APAC equity markets closed mixed, while all major US and
European equity indices closed lower. US government bonds closed
higher, while benchmark European bonds closed lower. CDX-NA closed
wider across IG and high yield, iTraxx-Xover was wider, and
iTraxx-Europe was almost flat on the day. Oil, natural gas, gold,
and silver were higher, while the US dollar and copper were lower
on the day.
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by IHS Markit platform.
Americas
- US equity indices closed lower; Nasdaq -0.4%, Russell 2000
-0.9%, S&P 500 -1.2%, and DJIA -1.6%, with the S&P 500 and
Nasdaq having the worst monthly declines (-4.8% and -5.3%,
respectively) since March 2020.
- 10yr US govt bonds closed -3bps/1.49% yield and 30yr bonds
-1bp/2.05% yield.
- CDX-NAIG closed +1bp/53bps and CDX-NAHY +5bps/302bps.
- DXY US dollar index closed -0.1%/94.23.
- Gold closed +2.0%/$1,757 per troy oz, silver +2.6%/$22.05 per
troy oz, and copper -2.6%/$4.09 per pound.
- Crude oil closed +0.3%/$75.03 per barrel and natural gas closed
+7.1%/$5.87 per mmbtu.
- Cotton closed +3.9%/$1.06 per pound, which is the highest
closing level in 10 years.
- IHS Markit provisionally expects that key global markets will
show steep declines during September. High-frequency data and other
intelligence gathered by our analysts provisionally estimates that
the mainland China market will fall by around 30% year on year
(y/y) in September. (IHS Markit AutoIntelligence's Ian Fletcher)
- Furthermore, we believe registration volumes in the US market
are on course to retreat by around 25% y/y during September as
well. The estimated performance, which is weaker than previously
thought, is mainly due to the fallout from the semiconductor
shortage that has hit production since the beginning of the year.
This has been compounded by a multitude of factors which have
emerged during the year and has exacerbated capacity and production
constraints for this key component. These include poor weather,
fires and the COVID-19 virus pandemic.
- The disruption has already caused IHS Markit to significantly
revise its light-vehicle production in the September forecast, has
meant that OEMs have struggled to supply vehicles despite otherwise
strong customer demand. In addition, inventory has been depleted to
very low levels with little opportunity to replenish it, losing the
buffer to meet demand from vehicles in stock; this has compounded
the direct and immediate shortages and is showing up as an
aggressive impact on sales. This is also likely to be indicative of
the performance in these markets through the remaining months of
the year.
- Given the situation regarding production disruptions and the
movement in the IHS Markit Production Loss tracker for Europe, it
would not be a surprise to see September sales volumes here down by
a similar rate. However, it is likely to hinge on registration
volumes in the UK during the important September age-related number
plate change, which makes the month hugely influential.
- Consumption of gasoline jumped last week, according to the
Energy Information Administration, to the upper end of a normal
range (for this time of year). This indicates no concern about
internal mobility. Meanwhile, averaged over the last seven days,
and after seasonal adjustment, passenger throughput at US airports
was running at 91.3% of the January 2020 average, close to readings
prior to some volatility around the Labor Day holiday. This
suggests no progress has been made in air travel since mid-June.
(IHS Markit Economists Ben
Herzon and Joel
Prakken)

- US seasonally adjusted initial claims for unemployment
insurance increased by 11,000 to a seven-week high of 362,000 in
the week ended 25 September. California reported the largest
increase in initial claims among all states for the second straight
week—unadjusted claims there rose by 17,978 to 86,792 in the
week ended 25 September. Initial claims in Michigan also turned
up—rising by 6,432 to 18,727—as the auto industry continues
to struggle with supply-chain issues. The recent trend in initial
claims is at best flat as the spread of the Delta variant and
supply-chain issues weigh on activity. (IHS Markit Economist Akshat
Goel)
- Seasonally adjusted continuing claims (in regular state
programs) fell by 18,000 to 2,802,000 in the week ended 18
September. The insured unemployment rate edged down 0.1 percentage
point to 2.0%.
- In the week ended 11 September, continuing claims for Pandemic
Emergency Unemployment Compensation (PEUC) fell by 2,652,742 to
991,813.
