,000 jobs.
This hot jobs report saw strong gains in the service sector, with hospitality recording big increases in new hires. This augers well for the sector as obviously increased hiring reflects buoyant demand. However, it would be remiss to ignore that some of this re-hiring is just normalisation back to levels pre-pandemic. It certainly isn’t reflective of an economy that is slowing perhaps as quickly as the Federal Reserve hopes for.
Even if wage growth increased less than expected, the odds of a further hike from current levels has to be higher than it was prior to this report (and it was high already). Bond bears are still in full control with yields across the Treasury curve pushing to near term highs and this is reflecting in a level of angst for equity markets which remain under pressure with the higher for longer narrative now having to be finally accepted.
The Fed must also be agonising of how much it needs to continue to do before the economy succumbs to higher and higher rates.”
Dollar on track for 12th weekly gain in a row
Having strengthened following today’s jobs report, the US dollar is on track for its 12th week of gains in a row.
That hasn’t happened since 2014.
The dollar has gained around 8% over those 12 weeks, lifted by expectations that the US Fed will raise interest rates again.
$DXY Dollar spiked on jobs data but has faded giving back most all of its gains although Treasuries have only taken back roughly half of their losses. pic.twitter.com/Rs233kcys4
— Scarlett's Grandpa (@KASDad) October 6, 2023
Today’s bumper US payrolls report has prompted a choppy session pulling European markets off their highs of the day, as we look to close out a third week of declines on a positive note, reports Michael Hewson of CMC Markets.
He adds:
The DAX has struggled this week, slipping to a 6-month low a couple of days ago, while the FTSE250 fell to an 11-month low.
The FTSE100 has performed slightly better managing to hold above its September lows, but the pressure being exerted by the prospect of higher long-term rates is certainly taking its toll on appetite for stocks.
Currently the FTSE 100 index is up 13 points, or 0.17%, at 7464 points.
Updated
President Biden’s council of economic advisers have published a handy thread on today’s jobs report:
Today’s employment report shows the U.S. economy added 336,000 jobs in September, substantially above expectations. The average monthly gain over the past 3 months is now 266,000. 1/ pic.twitter.com/1wjRUB0ZM0
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Employment growth in July and August was revised up by a combined 119,000 jobs. This upward revision is driven by higher government employment than previously estimated. 2/
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
The headline unemployment rate was steady at 3.8% in September. The broadest measure of underemployment, U-6, ticked down to 7.0%. Both have remained around these low rates since March 2022. 3/ pic.twitter.com/AYe9jxyhWm
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Note that employment measures in the Establishment and Household surveys are defined differently and can diverge significantly. Household employment grew by 86,000 in September, and fell by 7,000 when adjusted to use the same definition as the Establishment Survey. 4/ pic.twitter.com/WdI6oOBsxR
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Note too that the error bands around job gains between these two surveys are quite different. For the Establishment Survey, the 90% confidence interval is about +/- 130K; for the Household Survey it's about +/- 620K, meaning its employment growth estimates are more uncertain. 5/
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Labor force participation (LFPR) stayed at its pandemic recovery high of 62.8% in September. The prime-age (25-54 year-olds) participation rate, which is less sensitive to the aging of the population, also held steady at 83.5%; this rate has not been higher since May 2002. 6/ pic.twitter.com/UedBtt9fw8
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
The prime-age employment-to-population ratio (EPOP) ticked down 80.8%. For women, the prime-age employment rate held steady at 75.3%, its sixth straight month of reaching or tying an all-time high. 7/
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Together, these LFPR and EPOP results suggest that both labor supply and labor demand remain strong. 8/
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Monthly nominal average hourly earnings growth was 0.2% in September, the same rate as August. Year-on-year, nominal wage growth ticked down to 4.2%. Inflation data for September have not been released yet. 9/ pic.twitter.com/WrELTDJjmG
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Three-month growth in nominal average hourly earnings was 3.4% annualized in September, the lowest three-month rate since March 2021. 10/ pic.twitter.com/xcIaRE96Ex
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Today is National Manufacturing Day. In September, manufacturing added 17,000 jobs, bringing the total added since January 2021 to 815,000. Manufacturing employment is up almost 2% since February 2020, the strongest manufacturing jobs growth in any post-1953 business cycle. 11/ pic.twitter.com/mTPZVQvnpb
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Finally, @BLS_gov began publishing new data from the household survey on teleworking. In September, 20% of employed adults teleworked or worked at home for pay, up from 18% last October when the new questions were introduced. The comparable rate in Feb 2020 was about 9%. 12/
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. 13/ pic.twitter.com/SiWzArp7cE
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Therefore, it is important not to read too much into any one monthly report, and it is informative to consider each report in the context of other data as they become available. 14/
— Council of Economic Advisers (@WhiteHouseCEA) October 6, 2023
Back in the UK, the Financial Times are reporting that a group of Metro Bank bondholders offered the bank a £600m capital injection on Monday.
