Newsquawk Rundown, Daily Podcast

• US President Trump said on Truth Social that he is negotiating peace between Russia and Ukraine and that significant progress is being made.
• US President Trump signed an executive order waiving Graham Act sanctions and tariffs on Russian energy, drawing bipartisan criticism.
• Pakistani Army Chief Asim Munir may visit Tehran this week, ISNA reported.
• Cost-of-living and education protests swept across Europe; around 550,000 people marched in France, with unrest also in Milan, Lisbon and Brussels.
• Crude futures were softer, bonds firmer, with APAC sentiment recovering; Europe points to a slightly softer open.
• Looking ahead, highlights include Canadian CPI (Sep). Speakers include ECB's Lane and Elderson. Earnings from Cleveland-Cliffs.
• Click for the Newsquawk Week Ahead.

SNAPSHOTUS TRADEEQUITIES

• US stocks closed sharply lower on Friday as AI-financing worries and high oil prices weighed; chipmakers led the tech selloff, with Micron (MU) and Intel (INTC) among the decliners, and the Nasdaq suffered its biggest daily drop since 23rd July, while CoreWeave (CRWV) fell 12% to extend its weekly loss to 25%. On the week, the S&P 500 (-1.95%) and Nasdaq (-4.48%) posted their steepest weekly losses since June, while the Dow (+0.67%) notched a second straight weekly gain.
• SPX -1.09% at 7,659, Nasdaq Comp. -2.14% at 26,140, DJI -0.34% at 52,002.

NOTABLE WEEKEND GEOPOLITICS

RUSSIA-UKRAINE

• US President Trump signed an executive order waiving certain Graham Act sanctions, restrictions and duties on Russian energy revenues.
• US President Trump said he is negotiating peace between Russia and Ukraine and that significant progress is being made.
• Russian President Putin proposed a meeting with US President Trump and Chinese President Xi on the sidelines of the APEC summit in China (Nov 18th-19th) to discuss ending the war, WSJ reported.

MIDDLE EAST

• Pakistani Army Chief Asim Munir may visit Tehran this week, ISNA reported.
• Iran's Foreign Ministry Spokesperson said Iran is ready to help peacefully resolve issues between Saudi Arabia and Yemen.
• Iran's Foreign Minister Araghchi said Tehran's seven-day proposal to reopen the Strait of Hormuz remains on the table.
• IRGC said two oil tankers caught fire in the Strait of Hormuz after hitting mines.
• Explosions were reportedly heard in Saudi Arabia's Jeddah, Abha and Jazan.

(Full detailed headlines below)

TRADE/TARIFFS

• US Ambassador to the EU Puzder warned of devastating retaliation if Brussels limits spectrum access for non-EU firms, after the EU decided to allocate most mobile satellite spectrum to domestic companies, FT reported.
• Mexico's Ebrard said Commerce Secretary Lutnick has never told him he opposes lowering Section 232 tariffs on Mexico.
• US lifted restrictions on new Mexican airline flights to the US from Mexico City's AICM and AIFA airports.
• US President Trump said the US will at some point make an "amazing" deal with Canada.
• EFTA states signed a free trade agreement with Vietnam, with around half of Norwegian exports to become tariff-free upon entry into force.
• French President Macron said the EU needs to extend the China deal to include plastics, chemicals and ferroalloys.

NOTABLE NORTH AMERICAN HEADLINES

• US Treasury Secretary Bessent said the US is in an energy shock and inflation will slow when the war ends.
• US President Trump pledged USD 5k for every adult if the GOP wins Congress, speaking at a Kentucky rally ahead of the 3rd November midterms; separately, Reuters reported he blamed aides for a faltering Republican midterm strategy as Democrats led House polls.
• US President Trump said the US economy has never been stronger; on oil drilling in Texas, he said nobody can take a chance on it.
• "No Kings" rallies were held across the US, urging early voting.
• White House Press Secretary Katie Zacharia left the role after less than a week.
• Canadian PM Carney confirmed four soldiers died and dozens were injured in the fire at Canadian Forces Base Wainwright in Alberta; CBC had earlier reported seven dead.
• Alberta is set to vote on Monday on starting the legal process for a separation referendum; Canadian PM Carney and Alberta Premier Smith both oppose separation.
• US State Department is reportedly updating its travel advisory for mainland China to include an increased risk level for wrongful detention, according to a plan seen by Semafor.
• Anthropic co-founder Jack Clark said an internal model suggested AI could lift US GDP to USD 44tln by 2030 from USD 30tln.

APAC TRADEEQUITIES

• APAC stocks were mixed following Friday's tech-led sell-off on Wall Street, with Japanese and Korean stocks underperforming amid continued pressure on AI and semiconductor names. However, losses were pared as US equity futures recovered alongside a pullback in crude prices. Sentiment was also supported by Trump's latest Russia-Ukraine peace efforts and easing of restrictions on Russian energy, while Chinese activity data generally topped expectations but prompted little reaction.
• ASX 200 bucked the regional weakness, supported by Cleanaway Waste Management surging after EQT agreed to acquire the Co. Elsewhere, RBA's Kent noted evidence of rising neutral interest rates in Australia and abroad.
• Nikkei 225 and KOSPI underperformed as tech stocks caught up with Friday's losses in their US counterparts, although the indices pared earlier losses of over 2%. For Japan, BoJ Governor Ueda also spoke overnight but offered little fresh.
• Shanghai Comp was marginally softer despite Chinese activity data generally topping expectations, although Fixed Asset Investment remained weak. Hang Seng was closed for the Chung Yeung Festival.
• US equity futures recovered from Friday's tech-led losses, with the Nasdaq outperforming amid the pullback in crude prices. Trump's latest Russia-Ukraine peace efforts and easing of restrictions on Russian energy also provided some relief.
• European equity futures are indicative of a softer cash market open with the Euro Stoxx 50 future -0.3% after cash closed with gains of 0.6% on Friday.

FX

• DXY was little changed after Friday's losses, with the Buck finding some respite amid EUR weakness following widespread European protests. However, softer Treasury yields and Trump's efforts to ease energy supply pressures through Russian sanctions relief capped upside. DXY remained within Friday's 101.57-102.09 range, with the index holding around 101.80.
• EUR/USD was marginally softer for most of the session as the Dollar steadied, with the Single Currency also pressured at the start by political and social unrest in France and other European cities over the weekend. The pair remained within a 1.1181-1.1232 range.
• GBP/USD was flat/firmer, retaining most of Friday's gains amid limited Sterling-specific catalysts. Attention turns to UK inflation data later this week and fiscal developments ahead of Chancellor Healey's Budget. EUR/GBP weakness also provided some support, with the cross testing 0.8400 to the downside. GBP/USD remained within a 1.3303-1.3339 range.
• USD/JPY was marginally firmer amid weakness in Japanese equities, with BoJ Governor Ueda's comments prompting little reaction. USD/JPY remained within Friday's parameters, with the pair reaching 158.13.
• Antipodeans outperformed, led by AUD, which was supported by recovering US equity futures despite weakness in Japanese and Korean stocks. RBA's Kent suggested neutral rates were rising, while stronger-than-expected Chinese GDP and activity data prompted little reaction. NZD was also firmer despite New Zealand's September trade deficit widening to NZD 1.97bln (exp. 0.78bln deficit).
• PBoC set USD/CNY midpoint at 6.7208 vs exp. 6.6897 (prev. 6.7220).

FIXED INCOME

• 10yr UST futures extended their recovery following Friday's tech-led sell-off on Wall Street. The pullback in crude prices helped ease inflation concerns after Trump relaxed restrictions on Russian energy and signalled progress towards a Russia-Ukraine peace agreement.
• Bund futures were modestly firmer, with European fixed income supported by easing energy prices and ongoing political uncertainty following widespread cost-of-living protests across Europe. However, gains remained contained amid the recovery in broader risk sentiment, with Bunds holding within a 121.55-121.71 range.
• 10yr JGB futures outperformed amid weakness in Japanese equities; JGB futures remained within a 125.44-125.88 range.

COMMODITIES

• Crude futures were softer following Friday's gains, with WTI and Brent pressured after Trump waived certain sanctions and restrictions on Russian energy and signalled progress towards ending the Russia-Ukraine war. WTI declined within a USD 97.32-99.24/bbl range, while Brent traded within USD 107.70-109.65/bbl. Dutch TTF remained firmer despite the crude weakness, within a EUR 88.46-89.32/MWh range.
• Spot gold was modestly firmer amid softer US yields and lingering geopolitical uncertainty, although the steady DXY capped upside. Spot silver outperformed, with both metals recovering from earlier lows.
• Copper futures were firmer amid the recovery in US equity futures and better-than-expected Chinese activity data, although the broader risk tone remained mixed following Friday's tech-led sell-off. China's Q3 GDP, Industrial Production and Retail Sales all topped forecasts but prompted little reaction. Supply concerns also eased after Antofagasta reached an agreement to end the strike at its Centinela mine in Chile.
• US President Trump reiterated that oil prices are going to come down very soon.
• US Energy Secretary said the US is negotiating with European countries to release large diesel stockpiles, but their response has been slow.
• US lawmakers introduced a bill to block US President Trump's Russia diesel deal.
• Turkey will secure part of Russia's diesel supplies and plans to build a second offshore natural gas platform in the Black Sea, SANA reported; Turkey's Energy Minister said Turkey will receive some diesel under the US-Russia supply deal.
• Russian Deputy PM Novak said Russia's gasoline shortage is currently about 5% and the global oil market is unbalanced after a shock, with a significant supply deficit estimated at 4-6mln barrels, Interfax reported.
• IRIB reported that Saudi Arabia's East-West oil pipeline was targeted again, noting a new thermal anomaly in the Yanbu area near the pipeline.
• Russia's Ryazan oil refinery has halted one of its primary units since the 15th October drone attack, according to sources.
• US DoE issued an RFP to exchange up to 17mln bbls of crude from the SPR.
• Venezuela expects nearly USD 76bln of oil investment over five years; a US-Venezuela bilateral oil accord covers 17 fields and 250 rigs.
• Iraq aims to produce 450k bpd from four Kirkuk fields.
• Pemex set its November price constants for Maya crude to the US Gulf and Asia.