- In the week ended 11 September, continuing claims for Pandemic
Unemployment Assistance (PUA) fell by 3,836,877 to 1,059,248.
- In the week ended 11 September, the unadjusted total of
continuing claims for benefits in all programs fell by 6,222,725 to
5,027,581.
- The US spice processor McCormick has reported that its net
sales rose by 11.4% y/y to $1.54 billion in the quarter ending on
31 August, bringing year-to-date sales to $4.58 billion in the
FY2021 (December-November), thanks to a robust spice home
consumption and hostelry recovery. (IHS Markit Food and
Agricultural Commodities' Jose Gutierrez)
- Asian markets have been the drivers of growth, with a 20%
increase.
- As a result, the company has upgraded its sales outlook,
expecting to rise by 12-13%, up from 11-12% in its previous
estimate.
- "We are capitalizing on the sustained shift to cooking more at
home, increased digital engagement, clean and flavorful eating, and
trusted brands, which we are confident will persist beyond the
pandemic," the chief officer, Lawrence E. Kurzius, explained.
- Flavor solutions segment sales rose by 21% y/y to 627.5
million, bringing year-to-date sales to 1.77 billion (+21 y/y) due
to higher sales of packaged food, beverages and away-from-home
products in restaurants.
- Eli Lilly (US) has announced that it will reduce the list price
of its generic insulin lispro injection (100 units/mL) in the
United States by 40% from 1 January 2022. The new list price for
the generic will be USD82.41 for individual vials and USD159.12 for
a pack of five pens. This is 70% less than the branded version of
the drug, which is sold by Lilly as Humalog U-100. According to
Lilly, the 40% price cut will in effect reduce the price of insulin
lispro injection to 2008 levels. The company noted that the
greatest benefit would be seen by people who face higher
out-of-pocket (OOP) costs, which include those without insurance
and those insured under high-deductible plans. The reduction comes
amid ongoing political pressure over the high cost of insulin,
including Humalog, whose price per vial reportedly rose from USD21
in 1996 to USD275 in 2019. Against this background, in June Walmart
launched a new private label analog insulin, ReliOn NovolLog
Insulin (insulin aspart) injection, which the company said
represented a saving of between 58% and 75% on the cash price of
branded insulin products. (IHS Markit Life Sciences' Milena
Izmirlieva)
- Paraguay's second-quarter real GDP grew by 14.5% year on year
(y/y) on favorable base effects and robust activity in industrial
sectors. Services will continue to rebound, but a drought will
weigh on agriculture, hydroelectric output, government revenue, and
exports. (IHS Markit Economist Jeremy Smith)
- Following a 2.4% quarter-on-quarter (q/q) expansion, the
fastest since the third quarter of 2020, real GDP in the second
quarter of 2021 was as much as 4.1% higher than in the fourth
quarter of 2019.
- As expected, a surge in the number of COVID-19 infections from
April to June and the subsequent tightening of containment measures
dampened the recovery of private consumption. The monthly sales
index dropped sharply in April while the consumer confidence index
dipped well into negative territory.
- Even so, however, the impact was not as significant as
anticipated and robust growth in industrial sectors such as
manufacturing and construction more than compensated for
pandemic-related disruptions.
- Although fixed investment accounts for just one-quarter of real
output by expenditure, it explains half of the overall year-on-year
(y/y) expansion, increasing by 44.2% y/y after declining by just
2.5% y/y in the second quarter of 2020.

Europe/Middle East/Africa
- All major European equity indices closed lower; Italy -0.2%, UK
-0.3%, France -0.6%, Germany -0.7%, and Spain -0.9%.
- 10yr European govt bonds closed lower; Germany +1bp,
France/Spain +2bps, and Italy/UK +4bps.
- iTraxx-Europe closed flat/50bps and iTraxx-Xover
+5bps/253bps.
- Brent crude closed +0.3%/$78.31 per barrel.