However, Metro – which said yesterday it was evaluating various options to bolster its capital – has yet to accept the offer, according to two people familiar with the matter.
The challenger bank sent representatives for the consortium of bondholders a letter on Friday morning that acknowledged the offer, which is still on the table, according to one of the people.
The bondholders’ offer came before Metro approached investors this week about a separate fundraising plan for a similar amount to shore up its balance sheet. Existing investors, who could lose money if the bank fails, are looking to bolster its capital position and avoid it running into difficulty.
Metro Bank bondholders offered the lender a £600mn capital package on Monday - but are still waiting to see if it is accepted
— Owen Walker (@OwenWalker0) October 6, 2023
With @LauraNoonanFT @sjhmorris @BondHack and @akilazoe https://t.co/tBZ1t0uLkg via @ft
Strongest monthly jobs growth since January
The 336,000 new jobs created in the US in September is the most for any month since January.
It is also above the average monthly gain of 267,000 over the prior twelve months.

Pushpin Singh, senior economist at the CEBR thinktank, says:
The latest data signals a still-hot labour market amidst historically low unemployment, elevated wage growth and strong job additions in recent months, suggesting that there is still more to be done before inflation is brought back under control.
In light of this, Cebr expects the Fed to raise rates by another 25 basis points before the end of the year, before leaving interest rates at a restrictive level for some time to fully curb demand-side pressure.”
Mike Bell, Global Liquidity Market Strategist at J.P. Morgan Asset Management, agrees that today’s very strong payrolls data increases the probability of another rate hike from the Federal Reserve this year.
However, the more investors believe a recession can be avoided, the more likely an eventual recession becomes, Bell fears.
Here’s why:
“If enough people believe that rates can stay high without causing a recession, then the subsequent rise in long bond yields that we have seen in recent months increases the eventual risk of recession by raising borrowing costs.
“Our base case is therefore still for a mild recession sometime in 2024. But even in a recession, we don’t expect rates to be cut back down to zero.
UK government bonds are also weakening, pushing up the cost of borrowing.
The yield, or interest rate, on benchmark 10-year gilts has risen to around 4.62%, from 4.55% last night.
The yield on the UK's 10-year Gilt surged past the 4.6% threshold, hovering around its highest level since August 22. Bonds are being sold off globally. US 30 year bond 5.01%. 10 year now approaching 5%. US adds more jobs than expected. Equity needs to be sold off to save bonds. pic.twitter.com/CGLcIm0cLe
— Winston (@WKyaw7) October 6, 2023
There’s a weak start to trading on Wall Street, after the strong jobs report fuelled concerns over high interest rates.
The Dow Jones industrial average has lost 174 points, or 0.5%, to 32,945 in early trading, while the broader S&P 500 is down 0.75%.
DOW JONES DOWN 80.51 POINTS, OR 0.24 %, AT 33,039.06 AFTER MARKET OPEN
— First Squawk (@FirstSquawk) October 6, 2023
S&P 500 DOWN 22.79 POINTS, OR 0.54 PERCENT, AT 4,235.40 AFTER MARKET OPEN
NASDAQ DOWN 94.82 POINTS, OR 0.72 PERCENT, AT 13,125.01 AFTER MARKET OPEN
Jobs report will spook bond market
The odds of another rise in US interest rates in 2023 have risen, reports Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin.
Mui says:
“The jaw-dropping strength of the US nonfarm payroll report is bound to spook the bond market further as the “higher for longer” interest rate narrative gains more support.
While the resilience in jobs is to be celebrated, markets currently are in “bad news equals good news” mode as the bond market just doesn’t want to stomach hot data.
The 336K job gains blows past even the most bullish estimate. Despite the Federal Reserve’s aggressive interest rate increases and some pockets of weakness in the US economy, this report raises concern the labour market can remain too hot for too long.
Perhaps the only solace is that wage growth has slowed modestly and came in below estimate.
But with the recent rebound in US jobs opening and a lack of increase in the labour participation rate, the Federal Reserve may remain concerned about underlying inflation pressure on the economy.
Traders have boosted the probability of another Fed rate hike by the end of the year from 1/3 to around 50% after the report.”