DATA RECAP

• US Baker Hughes Total Rig Count (Oct/16) 603 (Prev. 603); Oil Rig Count (Oct/16) 459 (Prev. 462); Gas Rig Count (Oct/16) 133 (Prev. 132).

CRYPTO

• Bitcoin traded with mild gains overnight but with price action largely contained withing recent ranges.

CENTRAL BANKS

• ECB's Lagarde said Eurozone headline inflation rose to 3.8% in September on energy, with no material wage response yet; sees growth of 0.9% in 2026 and 1.4% in 2027 after 25bps hikes in June and September, according to her IMFC statement.
• ECB's Nagel said the job of fighting inflation is not done and the ECB may have to do more.
• ECB's Rehn said the Bank is staying vigilant to second-round inflation effects.
• BoE Governor Bailey was among the delegates who walked out of the IMFC meeting in Bangkok as Russian Finance Minister Siluanov spoke.
• BoJ Governor Ueda said Japan is in a positive cycle of rising wages and recovering prices and anchoring core inflation near 2% is increasingly important; the steady recovery, tight labour market, strong AI-driven capex and exports, and Middle East energy costs are fuelling inflation. He said it would be inappropriate to signal in advance when the BoJ might conduct emergency bond market operations, with any intervention to depend on the speed of long-term rate rises and signs of market instability; long-term rates would likely rise steadily in line with policy rate hikes, financial conditions remain accommodative and fiscal spending is adding upward pressure on prices and wages.
• IMF said the BoJ may need to tighten faster if inflation beats forecasts, and that JPY moves since mid-2025 were driven by speculation rather than yield differentials.
• RBA Assistant Governor Kent said there is reasonable evidence neutral rates are rising in Australia and abroad, and that policy is somewhat restrictive but it is questionable whether it is restrictive enough; household demand is softening while business credit remains strong, and housing tax adjustments move policy in a favourable direction. He is cautious about monthly employment figures but said the labour market has become less tight and the market reaction to the jobs data was reasonable.
• PBoC Governor Pan backed closer IMF surveillance of fiscal risks in major advanced economies and said China opposes all forms of protectionism.
• PBoC injected CNY 80bln via 7-day reverse repos at an unchanged rate of 1.40%.
• BoC Governor Macklem said high oil prices raised the risk of broader inflation, though they had boosted Canadian growth and investment.
• Barclays sees 25bps Fed hikes in December and January (prev. a December hike only).

NOTABLE ASIA-PAC HEADLINES

• China's Stats Bureau said the economy showed more positive developments in Jan-Sept, though weak demand and a complex international environment remain challenges; its Deputy Head said new growth drivers, including high-end manufacturing and the digital economy, accounted for over 40% of growth, while consumption contributed 46.7% of GDP growth.
• Japanese PM Takaichi said the government has no predetermined plans on whether to compile a supplementary budget and a robust economy can boost market confidence in the JPY; her approval rating fell below 50%, the lowest since she took office, Kyodo reported.
• South Korea's Finance Minister expects economic growth of 3.4-3.6% in 2026.
• China's solar panel exports extended their slump in September, Reuters reported.
• Chinese President Xi called for coordinated planning of computing power, electricity and water supply.

DATA RECAP

• Chinese GDP Growth Rate (Q3 YY) 4.5% vs. Exp. 4.4% (Prev. 4.3%).
• Chinese GDP Growth Rate (Q3 QQ) 1.2% vs. Exp. 1.1% (Prev. 0.9%).
• Chinese Industrial Production (Sep YY) 5.5% vs. Exp. 5.4% (Prev. 5.2%).
• Chinese Retail Sales (Sep YY) 1.1% vs. Exp. 0.5% (Prev. 0.4%).
• Chinese Fixed Asset Investment (YTD) (Sep YY) -7.2% vs. Exp. -7.3% (Prev. -7.2%).
• Chinese Unemployment Rate (Sep) 5.2% vs. Exp. 5.3% (Prev. 5.3%).
• Chinese House Price Index (Sep YY) -2.8% (Prev. -3.0%).
• Chinese Industrial Capacity Utilization (Q3) 73.1% (Prev. 73%).
• New Zealand Trade Balance (Sep) -1.971B vs. Exp. -0.775B (Prev. -1.536B).
• New Zealand Imports (Sep) 8.44B (Prev. 8.02B).
• New Zealand Exports (Sep) 6.47B (Prev. 6.48B).
• New Zealand Composite NZ PCI (Sep) 53.4 (Prev. 52.5).
• New Zealand Services NZ PSI (Sep) 50.9 (Prev. 51.2).

GEOPOLITICS

RUSSIA-UKRAINE

• Russian President Putin proposed a meeting with US President Trump and Chinese President Xi next month to discuss ending the Ukraine war, with the Kremlin suggesting talks on the sidelines of the APEC summit in China (Nov 18th-19th), WSJ reported citing sources; Trump has not agreed but could be receptive, according to a senior US official. Putin has proposed a trilateral summit before, but the latest offer comes amid a broader shift in Moscow's relations with Washington.
• US President Trump said he is negotiating peace between Russia and Ukraine and that significant progress is being made, including on hostage talks, but warned that signing a Russia-related document now could drive Moscow away from negotiations; he criticised Ukrainian President Zelensky for targeting Russian diesel refineries, claiming the attacks are hurting global and US diesel markets, and accused him of not wanting to end the war. Trump also said he wants the war ended, will release details at some point and will get a deal on nuclear arms with Russia and China, and denied slowing Ukraine's Starlink access.
• US President Trump signed an executive order waiving certain Graham Act sanctions, restrictions and duties on Russian energy revenues, certifying the move is in the US national interest, and said Russia will initially supply over 300k tonnes of diesel. Secretary of State Rubio said Trump will take up to 60 days to weigh Russia sanctions and assess their economic impact, Treasury Secretary Bessent said the waiver could be examined during that period, and Energy Secretary Wright said enforcement had been suspended rather than ended and Russian diesel exports would benefit US consumers. Russian Envoy Dmitriev hailed the waiver as historic, while Ukrainian President Zelensky said it rewarded Putin.
• The Trump administration has proposed resuming Russian gas imports to Europe as part of a potential Ukraine peace deal, with US envoys Witkoff and Kushner raising the idea with Ukrainian and European officials despite opposition from European governments, NYT reported.
• US Secretary of State Rubio said US President Trump is open to anything to end the Ukraine war, while discussions have taken place over a potential meeting between Putin, Xi and Trump.
• Ukrainian President Zelensky said Trump is pushing Ukraine to capitulate to Russia, citing delayed Patriot deliveries, Starlink restrictions and eased sanctions, and offered to halt strikes on Russian refineries if the US sends more interceptors. He said he spoke with Witkoff and Kushner about a peace meeting, possibly as early as this week, that US intelligence-sharing had resumed after a brief pause, that Ukraine-US negotiators could meet next week with a trilateral leaders' meeting possible at the G20, and that Europe needs its own track for talks with Russia.
• US Treasury Secretary Bessent called Zelensky reckless for accusing the US of slowing Starshield, while Rubio said Ukraine had requested Starshield for deep strikes in Russia and access is still under discussion.
• Ukraine launched more than 1,000 drones at Russia, including its biggest attack on St Petersburg since 2022, which set oil terminal and depot facilities ablaze; Russia said it downed 1,015 drones over 15 regions and Crimea, and the Kremlin said the attacks would not change its war aims. Separately, Moscow's Mayor said nearly 200 Ukrainian drones heading for the city were destroyed, with Domodedovo and Vnukovo airports suspending flights.
• Russia launched one of its largest attacks on Ukraine's energy sector, using 320+ drones and missiles against more than 15 energy sites, and hit Metinvest's Zaporizhstal steelworks with six ballistic missiles; Zelensky said Russia attacked Ukraine's energy sector 76 times in the week since Trump announced an "energy ceasefire" and warned Russia may escalate strikes on western Ukraine and deploy ballistic systems in Belarus.
• Russia claimed the capture of Dobropillia and eight more settlements; Ukraine's General Staff denied that Dobropillia had fallen.
• Kremlin said Russia is building a security zone which will not be part of any negotiation with Ukraine, Interfax reported.
• Ukrainian President Zelensky asked Poland, Romania, Slovakia and Hungary to allow grain transit amid a Black Sea blockade; Hungarian PM Magyar said he would not object to transit.
• Lithuania issued a red air raid alert after detecting an unidentified flying object, closing Kaunas airport and scrambling NATO air police jets, before Lithuania and Latvia lifted their alerts. Lithuania found likely drone debris that probably entered from Poland, with Ukraine regretting the possible Russian diversion of its drone over Lithuania, and treated an attempted arson attack on Starlink equipment as Russia-linked sabotage targeting Ukraine's military capability.
• Poland's army investigated a possible airspace violation and searched south of Lublin for a crash site, though no violation was confirmed; Romanian F-16s shot down two drones over Romania's Black Sea waters, and Moldova condemned Russia after five drones crashed on its territory.
• Italy's Defence Minister Crosetto said Ukraine could never win the war and called the US decision to limit Kyiv's access to satellite systems and intelligence a serious mistake.
• EU Council President said Russia's actions point to escalation.