- Rolls-Royce has announced that it will launch its first battery
electric vehicle (BEV) during the next couple of years. According
to a statement released by the brand, the new model will be known
as the Spectre, which will reflect "the beginning of a new legacy
for our brand", and also fit with Phantom, Ghost and Wraith
nameplates that it currently uses. CEO Torsten Müller-Ötvös has
said that it is now starting a test program for the vehicle that
will cover 2.5 million km - 400 years' use for the typical owner -
and that it will take place across the world. This will be
completed before the first deliveries take place to customers
during the fourth quarter of 2023. (IHS Markit AutoIntelligence's
Ian Fletcher)
- Perrigo (US/tax-domiciled in Ireland) has resolved a
long-running tax dispute in Ireland, which will result in the
company making a one-off EUR297-million (USD343 million) settlement
to Ireland's Revenue Commissioners. The case dates back to 2018
when Ireland's Revenue Commissioners issued an EUR1.64-billion tax
claim in relation to a 2013 deal to sell multiple sclerosis drug
Tysabri (natalizumab) to Biogen. Despite paying only a fraction
(18.1%) of the original tax bill and avoiding any penalties or
interest payments, the EUR297-million figure represents the largest
single settlement in the history of Ireland's Revenue
Commissioners. (IHS Markit Life Sciences' Eóin
Ryan)
- The European Parliament's Industry, Research, and Energy
Committee voted on 27 September to phase out eligibility for
natural gas pipelines in the Projects of the Common Interest (PCI)
program, but to do so more slowly than advocated by environmental
groups. (IHS Markit Net-Zero Business Daily's Kevin Adler)
- According to the EU, "PCIs link the energy systems of EU
countries and can benefit from accelerated permitting procedures
and funding." Recent examples in the gas sector include a pipeline
between Greece and Bulgaria, completed in 2020, and a pipeline
between Poland and Lithuania, completed in 2019.
- The PCI criteria is being revised to align the Trans-European
Networks in Energy (TEN-E) regulation with the objectives of the
European Green Deal. The EU has set a goal of a 55% reduction in
GHG emissions by 2030 from a 2005 baseline, as its key measure of
progress towards meeting a goal of net-zero emissions by 2050.
- However, coming at a time when gas prices are surging in Europe
and dragging power prices up with them, the committee members' vote
reflected concerns that moving away from fossil fuels too quickly
could be costly. As a result, the new eligibility rules will not go
into effect until 2027.
- According to IHS Markit's tracking of international gas prices,
the benchmarks in Europe known as the Dutch TTF and the UK NBP
showed spot prices this week surpassing €75/MWh. This is up more
than 500% from a year ago, when they were about €12/MWh. High
demand, low inventories, and inadequate imports are all being
credited for the price spike, which is expected to last through the
upcoming winter, unless temperatures are unusually warm.
- Germany's Federal Statistical Office (FSO) has reported, based
on data from various regional states, that the country's national
consumer price index (CPI) is flat month on month (m/m) in
September. This has driven up the annual inflation rate from 3.9%
in August to 4.1% year on year (y/y), a level not observed since
1993. (IHS Markit Economist Timo
Klein)
- The EU-harmonized CPI measure even increased by 0.3% m/m, its
y/y rate thus rising sharply from 3.4% to 4.1%. The recent
differential between the national and the harmonised measures in
y/y terms - linked to the latter using weights derived from the
consumer spending pattern of 2020 rather than 2015, thus
underweighting package-tour prices that always spike around
mid-year - has disappeared now.
- The detailed breakdown of the German national data will only be
published with the final numbers on 13 October, but components are
available, for instance, from the largest and most populous state
of North Rhine-Westphalia (NRW). CPI inflation in this state stands
at 0.0% m/m and 4.4% y/y, the latter rising from 4.2% y/y in
August.
- In NRW, energy prices have increased by 0.4% m/m, boosting
their annual rate once more from 12.6% in August to 13.6% in
September. Food prices have added to inflationary pressure as their
0.2% monthly increase has lifted their y/y rate from 4.4% to 4.9%.
In addition, loosened restrictions have facilitated price increases
with respect to holiday travel and recreation/entertainment in
general. The inflation rate for package tours has risen from 1.5%
to 3.4% and the overall category of
recreation/entertainment/culture from 3.4% to 4.0%.