Bond yields jump after strong jobs report
US government bond prices are weakening following today’s strong jobs report, as traders anticipate that interest rates could rise higher – and stay there for longer than hoped.
This is pushing up the yield, or interest rate, on US debt (yields rise as prices fall).
10-year US Treasury bonds have hit their highest level since the financial crisis, as have longer-dated 30-year Treasury yields.
Benchmark 10-year notes reached 4.887% and 30-year yields hit 5.053%, both the highest since 2007, Reuters data shows.
⚖️❗️*TREASURY 5- TO 30-YEAR YIELDS RISE 15 BASIS POINTS ON DAY
— Cable FX Macro (@cablefxmacro) October 6, 2023
🔺*TREASURY 30-YEAR YIELD RISES TO 5.04%, HIGHEST SINCE 2007 pic.twitter.com/QK5gum9ZHj
Global bond markets were already on edge. A hot US labor market is the last thing they needed. Today's payrolls data are a +1.8 standard deviation surprise (horizontal), causing a jump in 10-year Treasury yield of 15 bps (vertical), 3 times more than normal (black dotted line)... pic.twitter.com/FultHYPVG2
— Robin Brooks (@RobinBrooksIIF) October 6, 2023
Richard Carter, head of fixed interest research at Quilter Cheviot, explains:
“As the market looks to come to terms with higher interest rates for longer, today’s US job numbers confirm this scenario is most likely to play out. The surge in new jobs was unexpected and adds to the belief that the US economy remains too hot, and that interest rate cuts will not be seen for a while.
“Bond yields have been rising over the past month and it is data prints like this that make the risk of inflation spiking again appear more of a reality. The fact is that interest rates are not yet having the complete desired effect of dampening demand and tightening conditions. We are entering a scenario now where the data prints are going to be increasingly volatile and the soft landing the Federal Reserve wishes for becomes harder to achieve.”
Updated
Glassdoor’s lead economist Daniel Zhao has analysed today’s jobs report, and says:
“The summer weather is sticking around in the labor market as the September jobs report shows hot job gains. As the labor market stays in its holding pattern, we’re one month closer to exiting without a recession. Resilient jobs growth shows there is some cushion for the Federal Reserve’s efforts to cool inflation without causing job losses.”
Today’s jobs report shows signs of an unexpected surging payroll growth with 336,000 jobs added. Leisure and hospitality sector provided well above average monthly job gains (+96,000) jobs, likely due to the ramp of the upcoming holiday season.
While labor force participation held at 83.5%, female labor participation decreased to 77.4%. In future months, we are watching this number closely as expiring federal childcare funding could sideline working mothers.
Full story: US economy added 336,000 jobs in September
The US workforce added 336,000 jobs last month, much more than expected, despite the Federal Reserve’s fight to cool the world’s largest economy, my colleague Callum Jones reports.
Employment growth had been fading in recent months, but remained largely resilient while the Fed battled to get inflation under control. Official data has bolstered hopes that the central bank will manage to guide the US economy to a so-called “soft landing”, where price growth normalizes and recession is avoided.
Economists had expected non-farm payrolls to increase by 170,000 in September, according to a survey by Reuters, down from August’s reading of 187,000.
The closely watched monthly report is seen on Wall Street and in Washington as a key indicator of the health of the US economy. It excludes farms because of seasonal variation. More here.
The surprisingly strong 336,000 increase in non-farm payrolls in September adds to the evidence that the US economy is “holding up well despite the headwind from higher interest rates”, says Paul Ashworth, chief North America economist at Capital Economics.
Employment at America’s bars and restaurants has returned to its pre-Covid-19 levels, today’s jobs report shows.
Employment in food services and drinking places rose by 61,000 over the month, which takes it back to its level in February 2020.
Another recovery milestone: Restaurant employment is back to pre-pandemic levels
— Heather Long (@byHeatherLong) October 6, 2023
"Employment in food services and drinking places rose
by 61,000 over the month and has returned to its pre-pandemic February 2020 level."
Feb 2020: 12,339,000 workers
Sept 2023: 12,368,000 workers pic.twitter.com/79N9jTnFs4
Financial markets are pricing in another rise in US interest rates, in November, following today’s jobs report, says John Leiper, chief investment officer at Titan Asset Management:
New jobs created in September surged 336k, way above the prior reading at 187k and expectations for 170k. The past two months of data were also revised higher by 119k.
Because good news is bad news for markets, equities are selling off aggressively as a November rate hike is priced back in.