MIDDLE EAST

US-Iran

• Pakistani Army Chief Asim Munir may visit Tehran this week, ISNA reported.
• Iran's Foreign Ministry Spokesperson said Iran is ready to help peacefully resolve issues between Saudi Arabia and Yemen, and to use all its capacities for this if requested by the parties, reaffirming that dialogue between them is necessary.
• Iran's Foreign Minister Araghchi said Tehran's seven-day proposal to reopen the Strait of Hormuz remains on the table: the strait could reopen within six days if the US meets Iran's conditions, with talks resuming on day seven; Iran said it is still studying US comments on the proposal.
• US said it is awaiting Iran's response to a counterproposal to end the war, while CENTCOM said Iran-backed militias were sending funds back to the cash-strapped IRGC, Axios reported.
• US President Trump said the Iran war will be over very soon and that Iran had been systematically destroyed militarily and financially, warning the US would soon finish the job unless Iran rapidly changes course. He endorsed Netanyahu ahead of Israel's 27th October election, where polls show a tight race between Netanyahu's bloc and its rivals, adding that if anyone else led Israel the US would have to do the work itself.
• Israeli PM Netanyahu said Israel's goal is to eliminate the Iranian threat and topple the regime in Tehran, that he remains aligned with Trump on Iran, and that the ultimate goal is to eliminate Hezbollah as he does not trust the Lebanese government to disarm it.
• Lebanon's President said a military delegation will present demands to halt Israeli escalation at trilateral talks in Tampa on 20th October, accused Israel of breaching the US-brokered framework and sought an extension of UNIFIL's mandate.
• Iran's SNSC Secretary Rezaei said the armed forces have prepared a new operational plan for any renewed attack, while an IRGC spokesperson warned the world will see what happens if Iran's energy infrastructure is attacked, ISNA reported.
• Iran's IRGC denied reports of an explosion in eastern Tehran, saying no explosion or security incident had occurred, Fars reported.
• Iran's parliament approved US- and UN-sanctioned Mehrdad Akhlaqi Ketabchi as defence minister.
• Two rockets were launched from the city of Tabriz in north-west Iran, Sabreen reported; two missiles were also fired from Iran towards the Strait of Hormuz.
• An Iranian hardline newspaper called for strikes on Israeli nuclear sites if the US attacks Pickaxe Mountain, Iran International reported.
• IRGC said two oil tankers caught fire in the Strait of Hormuz after hitting mines. Separately, the IRGC Navy said a tanker struck a sea mine in the southern strait, causing an explosion and engine-room fire, after reportedly disabling its navigation systems and attempting an unauthorised route, and warned of severe action against vessels disabling navigation and identification systems in the Strait of Hormuz and Persian Gulf, according to SNN.
• Indian shipping official said a crude oil tanker was targeted by a missile in the Strait of Hormuz, also noting the Romania incident on 14th October.
• UKMTO said a southbound tug was struck by two unknown projectiles northeast of Khor Fakkan, UAE, sustaining damage and one minor casualty but continuing its route. It also reported a tanker struck by an unknown projectile 68NM northeast of Saudi Arabia's Jubail on 16th October (crew safe and evacuated) and a tanker hit by an RPG fired from a small boat 78NM northeast of Jubail, possibly the same incident, and an LNG tanker fired upon by a skiff 140NM southeast of Al Mukalla, Yemen, before its security team fired warning shots.
• US CENTCOM said the US has helped ship over 100mln bbls through Hormuz in the past seven days, and a US commander said the naval blockade had stopped Iran exporting USD 25bln of oil and the US helped freeze USD 350mln of Iranian crypto.
• US VP Vance said gasoline prices would be three times higher without the US Navy keeping oil and gas moving through Hormuz; JMIC kept the Strait of Hormuz threat level at severe.
• Masked Israeli settlers attacked a convoy of European diplomats in the West Bank and beat a visiting French mayor; the EU strongly condemned settler attacks and urged Israel to halt settlement expansion, Rubio said he was disturbed by the images and the US wants Israel to do more to curb settler violence, Israel's Foreign Minister condemned the attack and Netanyahu's office decried a "smear campaign".
• Israel's government approved an ILS 2.6bln cut across ministries to boost the security budget, Channel 12 reported.

Saudi & Gulf

• Explosions were reportedly heard in Saudi Arabia's Jeddah, Tasnim reported, with flight operations at King Abdulaziz International Airport disrupted according to Naya for Iraq, and in Jizan and Abha following attacks by Yemeni forces, Sabreen News reported.
• Saudi Civil Defence issued warnings in Jazan, Khamis Mushait (later saying the danger had passed), Najran, As Sulayyil and Abha; six people were injured after a projectile fell in Najran.
• Houthis have repeatedly struck Riyadh airport and Saudi Aramco headquarters, with 19 killed in Houthi strikes as Saudi Arabia struggles to counter the attacks, AP reported; Iran is providing the Houthis with intelligence and targeting data for attacks on Saudi Arabia, WSJ reported.
• Saudi-led coalition said it destroyed two ballistic missile launchers in Yemen's Saada, and an airstrike killed at least nine in the Houthi-held province, AP reported; Saudi warplanes reportedly bombed a residential house in Shamaytin in Yemen's Taiz province, Mehr reported. Separately, a Saudi helicopter crashed in Najran due to a technical failure, killing two crew members.
• Egypt's National Defence Council, chaired by President Sisi, pledged all forms of support to Saudi Arabia against Houthi attacks and reportedly approved deploying troops to the kingdom; Sisi sought parliamentary backing to defend Saudi Arabia if asked, with parliament calling an emergency session for Sunday and set to resume discussions on Monday.
• GCC Secretary General said Saudi security is integral to GCC security and called for Iran to be compelled to abide by international law.
• Iran's Deputy Foreign Minister said Saudi Arabia is yet to respond to Iran's response on mediation efforts relating to Yemen.
• US President Trump said Israel has been helpful to Saudi Arabia and the US relationship with Saudi Arabia is great.
• The Six Kings Slam and an EU summit in Saudi Arabia were postponed, while the US weighed direct involvement in Saudi-backed operations.
• US embassies in Kuwait, Bahrain and Jordan issued security warnings to American citizens over potential attacks on US interests amid escalating regional tensions, Tasnim reported.
• Iraqi Islamic Resistance said six US MQ-9 drones violated Iraqi airspace across four provinces on Saturday, ISNA reported.
• A flight from Tel Aviv made an emergency landing in Sofia, Bulgaria after the crew reported a bomb threat signal near the Romanian border, Bulgaria's Transport Ministry said, Sky News reported.

OTHERS

• US and China remained divided on Taiwan despite plans for more Trump-Xi meetings, Nikkei reported.
• North Korea said it successfully tested a new AI-guided high-speed torpedo on 15th October.
• US Defense Secretary Hegseth warned of China's historic military buildup.

EU/UK

NOTABLE HEADLINES

• France's Saturday cost-of-living protests drew around 550,000 people, with some 1,800 arrested and more than 500 police, gendarmes and firefighters injured, according to the Interior Minister; one demonstrator died and Limoges' historic town hall was torched. Clashes, fires and looting hit Paris, Lyon and other cities, and President Macron and PM Lecornu said violence would not be tolerated.
• French President Macron ordered a review of police preparedness and intelligence, empowered prefects and mayors to ban gatherings, and asked the government to hold cost-of-living talks this week.
• US President Trump said France is burning, blamed immigration and urged France to close its borders.
• Clashes continued for a second day in Milan, with Italian PM Meloni condemning the violence and calling a government meeting for Monday; cost-of-living and education protests also hit Bologna, Lisbon, Madrid and Brussels.
• EU's Costa said an EU long-term budget needs to be agreed by year-end.
• Morningstar DBRS affirmed Italy at A (low); trend stable.
• S&P affirmed the Netherlands at AAA/A-1+; outlook stable.

LATAM

NOTABLE HEADLINES

• Brazil's Finance Minister Durigan said CPI is under control, but high rates are still a problem and need to come down.

• US President Trump said Iran had asked for a halt to US attacks and negotiations are still ongoing. Trump mentioned that he would not use nuclear weapons, but warned that they may have to go to Pickaxe Mountain.
• European bourses traded mostly firmer in a rebound from recent selling pressure; TSLA +5% in pre-market trade after Musk unveiled a “flying” car.
• DXY is under pressure after Fed Chair Warsh avoided any rate guidance; Antipodeans lead given the risk tone.
• Crude benchmarks edge lower; Trump mentioned that Ukrainian President Zelensky is not a good guy to deal with.
• Looking ahead, Highlights include US Import/Export Prices (Sep), Industrial Production (Sep), Credit Ratings update from Morningstar DBRS on Italy.

SNAPSHOTLOOKING AHEAD

• Highlights include US Import/Export Prices (Sep), Industrial Production (Sep), Credit Ratings update from Morningstar DBRS on Italy.
• Click for the Newsquawk Week Ahead.

EUROPEAN TRADEEQUITIES

• European bourses (STOXX 600 +0.5%) have an upward bias to start the final trading session of the week, with cyclical-heavy indices outperforming as tech rebounds from this week's losses.
• Sectors highlight the positive bias. Autos lead, with Media and Telecoms following closely behind. To the downside resides Health Care, as the only sector in the red.
• UK banks are under pressure this morning after Bloomberg reported that UK Chancellor Healey will raise taxes on banks. The report follows a Guardian source stating that the proposal includes a 3% increase to the bank surcharge. Lloyds (-2.3%) and NatWest (-2.1%) are under the most pressure, while Barclays (-0.2%) and HSBC (+0.5%) are little moved given its large international business.
• US equity futures follow their European peers. Tesla (+5%) is getting a boost pre-market as it unveils its flying car, while Strategy (-2.4%) falls after MSCI announces new screening methodology that targets companies holding digital assets.
• Tesla (TSLA) Roadster uses thrusters to land after ramp jump, while Roadster can accelerate 0-60Mph in less than 1 second, while it will enter production in 2028.

FX

• Snapshot: G10s are firmer against the broadly lower USD this morning. Antipodeans lead, benefiting from the risk tone, whilst the JPY holds towards the bottom of the pile, but still remains flat.
• USD continues the prior day’s downside, which stemmed from AI-debt concerns and lower yields. Also fuelling the downside this morning is a speech from Fed Chair Warsh, where he ultimately provided no forward guidance ahead of the October meeting; as such, money markets pared back their bets of an October hike (now 14% vs 26% earlier). The docket for the remainder of the day remains exceptionally light aside from US Import/Export Prices and Industrial Production.
• GBP is a touch firmer this morning, benefiting from the softer USD a little more-so than peers. Focus remains on the looming UK Budget (Oct 28), where source reports have generally been welcomed by markets. The latest was via Bloomberg, which suggested that Chancellor Healey could raise taxes on banks. The source adds that the move will likely involve increasing the bank surcharge that it added on top of the standard corporation tax rate. It seems as if markets are taking the potential tax on banks as a reliable way to improve the fiscal situation, without having a significant impact on growth.

