Traders are beginning to wonder if the slowdown visible in the U.S. and world economies will force the Federal Reserve to adjust its rate-hiking trajectory lower.

- This has driven a sharp rally in government bonds over the last week, driving benchmark Treasury yields down all along the yield curve, a move which has continued Tuesday.

- This comes ahead of key U.S. nonfarm payrolls data this Friday, which is expected to show resilience in the labor market. U.S. interest rates are widely expected to end the year above 4%.

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Equities:

- Wall Street's three major indexes rallied to close over 2% on Monday as U.S. Treasury yields tumbled on weaker-than-expected manufacturing data, increasing the appeal of stocks at the start of the year's final quarter.

- All 11 major S&P 500 sectors advanced to positive territory, with energy being the biggest gainer. Oil majors Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX) rose more than 5%, tracking a jump in crude prices.

- Tesla (NASDAQ:TSLA) Inc fell 8.6% after it sold fewer-than-expected vehicles in the third quarter as deliveries lagged way behind production due to logistic hurdles.

- The Nasdaq Composite added 257 points or 2.34% at 11,255.8. The S&P 500 gained 92.83 points or 2.59% at 3,678.44. The Dow Jones Industrial Average rose 743 points or 2.58% to 29,525.

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Currency Market:

- The Dollar Index fell 0.5% to 111.145, dropping to a two-week low.

- EUR/USD rose 0.4% to 0.9864, ahead of the release of the latest producer prices for the Eurozone as a whole for August. GBP/USD climbed 0.5% to $1.1375 in the wake of the British government’s decision to reverse the proposed scrapping of the highest rate of income tax.

- USD/JPY rose 0.1% to 144.65, remaining close to the psychologically-important 145 level after data showed that inflation in Tokyo rose to an eight-year high in September.

- AUD/USD rose 0.4% to 0.6541. NZD/USD climbed 0.5% to 0.5749, ahead of the Reserve Bank of New Zealand’s policy-setting meeting on Wednesday.

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Commodities: Gold:

- Gold rose sharply retaking the $1,700 an ounce level after nearly three weeks. Prices of the yellow metal rose after weak U.S. manufacturing and construction data suggested that the Federal Reserve may have to temper its pace of rate hikes to prevent further economic destruction.

- Spot gold rose 0.2% to $1,710 an ounce, while gold futures rose 0.3% to $1,715.35 an ounce.

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Commodities: Oil:

- Oil prices edged up on Tuesday as expectations that OPEC+ may agree to a large cut in crude output when it meets on Wednesday outweighed concerns about the global economy.

- Brent crude futures rose 0.5% to $89.33 per barrel. WTI rose 0.4% to $83.94 a barrel.
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