The silver lining, if there is one, is that average hourly earnings came in below expectations and fell slightly year-on-year, meaning that whilst the labour market, and economy, remains strong, this is not, yet, meaningfully flowing through into wages.”
July and August hiring revised up too
July and August’s jobs reports have been revised higher – showing that employment actually rose by 119,000 more than expected.
Today’s report says:
The change in total nonfarm payroll employment for July was revised up by 79,000, from +157,000 to +236,000, and the change for August was revised up by 40,000, from +187,000 to +227,000.
With these revisions, employment in July and August combined is 119,000 higher than previously reported.
Strong jobs report should allay recession fears
September’s surge in hiring should help to keep fears of a US recession at bay, says Richard Flynn, managing director at Charles Schwab.
“Investors will interpret today’s jobs report as a sign that there is a healthy level of demand in the labour market. Job growth has been a key driver of economic resilience recently, balancing out weaknesses in areas such as housing and consumer goods.
The strong figures released today should help to keep fears of recession at bay and offer optimism for economic sectors that are likely on their way to stability.”
Average hourly earnings in the US have slowed a little.
Over the past 12 months, average hourly earnings have increased by 4.2%, today’s report shows, down from 4.3% in the year to August.
In September, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents, or 0.2%, to $33.88.
🇺🇸 United States Average Hourly Earnings (YoY) (YoY) (Sep) $USD
— PiQ (@PiQSuite) October 6, 2023
Actual: 4.2% 🔴
Expected: 4.3%
Previous: 4.3%
- https://t.co/orvmA6Wqwk
Wall Street futures fall after jobs report
Good news on jobs is bad for the markets.
Wall Street futures have taken an immediate bath, as traders conclude that the strong US labor market will mean interest rates remain high for longer.
Payroll employment rises by 336,000 in September
— Ayesha Tariq, CFA (@AyeshaTariq) October 6, 2023
👀👀👀👀👀👀👀
Unemployment rate unchanged at 3.8% https://t.co/HLxxEuDdcH pic.twitter.com/VRvh6McpI2
The dollar is strengthening too, knocking sterling down by half a cent to $1.2145.
US jobs growth smashes forecasts
Newsflash: The US economy added 336,000 new jobs in September, smashing expectations, which may pave the way for further rises in interest rates.
That’s sharply higher than the 170,000 new hires which Wall Street expected from today’s non-farm payroll report.
The U.S. Bureau of Labor Statistics reports there were job gains in leisure and hospitality; government; health care; professional, scientific, and technical services; and social assistance.
The US unemployment rate was unchanged at 3.8%; it had been forecast to drop to 3.7%.
Wow. What a jobs report!
— Heather Long (@byHeatherLong) October 6, 2023
JUST IN: The US economy added 336,000 jobs in September – that’s another strong month of hiring that blows away the 170,000 forecast.
Unemployment rate: 3.8% (same as August)
Wage growth: 4.2% y/y (above 3.7% inflation)
Here’s a round-up of expectations ahead of the US jobs report, due in 5 minutes…
#NFP | PREVIEW: September US Nonfarm Payrolls Expected To Fall To 170,000; Unemployment Rate To Fall To 3.7% From 3.8%
— LiveSquawk (@LiveSquawk) October 6, 2023
Take A Look At What The Top Economists Are Forecasting For Today's US Jobs Report: pic.twitter.com/7L9HTOZ6y1
US jobs report coming up
Tension is rising in the financial markets as investors await the latest report on the US jobs market, due in less than half an hour.
September’s Non-farm Payroll is expected to show a rise of around 170,000 in September, down a little on August’s 187,000 (which may be revised).
The unemployment rate is expected to fall to 3.7% while average hourly earnings are set to remain steady at 4.3% year-on-year – these are the consensus forecasts.
A weak jobs report could show that a US recession is approaching.
But a strong one might increase the chances of further interest rate rises, which would alarm the markets, just days after we saw volatility in the bond markets.
On Wednesday, payroll operator ADP reported that private job growth totaled just 89,000 for the month, weaker than expected.
Kit Juckes, currency expert at French bank Société Générale, says:
Markets are twiddling their thumbs ahead of the US jobs data.
The ADP report, which barely correlates at all with the official data on a month-to-month basis, came in weak and that may mean the soft consensus is a little lower than the 160k NFP increase that forecasters are looking for. I have a bias to think it could be a bad day for bonds, with US politics, debt supply, and strong payrolls all potentially supporting the dollar as we look ahead to next week’s auctions and CPI data.