- Durable goods prices provide a mixed picture as the y/y rate
for clothing/shoes has softened once more from 4.2% to 2.1% whereas
inflation of furniture/household goods has increased from 3.8% to
4.0% and that of 'miscellaneous goods and services' remains at a
historically elevated level of 3.6%.
- Seasonally adjusted German unemployment has declined by 30,000
month on month (m/m) in September, one-third of the particularly
large drop in July 2021 and broadly matching the average monthly
decline since July 2020 (the start of the initial recovery after
the first wave of the pandemic). A total of 64% of the initial,
pandemic-related unemployment surge in the second quarter of 2020
has now been unwound. (IHS Markit Economist Timo
Klein)
- The Labour Agency calculates a cumulative net boosting effect
from the COVID-19 pandemic on unemployment of 232,000 as of
September, down from 261,000 by August 2021 and an interim peak of
638,000 in June 2020. This represents a comparison with a
hypothetical continuation of the pre-pandemic trend if the pandemic
had never occurred.
- Germany's (national) unemployment rate has remained steady at
5.5% in September. This compares with a peak of 6.4% after the end
of the first wave of the pandemic in mid-2020 and a pre-pandemic
40-year low of 5.0% in March 2020.
- Employment, data for which regularly lag by one month,
increased by 66,000 to 45.018 million in August. This reduces the
gap with the pre-pandemic high in February 2020 to 0.9%. The
sub-category of "regular" jobs - for which employers pay social
security contributions, i.e., excluding the self-employed,
"mini-jobs", or other forms of precarious employment - exceeded its
level a year earlier by 1.4% in July (the latest data available).
This outperformed July's 0.6% annual increase for total employment,
confirming previous evidence that the recovery of precarious forms
of employment still lags considerably. Meanwhile, among regular
jobs, part-time employment outperformed full-time employment, up
2.6% versus 1.0% y/y.
- Daimler Truck and Torc Robotics have begun the third year of
their partnership focusing on deploying Level 4 autonomous trucks
in the United States, according to a company statement. Currently,
the companies are testing their next-generation Level 4 autonomous
trucks on public roads of the US states of New Mexico, Texas, and
Virginia. These test trucks have more sensors at higher resolutions
than previously to enhance object detection at longer ranges.
Daimler Trucks announced in April 2019 an agreement to acquire a
majority stake in Torc to commercialize highly automated trucks on
US roads - specifically Level 4 autonomous trucks. (IHS Markit
Automotive Mobility's Surabhi Rajpal)
- South Africa's current-account surplus widened to 5.6% of GDP
in the second quarter of 2021, from 4.3% of GDP in the previous
quarter. The sizeable expansion of the trade surplus partly
countered the larger shortfall on the services, income and transfer
account, latest data in the South African Reserve Bank's (SARB)
Quarterly Bulletin for September show. (IHS Markit Economist Thea
Fourie)
- South Africa's export proceeds benefited from resilient global
commodity prices, despite a smaller increase in volumes, while a
rise in imports mostly reflected higher prices. The shortfall on
the income account widened to 2.8% of GDP in the second quarter,
from 1.0% of GDP in the previous quarter. Gross dividend payments
rebounded, spurred by improved profit levels in the mining sector.
Gross dividend receipts decreased sharply during the second
quarter.
- The deficit on the financial account widened to 7.2% of GDP in
the second quarter, from 4.4% of GDP in the first quarter, the SARB
reports. "On a net basis, only direct investment recorded an
inflow, while portfolio investment, financial derivatives, other
investment and reserve assets all registered outflows," the SARB
states.
- Foreign direct investment inflows strengthened in the second
quarter on the back of higher equity investment by non-residents in
domestic subsidiaries and the acquisition of a South African energy
and chemicals group company by a foreign investor. Furthermore, the
SARB data show that South African residents' foreign portfolio
assets (foreign debt and equity securities) continued to increase
in the second quarter, with a recorded outflow of ZAR71.0 billion
(USD4.7 billion), from ZAR39.8 billion in the previous
quarter.
Asia-Pacific
- APAC equity markets closed mixed; Australia +1.9%, Mainland
China +0.9%, South Korea +0.3%, Japan -0.3%, Hong Kong -0.4%, and
India -0.5%.