FIXED INCOME

• Fixed income benchmarks are a touch lower to start the final trading session of the week. USTs essentially flat, and look set to end with weekly gains despite a hotter CPI and PPI print this week, as Fed Chair Warsh fails to provide little guidance. As such, money markets pared back their bets of an October hike (now 14% vs 26% earlier).
• Focus will be on the US Treasury primary dealer questionnaire, expected at 17:00BST/12:00EDT, ahead of the QRA on November 4th. Some analysts expect the Treasury to cut both 20-year and 30-year auction sizes by USD 3bln each, and to be replaced by T-bills. To add, there has also been speculation that the 20-year could be cut altogether.
• Gilts and Bunds trade in tandem, posting losses of around 15 ticks.
• Focus for Gilts this morning, and heading into the Budget, is on any clues to how Chancellor Healey chooses to balance spending with income. The latest being focused on the banking sector, with Bloomberg reporting that UK Chancellor Healey will raise taxes on banks. The report follows a Guardian source stating that the proposal includes a 3% increase to the bank surcharge.
• Australia sold AUD 1bln in 3.25% April 2029 bonds, average yield is 4.8238%, bid to cover of 4.89.

COMMODITIES

• Crude benchmarks are on the backfoot, with mild underperformance in the WTI Dec’26 (-1.2%) vs Brent Dec’26 (-0.8%). The former currently holds towards the bottom end of a USD 95.29-96.39/bbl range, whilst the latter sits within a USD 104.91-105.94/bbl range. The mild underperformance seen in WTI is likely a bit of an unwind following yesterday’s relative outperformance, on the back of large weekly US headline inventory and as the US Treasury extended a sanctions waiver allowing Lukoil petrol stations to operate within the US.
• The geopolitical environment remains tense on three major fronts: 1) The US-Iran situation remains unresolved, though President Trump did mention that Iran requested a halt to attacks and that negotiations are ongoing. A factor which is likely weighing on the complex this morning. 2) Saudi Arabia and the Houthis continue to strike each other, and 3) Russia and Ukraine have continued to strike energy facilities, despite Trump’s announcement of an energy ceasefire.
• Spot gold currently trades within a USD 4,147-4,189/oz range, continuing to build on the prior day’s gains; the yellow metal now eyes its 21-DMA at USD 4.2k/oz. Strength today is facilitated by a slightly softer USD, which comes after Fed Chair Warsh avoided any guidance surrounding the October confab, which saw a slight paring of tightening bets.
• Base metals are rebounding from recent losses as global sentiment improves. 3M LME Copper (+1%) currently trades at the upper end of a USD 14,296-14,482/t range, and now eyes USD 14.5k/t.
• South Korea is reportedly to extend oil fuel price cap for another four weeks.
• Russia and Iran is reportedly discussing gas pipeline route and pricing, TASS reported.
• Japanese Chief Cabinet Secretary Kihara said Japan expects October crude procurement to be at the same level as last year.
• China set 2027 corn import tariff quota at 7.2 mln tons and wheat import tariff quota at 9.64 mln tons.

TRADE/TARIFFS

• China's MOFCOM is to revise the "Catalogue of Technologies Prohibited and Restricted from Export in China," and temporary registration management will be implemented for the export of related technologies.
• Taiwan is to curb AI chip exports to China as part of the US trade deal, Bloomberg reported. Servers and high-end chips will be added to the controlled items list.
• France is said to have agreed to support UK inclusion in the bloc's proposed "Made in Europe" legislation, although Britain would need to align with the EU's approach to tariffs on Chinese EVs.
• Japan is to open anti-dumping probe on Chinese pigments and preparations made from Chinese rutile titanium dioxide.
• US Commerce Secretary Lutnick throws future of US-Mexico trade talks into further doubt as he has objected to significant reductions in tariffs on Mexican steel, aluminum and automobiles, according to WSJ.

NOTABLE EUROPEAN HEADLINES

• UK Ofcom proposes to cap Second Class stamp price for a further year, until March 2028.
• Chinese Finance Minister met with the EU Economy Commissioner Dombrovskis, ECB President Lagarde and Eurogroup President Pierrakakis. Chinese side is willing to give full play to the role of China-EU financial dialogue and other mechanisms with the EU side.
• Germany's Finance Minister said he is not against China, China is an important partner, but is not playing by the rules and we should not be naive.

NOTABLE EUROPEAN DATA RECAP

• European HICP Final (Sep) 104.31 vs. Exp. 104.30 (Prev. 103.69).
• European HICP Final (Sep YY) 3.8% vs. Exp. 3.8% (Prev. 3.2%).
• European Core HICP Final (Sep YY) 2.5% vs. Exp. 2.5% (Prev. 2.4%).
• European HICP Final (Sep MM) 0.6% vs. Exp. 0.6% (Prev. 0.4%).
• European Trade Balance (Aug) -16.1B (Prev. 10.7B).
• Italian CPI Final (Sep YY) 4.2% vs. Exp. 4.2% (Prev. 3.3%).
• Italian CPI Final (Sep MM) 0.7% vs. Exp. 0.7% (Prev. 0.5%).
• Italian HICP Final (Sep YY) 4.2% vs. Exp. 4.1% (Prev. 3.2%).
• Italian HICP Final (Sep MM) 2.1% vs. Exp. 2% (Prev. 0.1%).
• Swedish Employed Persons (Sep) 5.292M (Prev. 5.423M).
• Swedish Unemployment Rate (Sep) 8.6% (Prev. 8.5%).

NOTABLE EUROPEAN EQUITY HEADLINES

• Rio Tinto (RIO LN) CEO said that they are looking to build commodity trading capabilities.

CENTRAL BANKS

• Fed Chair Warsh said he may be over-scarred from the Global Financial Crisis, adds since September FOMC, world has broadly conformed to our expectations. Will be crystallising what is happening to output, employment and inflation. We will be meeting a couple more times this year, which will be the crystallising moment. Right now, we have structural growth and an investment surge. Obviously, the Fed's policies spill over to the rest of the world, but their policies spill back to the US too. Will make judgements at the October and December meetings. At the Fed, we made clear that we would deliver price stability; I do not believe in prejudging meetings. Do not prejudge meetings. Do not believe in signalling what I might do at meetings for the rest of 2026. AI is going to hit the demand side of the economy before the supply shock. AI will help central banks have confidence in data and monetary policy. AI will change the real economy, but near-term impact on employment is uncertain. AI will make economy more productive, more wealth, but path to them will be a bumpy one.
• Fed's Goolsbee (2027 voter) said it's a discouraging month regarding inflation and still feel some optimism if drivers of inflation can go away in short order, if inflation is from overheating demand from AI, that's more disturbing and have to address it.
• Fed's Hammack (2026 voter) said hearing more from lower-income Americans struggling with inflation, adds anecdotal information provides important economic guidance. Businesses are seeing a lot of input cost price pressures. Worries about formation of inflation mentality. Formation of inflationary mindset might force more aggressive Fed policy action. Hard to know what a neutral rate is. Financial conditions do not appear restrictive right now.
• BoJ Governor Ueda said underlying inflation is approaching 2% and the BoJ will continue to raise policy rate in accordance with economic, price and financial developments. There is a risk of underlying inflation overshooting 2% price target.
• ECB's Wunsch said further tightening would be reasonable given persistent inflation pressures and the resilient EZ economy. Inflation is running at almost 4%, domestic inflation stands at 3% and energy prices are likely to remain elevated for longer than previously expected. Not committing to anything due to the high degree of uncertainty. Market pricing of three rate hikes seems reasonable.
• ECB's Nagel said Germany is getting fit for the challenges of the future and a fitness program of reforms is always important. Regarding bond market, Germany will remain the anchor of stability in Europe.
• ECB's Rehn said growth outlook is better today than start of the year, adds not seeing second-round effects on inflation. Labour market not as tight, wage moderation ongoing. Must show vigilance on inflation outlook.
• BoE Governor Bailey said it's too early to form strong views on strength of second round effects. So far signs of second round effects are subdued and businesses emphasizing cost cutting. UK economy is more resilient than we expected and not as strong as we need. News from Middle East is the biggest factor moving UK gilt yields. Second-round inflation pressures look subdued so far. More hopeful than a month ago that they will get more international alignment on AI testing.
• RBNZ Chief Economist Conway said there is reasonable confidence that inflation has not become broad-based and that rate hikes help contain spillovers from an energy shock.
• PBOC's Pan said that the PBOC is to support offshore CNY markets development; to further expand liquidity management tools.
• PBoC injected CNY 60bln via 7-day reverse repos with rate kept at 1.40%.
• PBoC set USD/CNY mid-point at 6.7220 vs exp. 6.6947 (prev. 6.7253).
• Bank of Canada Governor Macklem said Canada hasn't raised rates yet, but the longer it goes, the harder it is to look through increases in energy prices.

NOTABLE US HEADLINES

• US President Trump is to deliver remarks in Dalton, Georgia at 14:45 EDT/19:45BST on Friday.
• US President Trump said no real reason for him to go to Maine and thinks he will go to Minnesota, while he said he is not involved in that when asked regarding probe into Democrat Rep. Omar.
• Japan is to sidestep 3.5% defence spending target despite US pressure, according to Asahi.
• US President Trump said he will be going to Iowa state on Thursday, October 22nd and Sunday, November 1st.

GEOPOLITICS

RUSSIA-UKRAINE

• US President Trump said Ukrainian President Zelensky is not a good guy to deal with, adds Zelensky is more difficult than Putin to deal with. He is allowed to do a self-pardon. Plenty of other targets besides refineries to hit. Need an election in Ukraine.
• US President Trump said Ukraine's resumption of strikes on Russian refineries is a disgrace.
• EU President of the European Commission Von Der Leyen said that they are working on the 22nd package of sanctions against Russia, adding that no sanctions will be lifted unless Russia stops its war.
• Russian forces struck a vessel sailing to Ukraine's Odessa, according to IFX.
• Temporary restrictions introduced at Pulkovo Airport in St. Petersburg, Russia, according to TASS.
• Ukrainian drones are attacking Russia's Moscow region and reportedly hitting industrial warehouse facilities.
• Massive fire breaks out in Ukraine's Khmelnitsky region following a reported strike on a fuel depot.
• US senators are demanding an investigation into disruption of a satellite system supporting Ukraine, according to an Al Jazeera correspondent.
• Order to limit Ukraine's access to Starshield system came from inside the White House, according to sources.
• Ukraine's Air Force said jet drones spotted over Kirovohrad region heading west.
• Russian local governor said drones hit industrial facilities in Russia's Rostov region.
• Russian President Putin said Ukraine failed to grasp consequences of returning to targeting refineries.