Updated
Here’s another sign of pressures on borrowers:
A further blow to those on a standard variable rate. The UK BBA Mortgage Rate average steps up again in September from 7.85% to 7.93% @bankofengland pic.twitter.com/SKHzqSxGwm
— Emma Fildes (@emmafildes) October 6, 2023
Britain’s data watchdog has issued Snapchat with a preliminary enforcement notice over a possible failure to properly assess the privacy risks of its generative AI chatbot to users, including teenagers.
The Information Commissioner’s Office’s findings are “provisional” at this stage.
But if a final enforcement notice were issued, Snap might not be able to offer the My AI function to UK users until the company carries out “an adequate risk assessment”.
JUST IN: Snapchat is facing an enforcement notice from the UK's data watchdog for allegedly not properly assessing privacy risks of its AI chatbot, particularly for children. Potential suspension of the chatbot until a thorough risk assessment is done. #Snapchat #Privacy #UKICO
— ChatGPT Global News (@chatgptglobal) October 6, 2023
Update: A Snap spokesperson says:
“We are closely reviewing the ICO’s provisional decision. Like the ICO we are committed to protecting the privacy of our users. In line with our standard approach to product development, My AI went through a robust legal and privacy review process before being made publicly available.
We will continue to work constructively with the ICO to ensure they’re comfortable with our risk assessment procedures.”
Updated
NS&I has withdrawn one-year bonds paying 6.2% interest from sale, after a rush of interest from savers since they were launched a month ago.
Launched on August 30, NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds pay 6.2% AER (annual equivalent rate), fixed for a year.
The bonds have been sitting at the top of “best buy” tables, but NS&I said that, as of Friday, the bonds are no longer on general sale.
Postal applications received for a reasonable period will be honoured, it added.
Since going on sale, more than 225,000 customers have benefited from the highest-ever interest rate offered for the products since launch in 2008.
UK credit unions must monitor liquidity risks, says Bank of England
The Bank of England has told the UK’s credit unions that they must review their liquidity, as higher borrowing costs put pressure on the sector.
In a letter to the directors of credit unions, the BoE’s Prudential Regulation Authority warned that they face “a challenging business and operating environment, dominated by higher interest rates, inflation, and economic uncertainty”.
High interest rates have generated higher profits for the surplus funds held by credit unions – financial co-operatives which provides savings, loans and a range of services to members.
But, the cost of living crisis is leading to increasing difficulties for borrowers, the PRA fears, with corresponding increases in arrears.
The PRA says credit unions must be resilient to a prolonged period of stress and take proactive steps to assess the implications of the evolving economic outlook on the sustainability of their business model.
In the letter, it says:
It is critical that CUs closely monitor their liquidity in light of their particular circumstances; including reviewing their cash-flow and liquidity forecasts appropriately.
All boards should by 31 October 2023 review their liquidity management statement and demonstrate how they have considered and acted on the liquidity risks relevant to their CU.
40% of mortgage holders and renters struggling to make payments
More mortgage holders and renter are struggling to meet their monthly repayments, the ONS’s latest public opinions and social trends survey shows.
Among those who are currently paying rent or a mortgage, 40% reported finding it very or somewhat difficult to afford these payments, the ONS says.
That’s up from 30% during a similar period a year ago, and reflects the “mortgage bombshell” for borrowers whose fixed-term loans are ending.
Almost half of adults reported that their rent or mortgage payments had gone up in the past 6 months, up from 33% a year ago.
Of those currently paying rent or a mortgage, 47% of adults reported that their rent or mortgage payments had gone up in the past 6 months.
— Office for National Statistics (ONS) (@ONS) October 6, 2023
This has increased from 33% during a similar period one year ago (29 September to 9 October 2022).
➡️ https://t.co/KAHgukdBZt pic.twitter.com/46kidEaRsi
Updated
The UK public are still suffering from the cost of living squeeze, new official data shows, despite the easing in inflation.
Around 54% of adults polled by the Office for National Statistics reported that their cost of living had increased compared with a month ago, while 44% reported it had stayed the same and 2% said it had decreased.
More than 9 in 10 (94%) adults who reported their cost of living had increased compared to one month ago reported the price of their food shop had increased, 65% reported the price of their fuel had increased and 58% reported their gas or electricity bills had increased.
Of those who said their #CostOfLiving had gone up compared with a month ago:
— Office for National Statistics (ONS) (@ONS) October 6, 2023
🛒94% said the price of their food shop had increased
⛽ 65% reported the price of their fuel had increased
💡 58% reported their gas or electricity bills had increased
When asked about the important issues facing the UK today, the most commonly reported issues continued to be the cost of living (90%), the NHS (86%), the economy (72%), climate change and the environment (62%) and housing (58%).