- Chinese wine imports are showing signs of recovery in 2021,
after three consecutive years of declining imports following a
record year in 2017 when the country imported 751 million liters.
All imported wine categories showed growth this year, except for
bottled wines that were worst affected by China's import
restrictions on Australian wine. (IHS Markit Food and Agricultural
Commodities' Vladimir Pekic)
- The overall volume of Chinese wine imports held relatively
stable with a slight 1.4% contraction to 211.9 million liters in
the first half of 2021, although the value of imports dipped 9.4%
y/y to CYN5.30 billion ($819.1 million). The dip in value is
primarily due to lower import prices this year which averaged
CNY25/liter ($3.86/liter), according to a report published by the
Spanish Wine Market Observatory (OeMv) on 23 September.
- The average price of Chinese wine imports amounted to
CNY29.23/liter in 2020, up from CNY27.54/liter in 2019 and
CNY27.40/liter in 2018.
- Last year, China reduced its wine imports by around 30% to 430
million liters, down from 613 million liters in 2019. Although part
of the reduction can be attributed to Covid-19, Chinese wine
purchases have been falling since they peaked in 2017. In 2020, the
15 largest wine suppliers to China all saw their exports shrink,
save for Argentina that saw its bulk wine exports to China increase
exponentially.
- The recent imposition of Chinese import tariffs of up to 200%
on imported Australian bottled wines resulted in a sharp drop of
Australian wine imports. Australian wine exports fell by 86.5% y/y
in volume terms and by 85.5% y/y in value terms in H1 2021.
- Baidu's intelligent driving unit, Apollo, has released a report
on its robotaxi service operations during the first half of 2021.
The report, '2021 Baidu Autonomous Driving Service Semi-Annual
Report', states that the Apollo robotaxi service covered four
Chinese cities, Beijing, Guangzhou, Changsha and Cangzhou,
involving an operating area of more than 600 square kilometers.
Apollo has obtained over 410 test operation licenses for the
service and it provided over 400,000 trips as part of the service,
with a 95.3% rating on user experience, reports PanDaily. (IHS
Markit Automotive Mobility's Surabhi Rajpal)
- Plus has delivered the initial production units of its
PlusDrive autonomous solution to Chinese truck-maker FAW, according
to a company statement. FAW will install PlusDrive on its factory
production line with the aim of launching China's first driver-in
autonomous trucks. Plus, which recently went public through a
merger agreement with a special-purpose acquisition company (SPAC),
focuses on developing Level 4 autonomous technology to make
commercial freight transport safer, more efficient, and less
expensive for its customers. This delivery is part of an agreement
under which Plus sells PlusDrive units to FAW. The companies will
introduce the Level 3 automated J7 heavy-duty truck, which is
deployed with seven cameras, 5mm-wave radars, and one LiDAR, as
well as an autopilot system. (IHS Markit Automotive Mobility's
Surabhi Rajpal)
- Japan's retail sales fell by 4.1% month on month (m/m) and 3.1%
year on year (y/y) in August following two consecutive months of
m/m increases. (IHS Markit Economist Harumi
Taguchi)
- The weakness reflected negative impacts from containment
measures due to a surge of Delta variant COVID-19 infections and
unusually heavy rainfall during the holiday season.
- Sales for all retail store groupings except for autos declined
from the previous month. Because of tighter controls and temporary
closures following mass infections in several stores, department
store sales declined by 15.1% m/m.

- Japan's index of industrial production (IIP) fell by 3.2% month
on month (m/m) in August following a 1.5% m/m drop in July. A
faster decline in manufacturers' shipments (down 3.8% m/m; 0.3% m/m
drop in the previous month) and a softer drop in inventories (down
0.3% m/m; 0.7% m/m drop in the previous month) led the index of
inventory ratio to rise by 3.4% m/m. (IHS Markit Economist Harumi
Taguchi)
- Major factors behind the weakness were continued declines in a
broad range of industry groupings, particularly autos and
electrical machinery. Shortages of semiconductors and other
components because of the Delta-variant infections and supply-chain
disruption in Asia had a greater effect on auto production. The
chip shortages and working-day adjustments during seasonal
vacations also disrupted production of electrical machinery.