US-IRAN

• US President Trump said wouldn't use nuclear on Iran, while he is talking to Russia and China regarding denuclearisation, adds may have to go to Pickaxe Mountain and don't see troops on the ground in Iran. Iran has asked for a halt to US attacks and negotiations are still ongoing.
• IRGC Brigadier General Akraminia said "we have introduced new equipment into our combat formations", Al Mayadeen reported.
• IRGC Brigadier General Akraminia announces new operational plans to push back more American ships and flee ever further; reiterates that the Army Navy has complete operational control over the Sea of Oman, SNN reported.
• Iranian Army Commander Major General Amir Hatami said three ships entered the Sea of Oman and were fired upon by Iranian forces, severely restricting maritime traffic.
• Iranian Ambassador said that "The United States is not demonstrating serious political will to negotiate with Iran", Tass reported. Iranian Ambassador to Moscow's Kazem Jalali.
• US President Trump answered he doesn't trust anyone when was asked if he trusts Israeli PM Netanyahu.

SAUDI-HOUTHIS

• Saudi army conducted missile attack on areas of Amran and Saada provinces in northern Yemen, according to IRNA.
• Yemen Houthi official said Saudi Arabia must answer for the massacre of civilians in Yemen and called for independent international probe into the Saudi war on Yemen.
• Saudi-led coalition noted there 20 Houthi attacks on Riyadh in October and that recent strikes included an attack on King Khalid International Airport that killed 12 on October 10th.
• Explosions reported in the city of Dammam, Saudi Arabia, SNN reported.
• Yemeni armed forces strike military positions in Aden, hitting military operation headquarters managed by Saudi officers which killed four.
• Saudi-led coalition said it intercepted and destroyed a drone launched towards Saudi Arabia's Eastern Region.

OTHERS

• Chinese Foreign Minister told Israel's President promoting peace and reconciliation in the region is the cornerstone of China's Middle East policy, and China consistently held that the Palestinian question is greatest historical injustice of this century. Immediate priority is to fully open access to the Gaza Strip. Israel should stop and reverse its forced establishment of settlements in the West Bank.
• South Korea asks the US for a tax break for Alaska LNG project, according to Maeil.
• South Korea-US ties are said to be straining over intelligence sharing restrictions, trade disputes, and reduced military cooperation, raising concerns about Seoul's ability to counter North Korea's nuclear threat. South Korean President Lee Jae-myung is seeking to rebuild trust with Washington while improving ties with Beijing as trade tensions and potential Trump-Kim talks add uncertainty.
• US Secretary of State Rubio spoke with Israeli PM Netanyahu and spoke with Lebanon's President Aoun regarding recent developments including the seizure of a truck carrying Hezbollah explosives. Rubio also urged direct military-to-military communication between Lebanese and Israeli forces for deconfliction.

CRYPTO

• Bitcoin (+1%) and Ethereum (+3%) attempts to rebound from recent losses as the risk tone improves.

APAC TRADE

• APAC stocks were mostly higher as global markets regained composure following the recent tech bloodbath. Elsewhere, Indonesian stocks are the outlier with double-digit percentage losses as the MSCI consults on a proposal to reclassify Indonesia from Emerging Market to a Standalone Market Status.
• ASX 200 gained with the upside led by tech and miners, while recent weak jobs data also supported the case for a pause from the RBA at the next meeting.
• Nikkei 225 recouped some of the losses from the prior day's turmoil.
• KOSPI outperformed but still has far to go after falling by as much as 8% yesterday.
• Hang Seng and Shanghai Comp conformed to the broad recovery in risk assets, while PBoC Governor Pan also recently reiterated that China would maintain a moderately loose monetary policy.

NOTABLE ASIA-PAC HEADLINES

• South Korean Finance Minister and Central Bank Governor held a meeting with the Fed and US Treasury Department.
• China is reportedly moving to lift the stock market with selling curbs and buybacks, Bloomberg reported.
• Japan's Finance Minister Katayama said can't comment whether we would need extra budget or not, adds even if needed, the extra budget would be limited to urgent policy priorities.

NOTABLE APAC DATA RECAP

• Japanese Foreign Bond Investment (Oct/10) -339.7B (Prev. -345.7B).
• Japanese Stock Investment by Foreigners (Oct/10) 3521.5B (Prev. 2199.7B).
• New Zealand Food Inflation (Sep MM) 0.0% (Prev. 0.3%).
• New Zealand Electronic Retail Card Spending (Sep MM) -0.4% (Prev. -0.9%).
• New Zealand Electronic Retail Card Spending (Sep YY) 0.9% (Prev. 0.2%).
• New Zealand Business NZ PMI (Sep) 56.5 (Prev. 53.1).

• US President Trump said Iran had asked for a halt to US attacks and negotiations are still ongoing. Trump mentioned that he would not use nuclear weapons, but warned that they may have to go to Pickaxe Mountain.
• APAC stocks traded mostly higher, attempting to rebound from the recent tech selloff; European equity futures are set for a positive cash market open.
• DXY is essentially flat, and was largely unreactive to Fed Chair Warsh who avoided any forward guidance; Antipodeans leads, whilst the CHF underperforms.
• Crude benchmarks are in the red as the Middle East situation remains tense; Trump mentioned that Ukrainian President Zelensky is not a good guy to deal with.
• Looking ahead, highlights include EU Final Inflation (Sep), Italian Final Inflation (Sep), US Import/Export Prices (Sep), Industrial Production (Sep), Credit Ratings update from Morningstar DBRS on Italy.

SNAPSHOTLOOKING AHEAD

• Highlights include EU Final Inflation (Sep), Italian Final Inflation (Sep), US Import/Export Prices (Sep), Industrial Production (Sep), Credit Ratings update from Morningstar DBRS on Italy.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT/MIDDLE EAST

• US President Trump said he wouldn't use nuclear weapons on Iran and stated they may have to go to Pickaxe Mountain, but does not see troops on the ground in Iran. Trump said Iran has asked for a halt to US attacks and negotiations are still ongoing. Furthermore, Trump said he is talking to Russia and China regarding denuclearisation and answered that he doesn't trust anyone when was asked if he trusts Israeli PM Netanyahu
• US issued fresh Iran-related sanctions.
• US CENTCOM rejected the IRGC's claim that it controls the Strait of Hormuz, saying the US and regional partners control the waterway and commercial vessels continue to transit despite what it described as unwarranted IRGC aggression. CENTCOM also denied the IRGC's claim that a Singapore-flagged container ship struck a naval mine, saying the civilian vessel M/V GFS Pride was hit by an IRGC projectile and sank while being towed to shore. It also denied Iranian claims that hundreds of US service members had been killed in Jordan.
• Israeli PM Netanyahu spoke with US Secretary of State Rubio and security officials, saying that if Tehran does not come to its senses, military action is a realistic scenario.
• US Secretary of State Rubio spoke with Israeli PM Netanyahu and spoke with Lebanon's President Aoun regarding recent developments, including the seizure of a truck carrying Hezbollah explosives. Rubio also urged direct military-to-military communication between Lebanese and Israeli forces for deconfliction.
• Iran's Army Commander said the Strait of Hormuz would remain closed until the rights of the Iranian people are respected, warning that any threats to Iran's infrastructure would trigger a response several times greater. He said Tehran had established an equation whereby threats to Iran's infrastructure would result in multiple-fold damage to the infrastructure and interests of its adversaries, the "criminal Zionist regime" and anyone cooperating with it.
• Iranian senior diplomat said they are considering withdrawing from the NPT, while the Lebanese case is an integral part of any possible future agreement, according to Tasnim.
• Iran's PGSA blacklisted multiple vessels, bringing the total number of blacklisted ships to 120.
• Chinese Foreign Minister told Israel's President that promoting peace and reconciliation in the region is the cornerstone of China's Middle East policy and China consistently held that the Palestinian question is greatest historical injustice of this century. Furthermore, he stated that the immediate priority is to fully open access to the Gaza Strip and that Israel should stop and reverse its forced establishment of settlements in the West Bank.
• Saudi-led coalition said it intercepted and destroyed a drone launched towards Saudi Arabia's eastern region, while several explosions were heard in Jeddah.
• Saudi army conducted a missile attack on areas of Amran and Saada provinces in northern Yemen, while sources reported that an explosion was heard in Sanaa.
• Yemen Houthi official said Saudi Arabia must answer for the massacre of civilians in Yemen and called for an independent international probe into the Saudi war on Yemen.
• Yemeni armed forces targeted military positions in Aden, hitting a military operation headquarters managed by Saudi officers, which killed four.

US TRADEEQUITIES

• US stocks saw mixed price action on Thursday, but ultimately rebounded, with the S&P 500 eking modest gains, the Nasdaq 100 was slightly lower, while the Dow and Russell 2000 outperformed. Nonetheless, the tech sector remained pressured on recent selling in AI, chip and memory stocks following a 7.5% drop in the KOSPI overnight, although sentiment steadily improved after the opening bell, with equities gradually recovering throughout the session as technology stocks pared losses and most sectors closed in the green, led by Health Care, Materials and Financials.
• SPX +0.34 at 7,745, NDX -0.05% at 29,936, DJI +1.08% at 51,178, RUT +1.37% at 2,767.
• Click here for a detailed summary.

TARIFFS/TRADE

• US Commerce Secretary Lutnick throws the future of US-Mexico trade talks into further doubt as he has objected to significant reductions in tariffs on Mexican steel, aluminium and automobiles, according to WSJ.
• EU is reportedly open to developing a new trade instrument featuring a potential "kill switch" that would allow the EU to quickly exclude Chinese companies from its market, according to discussions among EU leaders on Thursday.
• Germany's Finance Minister said he is not against China and that China is an important partner, but stated it is not playing by the rules and that they should not be naive.
• UK Trade Minister Anas Sarwar indicated that the UK could be prepared to align with EU tariffs on Chinese electric vehicles, according to Politico. France and Germany were previously reported to be willing to include the UK in the EU's "Made in Europe" policy if London aligns with the bloc's China tariffs, according to the Financial Times, citing a draft.
• Japan is to open an anti-dumping probe on Chinese pigments, while rutile titanium dioxide was specifically mentioned.