We’ve published the latest insights from our Opinions and Lifestyle Survey (20 September to 1 October 2023) 💬
— Office for National Statistics (ONS) (@ONS) October 6, 2023
When asked about the important issues facing the UK today, the most reported issue continued to be the rising #CostOfLiving (90%)
➡️ https://t.co/KAHgukdBZt pic.twitter.com/y0pJvWCADN
Exxon Mobil 'in talks' to buy Pioneer in $60bn mega-deal
US oil giant Exxon Mobil is reportedly in talks to acquire Texas-based shale producer Pioneer Natural Resources in a $60bn mega-deal, our energy correspondent Jillian Ambrose reports.
The acquisition would be Exxon’s largest deal since its merger with Mobil in 1999 and could be completed in the coming days, according to the Wall Street Journal, which first reported the talks late on Thursday.
The deal would hand Exxon a dominant position in the oil-rich Permian Basin of West Texas and New Mexico, in a significant boost to the company’s growth plans.
The oil giant made its first major move to dominate the US shale industry with a $30bn takeover of XTO Energy for about $30bn in 2010. Exxon has a market value of over $436bn.
Exxon in Talks to Buy Shale Driller Pioneer Natural in What Could Be 2023’s Biggest Deal
— Giovanni Staunovo🛢 (@staunovo) October 6, 2023
Shale-focused Pioneer has market value of about $50 billion
Any acquisition would likely be Exxon’s biggest since 1999#ootthttps://t.co/nW64290iZs
Updated
World food prices drop again
World food prices have dropped to a new 30-month low, despite a rise in sugar and cereal prices.
The UN’s FAO Food Price Index, which tracks a basket of food commodities, slipped to 121.5 points in September 2023, slightly below August’s 121.6.
That’s the lowest reading since March 2021, as food prices slip back from the record high set after the full-scale invasion of Ukraine.

It found that vegetable oil prices fell 3.9% in September, due to lower world prices across palm, sunflower, soy and rapeseed oils
Dairy fell 2.3%, the 9th monthly fall in a row.
The report says:
Rising export availabilities in New Zealand in its new production season, limited internal demand in the European Union, and the impact of a weaker Euro against the United States dollar weighed on international dairy prices.
Meat prices were down 1%, due to lower demand for pork from China and abundant supplies of poultry.
But, there was a nearly 10% surge in the price of sugar on global markets last month, hitting the highest level since November 2010.
The report says:
The hike in prices mostly stemmed from increasing concerns over a tighter global supply outlook in the upcoming 2023/24 season. This mainly reflects early forecasts pointing to production declines in key sugar producers, Thailand and India, due to drier-than-normal weather conditions associated with the prevailing El Niño event.
Cereal prices rose 1%, due to various global factors, including:
….strong demand for Brazil’s supplies, slower farmer selling in Argentina and increased barge freight rates due to low water levels on the Mississippi River in the United States of America.
Updated
Aviva shares jump amid takeover talk
In the City, shares in insurance group Aviva have jumped almost 8% this morning, lifted by takeover speculation.
The Times reports this morning that at least two potential suitors are said to be examining Aviva, attracted by its excess capital and strong cash flow.
The talk is that the likes of Allianz of Germany, Intact Financial Corporation of Canada and the Scandinavian group Tryg are considering their options, with at least one mulling a £6 a share proposal.
An American insurer is also rumoured to be interested in Aviva, which last weekend revealed it was backing a £1 billion cancer research and treatment campus in London.
#AV. takeover chatter in The Timeshttps://t.co/HLem7BGJxq
— entrustTMF (@entrustTMF) October 6, 2023
The talk is that the likes of Allianz of Germany, Intact Financial Corporation of Canada and the Scandinavian group Tryg are considering their options, with at least one mulling a £6 a share proposal...
Updated
Moneyfacts: Fixed-rate mortgage costs dip
UK mortgage rates have continued to tiptoe lower, according to the latest data.
Moneyfacts reports that the average fixed-rate deals are slightly cheaper than yesterday.
Here’s the details:
The average 2-year fixed residential mortgage rate today is 6.42%. This is down from an average rate of 6.43% on the previous working day.
The average 5-year fixed residential mortgage rate today is 5.96%. This is down from an average rate of 5.97% on the previous working day.
There are currently 5,565 residential mortgage products available. This is up from 5,540 products the previous working day.