- The August results were weaker than IHS Markit's expectations.
Supply-chain disruption is likely to remain an issue and continue
to weigh on Japan's production over the short term. The recent
situations involving Delta-variant infections in many Asian
territories are improving, signaling an improvement of the
supply-chain condition in the fourth quarter of 2021. However,
fresh peaks for new daily cases in some territories and the
relatively slow progress in vaccination rollouts in Southeast Asia
mean that the risks of shortages of semiconductors and other
components could persist for an extended period.

- Private equity firm Apollo Global Management has announced that
funds managed by its affiliates have entered into a definitive
agreement to acquire the thermal and emission control materials
(Maftec) business of Mitsubishi Chemical, which produces and sells
polycrystalline alumina fiber. Mitsubishi has confirmed that the
deal is worth about ¥85 billion ($759 million). (IHS Markit
Chemical Advisory)
- Subject to customary closing conditions including regulatory
approvals, the transaction is expected to be completed in March
2022. Mitsubishi says it expects to realize income of ¥54 billion
related to the deal.
- The Maftec business makes polycrystalline alumina fiber from
aluminum and silicon. It is a world leader in thermal and emission
control protection materials, primarily for the industrial and
automotive industry as original equipment manufacturers (OEMs)
adapt their chemical fiber products to reduce emissions in
traditional and hybrid vehicles, Apollo says. The business is also
developing product applications for electric vehicle batteries, it
says.
- Mitsui Chemicals and SKC Co. (Seoul, South Korea) plan to
dissolve their joint venture (JV) Mitsui Chemicals & SKC
Polyurethanes (MCNS; Seoul). The JV produces polyurethane (PU) raw
materials including toluene diisocyanate (TDI), methylene
di-para-phenylene isocyanate (MDI), polypropylene glycol (PPG), and
PU system products. Mitsui says that customers will continue to
receive products individually from Mitsui or SKC. Mitsui and SKC
established MCNS in 2015 as a JV for their operations in PU raw
materials. Mitsui says that over this period, discrepancies have
started to arise in the policy of steadily improving earnings
through high-performance products and bioproducts, and SKC's policy
of quickly expanding scale. (IHS Markit Chemical Advisory)
- The Philippines' business confidence turned negative during the
third quarter of 2021, undermined by the deterioration in local
COVID-19 outbreak conditions and the reimposed strict containment
measures in August. Meanwhile, consumer sentiment turned less
pessimistic, but remained in the contraction territory, as
consumers expect stronger labor and income conditions than those in
previous quarters. Although the government has gradually eased
containment measures despite elevated infections, concerns over the
Delta variant, a slow vaccination campaign, and a still-challenging
labor market will continue to weigh on domestic sentiment. (IHS
Markit Economist Ling-Wei
Chung)
- Business confidence over the Philippine economy turned negative
during the third quarter of 2021, while consumer sentiment,
although remaining in the contraction territory, improved,
according to a quarterly survey conducted by the central bank
Bangko Sentral ng Pilipinas (BSP).
- Overall business confidence index for the current quarter
dipped into the negative territory, coming in at -5.6%, which
reversed from 1.4% in the second quarter. It followed three
straight quarters of positive sentiment since recovering in the
fourth quarter of 2020. In addition, the reading came in weaker
than -5.3% posted in the third quarter of 2020 and was also the
lowest level since the first quarter of 2009.
- Among sectors, business confidence worsened across the board in
the third quarter of 2021, led by the hard-hit sectors by the
pandemic. Sentiment of wholesale and retail trade sector came in
especially weak, falling further to -16.9%, which widened from
-9.5% in the second quarter and also marked the lowest reading
since the first quarter of 2009. This was followed by -7.2% posted
in the construction sector, with the sentiment turning negative for
the first time since the third quarter of 2008. Confidence of the
service sector also weakened to -2.4%, falling for the first time
since the first quarter of 2009.

Posted 30 September 2021 by Chris Fenske, Head of Capital Markets Research, Global Markets Group, S&P Global Market Intelligence
S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.