NOTABLE HEADLINES

• Fed Chair Warsh said he may be over-scarred from the Global Financial Crisis and stated that since the September FOMC, the world has broadly conformed to our expectations. Warsh said they currently have structural growth and an investment surge, while they will make judgements at the October and December meetings, and noted the Fed made clear they would deliver price stability, but he does not believe in prejudging meetings and does not believe in signalling what he might do at meetings for the rest of 2026.
• Fed's Hammack (2026 voter) said she is hearing more from lower-income Americans struggling with inflation and stated that anecdotal information provides important economic guidance. Hammack said businesses are seeing a lot of input cost price pressures and worries about formation of inflation mentality, and noted that the formation of inflationary mindset might force more aggressive Fed policy action. Furthermore, she said it is hard to know what a neutral rate is and that financial conditions do not appear restrictive right now. Fed's Goolsbee (2027 voter) said it is a discouraging month regarding inflation and still feels some optimism if drivers of inflation can go away in short order, but if inflation is from overheating demand from AI, that's more disturbing and have to address it.
• WSJ's Timiraos noted September CPI and PPI translate into a core PCE projection of around 0.34%, which would be the highest monthly reading since January, while that would push the 12-month change to 3.1% (from 3% in August) and the 3-month annualised rate to 2.9% (from 2.0%).
• US Treasury's liquidity-support buyback for 20–30-year securities accepted USD 6bln of USD 40.84bln in offers, accepting 3 of the 42 eligible securities.
• Some investors dialled back Anthropic valuation expectations amid disappointing results and market sell-off, while investors were said to discuss USD 1.5tln valuation vs prev. expected of around USD 2.0tln following the previous night's meeting, according to sources.
• Taiwan Minister of Economic Affairs said Taiwan is to fund a USD 4bln US industrial park for Nvidia (NVDA) suppliers, while the Texas complex may be the first of several US sites for AI producers.

APAC TRADEEQUITIES

• APAC stocks were mostly higher as global markets regained composure following the recent tech bloodbath. Elsewhere, Indonesian stocks are the outlier with double-digit percentage losses as the MSCI consults on a proposal to reclassify Indonesia from Emerging Market to a Standalone Market Status.
• ASX 200 gained with the upside led by tech and miners, while recent weak jobs data also supported the case for a pause from the RBA at the next meeting.
• Nikkei 225 recouped some of the losses from the prior day's turmoil.
• KOSPI outperformed but still has far to go after falling by as much as 8% yesterday.
• Hang Seng and Shanghai Comp conformed to the broad recovery in risk assets, while PBoC Governor Pan also recently reiterated that China would maintain a moderately loose monetary policy.
• US equity futures were contained following yesterday's recovery.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.7% after the cash market closed with losses of 0.4% on Thursday.

FX

• DXY got some reprieve from the recent selling despite the bout of hot inflation metrics, while the latest rhetoric from Fed officials regarding price pressures did little to spur the dollar, and Fed Chair Warsh continued to refrain from giving any clues on future policy.
• EUR/USD paused overnight and held on to its recent gains after returning to the 1.1200 level.
• GBP/USD mildly extended on its gains after relatively outperforming yesterday, with reports noting that UK Chancellor Healey is set to raise taxes on banks, while there was also better-than-expected UK GDP data and previous comments from BoE officials, in which Greene reiterated that she sees risks of second-round effects as “pretty significant”.
• USD/JPY lacked direction in the absence of tier-1 data and after recent oscillations through 158.00.
• Antipodeans strengthened overnight with tailwinds amid the mostly improved global risk sentiment.
• PBoC sets USD/CNY mid-point at 6.7220 vs exp. 6.6947 (prev. 6.7253)

FIXED INCOME

• 10yr UST futures were little changed following the choppy reaction to a slew of US data, including another hot inflation metric, in which PPI showed the fastest pace of increase since early 2022, while the comments from Fed Chair Warsh provided very little to spur price action.
• Bund futures lacked direction despite the mild retreat in energy prices and rebound in stocks.
• 10yr JGB futures retreated as the relief rally in stocks dampened haven appeal.

COMMODITIES

• Crude futures retreated overnight after yesterday's mixed price action, in which US crude outperformed its North Sea counterpart following the large weekly US headline inventory drawdown, while the US told IEA member countries it is unhappy with the planned emergency oil release and suggested supplementing it with a further 100mln barrels.
• US EIA crude oil stocks fell by 8.557mln barrels in the week ended October 9th, compared with an expected decline of 0.3mln barrels and a previous fall of 3.186mln barrels. Strategic Petroleum Reserve was unchanged at 283mln barrels.
• Spot gold was indecisive as the dollar took a breather from recent selling.
• Copper futures steadily climbed amid the mostly positive risk sentiment in Asia.

CRYPTO

• Bitcoin marginally declined in choppy, range-bound trade on both sides of the USD 82,000 level.

NOTABLE ASIA-PAC HEADLINES

• Japanese Finance Minister Katayama said she can't comment on whether we would need an extra budget or not, but even if needed, the extra budget would be limited to urgent policy priorities.
• Japanese MoF official said G7 and G20 meetings did not specifically debate recent stock market moves, while they are always monitoring market moves carefully but will not comment on each stock, forex or bond market move.
• US Treasury Undersecretary said Japan no longer faces the deflationary environment that existed for more than a decade, and the level of its currency and monetary policy must change accordingly.
• MSCI consults on reclassifying Indonesia from Emerging Market to Standalone Market status.

GEOPOLITICS

RUSSIA-UKRAINE

• US President Trump said Ukrainian President Zelensky is not a good guy to deal with and is more difficult than Russian President Putin to deal with, while he said there are plenty of other targets besides refineries to hit and need an election in Ukraine. It was separately reported that Trump said Ukraine's resumption of strikes on Russian refineries is a disgrace.
• US senators are demanding an investigation into the disruption of a satellite system supporting Ukraine, according to an Al Jazeera correspondent, while it was reported that the order to limit Ukraine's access to the Starshield system came from inside the White House, according to sources
• Russian President Putin said no significant damage has been caused by recent Ukraine’s strikes on Russian refineries, while Russia will respond to Ukraine’s strikes on oil refineries, logistics and energy facilities. Furthermore, Putin said Ukraine failed to grasp the consequences of returning to targeting refineries.
• Russian local governor said drones hit industrial facilities in Russia's Rostov region.
• Ukrainian drones attacked Russia's Moscow region, hitting industrial warehouse facilities.
• Ukraine's Air Force said jet drones were spotted over Kirovohrad region heading west.
• Massive fire broke out in Ukraine's Khmelnytsky region following a reported strike on a fuel depot.

OTHER

• South Korea-US ties are said to be straining over intelligence sharing restrictions, trade disputes, and reduced military cooperation, raising concerns about Seoul's ability to counter North Korea's nuclear threat. Furthermore, South Korean President Lee is seeking to rebuild trust with Washington while improving ties with Beijing as trade tensions and potential Trump-Kim talks add uncertainty.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Healey is poised to raise taxes on banks in the Budget, according to The Guardian.
• BoE Governor Bailey said it is too early to form strong views on the strength of second-round effects and that so far, the signs of second-round effects are subdued and businesses are emphasising cost-cutting. Bailey stated the UK economy is more resilient than we expected and not as strong as we need, as well as noted that news from the Middle East is the biggest factor moving UK gilt yields.
• ECB's Rehn said the growth outlook is better today than at the start of the year and he is not seeing second-round effects on inflation, while he added that the labour market is not as tight and wage moderation is ongoing, as well as noted that they must show vigilance on the inflation outlook.

• The US military developed new strike plans that include potentially using the so-called “mother of all bombs” to target Iranian energy infrastructure and nuclear sites.
• APAC stocks slumped amid the global tech sell-off; European tech slumps, whilst NQ -1% underperforms.
• KOSPI was the worst performer and triggered circuit breakers after dropping as much as 8% owing to its large tech exposure.
• DXY pressured on lower yields & AI concerns; AUD underperforms post-jobs data.
• Crude pressured by global risk-off sentiment and potential supply relief; gold gains on haven demand.
• Looking ahead, highlights include US Jobless Claims (Oct/10), PPI (Sep), Retail Sales (Sep), Philly Fed Index (Oct), Atlanta Fed GDP (Q3). Speakers include Fed’s Bowman & Hammack, BoC’s Rogers, Earnings from Charles Schwab & Alcoa.

SNAPSHOT

As of 10:30BST / 05:30 EDT

LOOKING AHEAD

• Looking ahead, highlights include US Jobless Claims (Oct/10), PPI (Sep), Retail Sales (Sep), Philly Fed Index (Oct), Atlanta Fed GDP (Q3). Speakers include Fed’s Bowman & Hammack, BoC’s Rogers, Earnings from Charles Schwab & Alcoa.
• Click here for the Week Ahead preview

EUROPEAN TRADEEQUITIES

• European bourses (STOXX 600 -0.2%) point to a mixed picture, with so-called defensives (FTSE 100 +0.3%, SMI +0.4%) outperforming while cyclical-heavy indices (DAX 40 -0.3%, AEX -0.9%) underperform, primarily driven by the continued selloff in chip and memory names.
• Sectors have a slight positive tilt. Telecoms lead, with Food, Beverages & Tobacco and Insurance rounding out the sector gainers. Unsurprisingly, Tech is the sector laggard, with Basic Resources and Industrials following behind.
• US equity futures are mixed, with the NQ and ES being weighed on by tech names. AI funding has returned as a worry for investors, with the Broadcom CEO recently highlighting concerns about AI buildout financing. Additionally, CoreWeave has been pressured, with shares plunging 15% in the prior session (-6% pre-market) as it has been heavily reliant on the high-yield debt markets to finance its build out.
• TSMC EARNINGS: TSMC earnings failed to result in a rebound in the tech space, despite a better-than-expected revenue outlook. In brief, Q3 net income topped estimates while gross margin printed a tick lower than consensus. The chipmaker projected Q4 sales as much as USD 54.3bln (exp. USD 48.8bln), which should result in a c. +44% rise in 2026 revenue in USD. Following the Q3 release, analysts at Saxo Markets see this as a much-needed vote of confidence in the AI demand story, amid a selloff triggered by growing signs of stress.
• US FTC has subpoenaed Anthropic and OpenAI, Axios reports citing sources; seeking documentation in relation to safety incidents and privacy policies. Plan to compel executives to testify.