Andrew Wishart, an economist with Capital Economics, said he expected a further drop of 5% or 6% in UK house prices on top of the 5% decline already seen since their peak, Reuters reports.
Updated
Wetherspoons cheers return to profit
In other news this morning, pub chain JD Wetherspoon is celebrating a return to profitability.
Wetherspoon’s has recorded a pre-tax profit of £42.6m for the year to 30 July, up from a loss of £30.4m a year earlier.
Like-for-like sales grew by 12.7% year-on-year, as the sales recovery following the Covid-19 pandemic continued.
Tim Martin, the chairman of JD Wetherspoon, says the pub chain continues to perform well, with like-for like sales up 9.9% in the last nine weeks.
Martin adds:
“The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance.
He also argues that “the biggest threat to the hospitality industry is the possibility of further lockdowns and restrictions” (more here).
Wetherspoon has updated the market this morning with preliminary results showing it swung back into profit last year.
— Julian Harris (@Hariboconomics) October 6, 2023
80% of Tim Martin's accompanying statement is about lockdowns.
"Perhaps the biggest threat to the hospitality industry is the possibility of further lockdowns"
The shortage of houses on the market should give price some support, points out Victoria Scholar, head of investment at interactive investor:
The fastest stream of rate rises from the central bank in recent history has made mortgages significantly less affordable, dampening demand for house purchases and in turn prices. Sellers are less incentivised to list their properties too with prices coming down.
With interest rates set to remain higher for longer, there’s likely to be ongoing pressure on house prices ahead. However with the Bank of England keeping rates on hold at its most recent decision, strong wage growth and recent cuts to fixed rate mortgage deals, conditions have been improving slightly this month. And a shortage of housing supply in the UK is likely to stem an even steeper downturn in property prices.”
Economic forecasters at the EY ITEM Club predict that UK house prices will “continue drifting down”.
They point out that UK interest rates look to have peaked much lower than many had expected only a few months ago, after the Bank of England left rates on hold in September.
Martin Beck, chief economic advisor to the EY ITEM Club, says:
“The Halifax measure of house prices continued its downward trend by falling 0.4% month-on-month in September. This was the sixth consecutive monthly decline and left prices 4.7% lower than a year earlier and 5.1% down on the peak in the Halifax measure in June 2022. That said, September’s fall was less marked than a 1.8% decline in August.
“With the Nationwide measure flatlining in September, the latest house price data points to a market gently deflating, not crashing. And the EY ITEM Club thinks that will likely characterise the housing market over the rest of this year and into 2024.
“The Bank of England’s decision to pause interest rate increases in its last meeting means the current rate rise cycle has likely peaked at a level much lower than many anticipated only a few months ago. Quoted mortgage rates edged down in response to the positive inflation numbers released in September and that fall has picked up since the Bank of England decision. Meanwhile, lower house prices, combined with still-strong growth in pay, means the ratio of house prices to incomes has fallen by more than a tenth since 2022’s peak, improving affordability in some respects.
Jeremy Leaf, north London estate agent, reports that business is “bumping along at a new, lower level”.
Buyers and sellers are encouraged partly by expectations of lower interest rates, Leaf says, while rising rents are making it more expensive in the lettings market.
Leaf also points out that Halifax’s data is based on approved mortgages, so doesn’t catch cash buyers:
These figures, though historically reliable, look at mortgage approvals rather than completions, while the country’s largest lender doesn’t include cash purchasers either, which make up an increasingly important part of the market.
There is more financial pain ahead for the housing market, points out Tom Bill, head of UK residential research at Knight Frank, as mortgate holders roll off existing fixed-rate deals and face higher borrowing costs.
Commenting on today’s Halifax house price report, Bill says:
The fact rising interest rates have caused a house price correction was predictable but the extent of the recent volatility was not. The combination of the mini-Budget and fourteen consecutive rate rises have taken their toll on demand but buyers and sellers should return in greater numbers as a sense of stability returns.
The financial pain entering the system will continue next year as people roll off fixed-rate deals, but there will be an improvement in sentiment, that vital lubricant in the housing market.
We therefore think most of the UK’s house price correction will happen this year and modest single-digit annual growth will return after the next general election.”
Alice Haine, personal finance analyst at investment platform Bestinvest, predicts the housing market will remain “subdued” until 2024, saying:
“The decline in Britain’s property market accelerated in September, according to the latest Halifax House Price Index, with prices falling 4.7% on the year, a faster slide than August’s 4.5% as affordability challenges dampened buyer demand and sellers increasingly slashed asking prices to secure a sale.
The monthly data was also downbeat with prices falling 0.4% in September, albeit at a slower pace than August’s 1.8% drop, taking the average price of a home to £278,601. The housing market is expected to remain subdued into the next year as the drag effect from the Bank of England’s 14 interest rate hikes delivers a heavy blow to affordability levels. While some buyers have been forced to reduce the size and value of the home they purchase to afford mortgage repayments, others are abandoning moving plans altogether.
There is some reason for optimism in the market, however. Mortgage rates have eased over the summer from their July peak with the average two-year fixed rate now below the 6.5%* mark and the average five-year fixed rate nudging below 6% as interest rate expectations improve and lenders compete more aggressively for business.
House prices under greatest pressure in South East England
House prices have fallen in all UK nations and the nine English regions, on an annual basis.
They’re falling fastest in the South East of England, and slowest in Northern Ireland.
Halifax reports:
Prices are under the greatest downward pressure in the South East of England, falling by -5.7% over the last year (average house price of £376,450). Northern Ireland currently has the most resilient house prices, down by just -0.2% compared to this time last year (average house price of £184,108), a fall of less than £400.
Scotland also experienced a relatively modest annual decline of -0.8% (average house price of £201,594). Wales saw property prices fall by -3.6% over the last year (average house price of £214,585).
London remains the most expensive place in the UK to purchase a home, with an average property price of £525,678.
With prices down by -4.8% over the last year, it has seen the biggest fall of any region in cash terms (-£26,514).
Avg house prices fell for the 6th consecutive month in Sep 23 by -0.4% to £278,601, a -4.7% drop annually. All regions registered declines but Northern Ireland remains the most resilient, down by only -0.2% whilst the South East is the most exposed dropping -5.7% @HalifaxBank pic.twitter.com/QEgzJj6EOx
— Emma Fildes (@emmafildes) October 6, 2023
Updated
Introduction: UK house prices fall 4.7% in year to September
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The downward pressure on house prices is likely to last into next year, lender Halifax has warned this morning, after reporting that UK house prices fell for the sixth month running in September.
The average property price fell by 0.4% last month, Halifax reports, a smaller fall than in August when it shrank by 1.8%. That extends a fall in prices, month-on-month, which began in April.
On an annual basis, prices fell by 4.7%, an acceleration on August’s 4.5% drop, and the biggest annual fall since August 2009 (when they fell -5.5%).

Recent house price falls mean the averge UK home has now dropped to levels seen in early 2022, at around £278,601.
They’re now 1% above their level in December 2021, when the Bank of England started raisig interest rates – but almost £40,000 above their pre-pandemic levels.
Prices have cooled following the jump in mortgage rates in 2022 and 2023. And although mortgage costs have fallen recently, demand from buyers may remain weak until rates fall further.
Kim Kinnaird, director of Halifax Mortgages, explains:
“Activity levels continue to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales. Borrowing costs are the primary factor, given the impact of higher interest rates on mortgage affordability. Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.
However, with Base Rate now likely to be at or around its peak, we are seeing fixed rate mortgages deals ease back from recent highs. Wage growth also remains strong, which has helped with affordability, with the house price to income ratio now at its lowest level since June 2020 (6.2 in September vs 6.3 in August).
Many economists and financial markets predict that Base Rate will remain higher for longer, with any significant cuts appearing unlikely until inflation gets closer to the Bank of England’s 2% target. Overall, these factors are likely to keep mortgage rates elevated in comparison to recent years, constraining buyer demand and putting downward pressure on house prices into next year.”
Halifax house price data shows house prices down 4.7% on the year rising to 5.7% in the south east. The market has remained resilient but has been propped up by the measures in the mortgage charter. #mortgage #houseprices #halifax pic.twitter.com/IXi2wWEqXT
— Riz Malik (@Riz_1) October 6, 2023
Also coming up today
Financial investors worldwide are bracing for the latest US jobs report, due at lunchtime UK time.
September’s non-farm payroll is expected to show a small slowdown in hiring, with around 170,000 new hires, down from 187,000 in August.
But a strong report might alarm markets, as it would encourage America’s central bank, the Federal Reserve, to raise interest rates again.
It has been a huge week for $USDJPY $EURUSD $GBPUSD $AUDUSD and more. And now we have #nfp figures due out today.
— Ashley Jessen (@ash_jessen) October 6, 2023
Expectation is 170k. My #nfpguess is 155k#trading #markets #forex pic.twitter.com/pRlPzBHD66
The agenda
7am BST: Halifax house price index for September
9am BST: UN Food price index
1.30pm BST: US non-farm payroll for September