FX

• Snapshot: G10s are mostly firmer against the USD, which is under mild pressure this morning. The Aussie is the clear underperformer following a weak jobs report, whilst the CHF holds at the top of the pile, on narrowing yield differentials and the broader risk-off tone.
• DXY is currently trading with modest losses, giving back some of the strength seen in the prior session; as it stands the index holds within a 101.87 to 102.39 range. Pressure which appears to be a pull back from the prior day’s post-CPI gains, and as US yields falter, amidst the latest tech sell off. Overnight, the likes of SK Hynix and Samsung Electronics sank in excess of 11%, with investors worried about AI spending sustainability, and most recently, default concerns related to CoreWeave.
• The selling pressure also comes in the aftermath of a hot US CPI report, which only further exacerbates credit concerns and expectations of tighter conditions ahead. Money markets currently assign a 27% chance of a hike in October, and 90% by December 2026; a few sell-side banks have also brought forward their calls of a hike by year-end vs previously viewing a hold.
• Aussie (-0.6%) is the clear underperformer this morning, and currently holds at the lower end of a 0.6936 to 0.6980 range. This comes after a very poor regional jobs report, which showed an unexpected contraction in headline Employment Change, which was solely due to part-time work, while the Unemployment Rate rose, although it coincided with a fall in the Participation Rate. A report which saw money market pare back their bets of a hike in November (16%); c. 40% chance of a hike is assigned by year-end.
• CHF (+0.6%) is the outperformer this morning, joined closely by the EUR (+0.5%) and GBP (+0.5%), all benefiting from the broader USD pressure. The Swiss Franc cheers narrowing yield differentials, whilst the GBP counts down the days to the UK Budget (Oct 28th).
• On that note, recent source reports about Chancellor Healey’s plans have been taken in the market’s stride. Most pertinently, he 1) does not intend to equalise income tax and CGT, 2) will fund the package without fresh borrowing. Into the Budget, the August GDP M/M reading saw the UK grow 0.1%, topping expectations of -0.1%, but beneath the prior 0.4%. So whilst Healey will welcome the growth in August, the slight slowdown will no doubt lessen some of the breathing room he would have liked to have. Cable kneejerked higher on the series itself, but then pared back given it has little impact on monetary policy in the near-term. On this subject, a couple of BoE members have spoken today; Greene reiterated that she sees risks of second round effects as “pretty significant”, whilst Breeden questioned whether the energy shock is gone or just delayed. A stark contrast between the two MPC members. GBP/USD currently holds within a 1.3186 to 1.3259 range.
• South Korea and Japan extend their currency swap agreement, Yonhap reported.

FIXED INCOME

• In short, the post-CPI rebound continues as the tech/AI selloff extends and a FTQ ensues.
• USTs at a 105-18 peak, firmer by 22 ticks on the day already into PPI, retail sales and Fed speak. Taking USTs to the highest since the 23rd of September, when 106-08+ printed. Amidst this, yields are lower across the curve with the 10yr down by 10bps on the day, at a 5.08% low; if the move continues, it is worth reminding that the referenced 23rd September session was the last time a sub-5% US 10yr yield was seen. For context, we are some way off the 5.365% early-October peak.
• Bunds in-fitting with drivers much the same, and ECB speak and data prints having no real impact on the market thus far. Price action that has lifted Bunds to a 121.92 peak, firmer by 96 ticks at best; though, for what it is worth, the peak hit in APAC trade (in slight contrast to USTs) during the worst of the South Korea selloff.
• Gilts opened higher by just over 50 ticks before extending to gains of exactly a full point on the day, hitting 84.91 and the highest since October 2nd. A move driven by the above FTQ. No real followthrough to the UK’s GDP data, as while better than expected this was essentially due to favourable service revisions in the last two periods, and a stagnate service picture in August, as opposed to any surprise growth. While the better-than-expected print is welcome, it does not change the narrative for policymakers.
• Spain sells EUR 5.436bln vs Exp. 4.5-5.5bln 2.35% 2029, 2.60% 2031 and 3.55% 2033 Bono.
• France sells EUR 12bln vs Exp. EUR 10-12bln 2.70% 2031, 0.00% 2031, 3.25% 2032 and 3.50% 2033 OAT

COMMODITIES

• WTI Nov and Brent Dec futures are softer amid the broader risk-off tone following the global tech sell-off and hotter-than-expected US CPI yesterday, with the complex also pressured by potential supply relief. Recent reports suggested the US is considering easing sanctions on shadow fleet vessels to boost oil flows, while Russian diesel could reach the US ahead of the November midterms. Nonetheless, geopolitics has subsided, with the US reportedly preparing fresh strike options against Iranian energy and nuclear facilities, while Houthi attacks on Saudi Arabia continue. Elsewhere, US private inventories yesterday showed a sizeable 11.1mln bbl draw in crude (exp. 1.9mln bbl build), although this provided little support amid the broader selling.
• WTI resides in a USD 93.58-95.31/bbl range, while Brent declined within a USD 103.64-105.83/bbl range, albeit both off worst levels. Dutch TTF is softer alongside the broader pullback in energy prices, although underlying fundamentals remain bullish ahead of winter. TTF fell to the bottom of a EUR 85.00-87.80/MWh range at the time of writing.
• Precious metals are firmer, with spot gold benefiting from haven demand amid the global tech sell-off, alongside a softer DXY and lower global yields despite yesterday's hotter-than-expected US CPI. Spot gold is firmer within a USD 4,100-4,162/oz range, while spot silver also gains, within a USD 55.49-56.37/oz range.
• Base metals are softer amid the broader risk-off tone, with copper pressured by the sharp sell-off in global equities, particularly Asian tech stocks, with the KOSPI suffering the most, alongside concerns over further Fed tightening following the US CPI report. 3M LME copper trades close to the bottom of a USD 14,320-14,480/t range.
• Chinese State Planner said that domestic gasoline and diesel retail prices will not be adjusted on Oct 15, 2026.
• Chile's state miner CODELCO called a shareholders meeting for November 5th to review production inconsistencies in 2024 and 2025.
• US Weekly Private Inventory Data (bbls): Crude -11.1mln (exp. +1.9mln), Gasoline +1.1mln (exp. -0.8mln), Distillate -1.5mln (exp. -2.0mln), Cushing +1.8mln.
• Russian Deputy PM Novak says that "a number of countries, not just the US, are interested in purchasing Russian diesel fuel"

TRADE/TARIFFS

• Japanese Trade Minister Akazawa said Japan and US agree on first chip project under USDD 550bln investment plan, while he added that chip project has great significance in AI era and they remain strongly committed to last year's trade deal. said:. Latest chip project is to enhance Japan and US ties further. Collaborating on chip supply is key for economic security.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Healey said he will follow IMF advice to stick to deficit reduction plans in October 28th Budget.

NOTABLE EUROPEAN DATA RECAP

• UK GDP (Aug MM) 0.1% vs. Exp. -0.1% (Prev. 0.4%).
• UK GDP (Aug YY) 2.1% vs. Exp. 1.7% (Prev. 1.8%).
• UK GDP 3-Month Avg (Aug) 0.7% vs. Exp. 0.5% (Prev. 0.5%).
• UK Trade Balance (Aug) -0.920B (Prev. -3.450B).
• UK Goods Trade Balance Non-EU (Aug) -5.29B (Prev. -8.19B).
• UK Goods Trade Balance (Aug) -18.01B vs. Exp. -21.8B (Prev. -19.30B).
• UK Manufacturing Production (Aug YY) 3.0% vs. Exp. 2.3% (Prev. 2.2%).
• UK Manufacturing Production (Aug MM) 1.2% vs. Exp. -0.1% (Prev. 1.0%).
• UK Construction Output (Aug YY) -1.8% vs. Exp. -1.6% (Prev. -1.9%).
• UK Industrial Production (Aug YY) 1.6% vs. Exp. 0.7% (Prev. 0.8%).
• UK Industrial Production (Aug MM) 0.8% vs. Exp. -0.1% (Prev. 0.3%).
• French CPI Final (Sep YY) 3.1% vs. Exp. 3% (Prev. 2.4%).
• French CPI Final (Sep MM) -0.3% vs. Exp. -0.3% (Prev. 0.7%).
• French HICP Final (Sep YY) 3.4% vs. Exp. 3.4% (Prev. 2.6%).
• French HICP Final (Sep MM) -0.3% vs. Exp. -0.4% (Prev. 0.4%).
• European Industrial Production (Aug YY) -1.1% vs. Exp. -0.1% (Prev. -0.3%); Industrial Production (Aug MM) -0.5% vs. Exp. 0% (Prev. -0.3%)

NOTABLE EUROPEAN EQUITY HEADLINES

• UBS (UBSG SW) is mapping out contingency plans to move its HQ from Switzerland if Swiss lawmakers proceed with tougher capital requirements under the country’s too-big-to-fail banking laws, according to WSJ.

CENTRAL BANKS

• Fed's Daly (2027 voter) said we are more likely than not to need more rate hikes, but still deliberating on timing, adds not in a posture of urgency and better to be thoughtful and deliberate. Reassuring that after markets' initial 'robust' reaction to CPI data, markets are calmer. Markets understand the Fed's reaction. CPI showed gas prices are driving headline inflation, while core inflation remains sticky, as expected. Feels imprudent to react when there is time to make a good decision. Don't know yet if inflation will come down as shocks abate or worsen if shocks persist. Risks to above-target inflation remain elevated; stable labour market means the Fed can focus on price stability. The Fed has a responsibility to communicate effectively and be accountable, transparent and clear.
• US President Trump said the Fed has interest rates artificially high.
• UBS expects the Fed to hike for a third time in March 2027 (prev. saw hiking cycle to end in December).
• BoJ Board Member Koeda said she believes that the bank should adjust the policy interest rate in a timely manner with an eye on the economic and price situation, while keeping in mind the estimated range of the neutral interest rate. The monetary environment has been accommodative; no pace of hikes in mind, sees neutral rate "significantly" above 1%.
• ECB's Kazaks said that there is no immediate rush on interest rates, inflationary pressure remains strong in the near term.
• ECB's Pereira said yields rise is more related to fiscal issues, adds good news is that inflation is not spreading and if inflation starts broadening, central banks will be forced to act. said:. Growth is surprising on the upside and wouldn't be surprised if it continued in the next few months.
• ECB's Dolenc said don't see second-round effects yet and the labour market isn't so tight anymore, adds must be vigilant on inflation data. said:. Approaching a restrictive policy stance. ECB may not have to do much if markets tighten and have tools including TPI which will be used if needed.
• BoE's Breeden said are looking to whether the energy shock is gone or just delayed; the loosening of the labour market hopefully means that there will not be wage price pressure like in 2022.
• BoE's Greene said the risks of second-round effects are quite significant.
• BoE's chief economist Pill said should not give impression that hike now would be at the start of a series of increases.
• RBNZ Chief Economist Conway said New Zealand is feeling the effects of oil price shock, while he affirm's direction of the OCR is most likely up and the next OCR decision is wide open.
• PBoC Governor Pan attends China-GCC Central Bank Governors' Meeting, while the PBoC and Qatar Central Bank renew FX swap agreement.
• PBoC injected CNY 45bln via 7-day reverse repos with the rate at 1.40%.
• PBoC set USD/CNY mid-point at 6.7253 vs exp. 6.6977 (prev. 6.7249).
• SARB Governor sees upside risks to inflation to remain, adding that he expects CPI to return to the 3% target only in 2028; policy rates are moderately restrictive and consistent with the outlook.

NOTABLE US HEADLINES

• US President Trump said regarding the inflation report that we're doing well.
• White House Council of Economic Advisers Chair said referring to the inflation report that this is not a good month and that Bureau of Labor Statistics data is reliable.
• US President Trump posted "I’m heading to Montana for a “PACKED HOUSE” Speech. It’s broadcast LIVE on Right Side Broadcasting Network (RSBN) — What a great job they do. See you soon!".
• Trump administration's investigation into Rep. Omar is aimed at building a case to strip her of her US citizenship and ultimately deport her, according to US officials and other people familiar with the probe cited by WSJ.
• US Judge limited Justice Department's access to Rep. Ilhan Omar's records in sprawling immigration fraud probe, according to CNN's Jake Tapper.
• Japanese Finance Minister Katayama said no change in the US-Japan message since intervention.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky's top advisors spoke with White House counterparts on Wednesday and asked whether there'd be a decision to shut down Starlink services and what could be done to fix the situation, according to sources cited by Axios's Ravid. "A senior U.S. official said the Trump administration had nothing to do with the alleged Starlink service constraints. But Ukrainian officials remain suspicious".
• US proposed European countries unfreeze some Russian sovereign assets in an effort to revive peace talks during discussions in Miami last week between Trump's peace negotiators and officials from Ukraine, France, Germany, UK, EU and NATO, according to FT. European delegates rebuffed the plan.
• Ukraine President Zelensky said Ukraine will resume strikes on Russian refineries and expresses anger at a dangerous withdrawal of US intelligence sharing and weakening of Starlink satellite internet service, according to FT.
• Dutch PM said that "we need to step up our game and make sure Ukraine wins the war".
• Russia's Ryazan refinery was reportedly attacked overnight by drone.
• Russia hits Ukraine's Izmail port and cargo vessels.
• Japanese PM Takaichi said there is no such fact when asked whether Japan is conducting espionage in Russia.
• UK Chancellor Healey called on other nations to stay the path regarding Russia sanctions and said tighter ban on Russia-linked shipping services is needed.

MIDDLE EAST

US-IRAN

• US is considering using "mother of all bombs" against Iran, according to source cited by CNN.
• US President Trump reiterated that the war with Iran will end soon and fuel prices will drop shortly, adds Iran issue will be resolved quickly.
• US President Trump said we have complete control of the Strait of Hormuz and are extracting more oil from it than ever before, while he stated that Iran was two weeks away from acquiring a nuclear weapon before we struck their sites. This matter in Iran will end very soon, and when it ends, gasoline prices will drop to levels even lower than they were before the start of military operations.
• US is reportedly discussing lifting some sanctions on shadow fleet vessels in attempt to lower global freight rates and boost oil flows in the Middle East, according to an official.
• IRGC Spokesperson said attack on violating ships was a response to America's third breach of promise.

HOUTHIS-SAUDI

• Saudi-led coalition says that a cruise missile has been intercepted in the Medina region, Al Hadath reports; Yemeni Army Spokesperson says Forces did not target Saudi's Medina, and these claims is a great falsehood.
• Houthis are developing their own advanced ballistic missiles that could reach Saudi Arabia and Israel using Chinese delivered parts, according to New York Post.
• Houthi media official called on Taiz residents to stay inside their homes.
• Yemen's air defences downed a Saudi Typhoon warplane in the skies over Saada in Yemen, according to Fars.
• Arab sources report hearing several explosions in Yemen's capital, according to Tasnim.
• Saudi-led coalition said it intercepted and destroyed a drone in the kingdom's eastern region.

CRYPTO

• Bitcoin (-3%) and Ethereum (-5%) slip alongside the broader risk tone.

APAC TRADE

• APAC stocks were lower across the board as the sell-off rolled over into the region following the losses stateside owing to the tech rout and hot CPI data.
• ASX 200 was slightly lower but with the downside limited as underperformance in tech and miners was offset by resilience in financials, telecoms and defensive sectors, while disappointing jobs data further lessened the likelihood of the central bank hiking rates again next month.
• Nikkei 225 slumped by more than 3000 points, with double-digit losses seen in several tech stocks.
• KOSPI was the worst performer and triggered circuit breakers after dropping as much as 8% owing to its large tech exposure and the ongoing bloodbath in the sector.
• Hang Seng and Shanghai Comp conformed to the broad-based tech-driven weakness, with recent stronger-than-expected lending data doing little to spur risk sentiment.

NOTABLE ASIA-PAC HEADLINES

• Chinese Premier Li said regarding New Yalu River Bridge, which connects China and North Korea, said opening of the bridge will strongly promote economic and trade cooperation and further strengthen personnel exchanges.

NOTABLE APAC DATA RECAP

• Japanese Capacity Utilization (Aug MM) -4.2% (Prev. 0.5%).
• Japanese Industrial Production Final (Aug YY) 2.7% (Prev. 3.9%).
• Japanese Industrial Production Final (Aug MM) -2.4% vs. Exp. -1.7% (Prev. -0.2%).
• Japanese Machinery Orders (Aug MM) 5.2% vs. Exp. 3% (Prev. -3.7%).
• Japanese Machinery Orders (Aug YY) 18.6% vs. Exp. 15.7% (Prev. 11.2%).
• Australian Part Time Employment Chg (Sep) -73.7K (Prev. 45.8K).
• Australian Full Time Employment Change (Sep) 34.4K (Prev. -6.3K).
• Australian Employment Change (Sep) -39.3K vs. Exp. 20K (Prev. 39.5K).
• Australian Unemployment Rate (Sep) 4.7% vs. Exp. 4.6% (Prev. 4.6%).
• Australian Participation Rate (Sep) 66.8% vs. Exp. 67% (Prev. 67.1%).

• US President Trump said the Iran conflict will end soon; the US military reportedly developed new strike plans targeting Iranian energy and nuclear sites.
• APAC stocks slumped amid the global tech sell-off and hotter-than-expected US CPI; US and European equity futures declined.
• KOSPI was the worst performer and triggered circuit breakers after dropping as much as 8% owing to its large tech exposure.
• DXY softened alongside lower US yields; crude futures retreated, while gold rallied on haven demand.
• Looking ahead, highlights include UK GDP (Aug), French Final Inflation (Sep), US Jobless Claims (Oct/10), PPI (Sep), Retail Sales (Sep), Philly Fed Index (Oct), Atlanta Fed GDP (Q3). Speakers include US President Trump, BoJ’s Koeda, BoE’s Pill, Greene & Breeden, Fed’s Bowman & Hammack, BoC’s Rogers, ECB's Cipollone. Supply from Spain & France. Earnings from TSMC, Ericsson, Charles Schwab & Alcoa.

SNAPSHOT

• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump said they have complete control of the Strait of Hormuz and are extracting more oil from it than ever before, while he stated that Iran was two weeks away from acquiring a nuclear weapon before the US struck their sites. Trump also reiterated that the matter in Iran will end very soon, and when it ends, gasoline prices will drop to levels even lower than they were before the start of military operations.
• US military developed new strike plans that include potentially using the so-called “mother of all bombs” to target Iranian energy infrastructure and nuclear sites should President Trump give the order to resume combat operations either before or after the midterm elections, according to multiple US officials familiar with the matter cited by CNN.
• Iranian Parliament Speaker Ghalibaf said that when Tehran talks about both fighting and negotiating, it does not mean waging an endless war or engaging in constant negotiations. He added that Iran would continue fighting until the enemy was forced to meet the nation's demands or accept defeat. Ghalibaf also said regarding the US proposal, that they must be punished and made to understand that they must accept the legitimate demands of the Iranian people.
• IRGC spokesperson said attack on violating ships was a response to US's breach of promises.
• Houthis are reportedly developing their own advanced ballistic missiles that could reach Saudi Arabia and Israel using Chinese-delivered parts, according to New York Post.
• Houthi spokesperson said the group had attacked King Khalid International Airport in Riyadh, Saudi Arabia, with a ballistic missile, while the group's armed forces targeted several Saudi troop concentrations in the Ras al-Ara and al-Mudharabah areas with three ballistic missiles.
• Explosions were reportedly heard in Jeddah as Houthis targeted Aramco's Jeddah North distribution station in Saudi Arabia, according to Naya.
• Saudi-led coalition says it intercepted and destroyed a drone in the kingdom's eastern region.
• Yemen's air defences downed a Saudi Typhoon warplane in the skies over Saada in Yemen, according to Fars.

US TRADEEQUITIES

• US stocks were sold on Wednesday, with initial pressure following the hotter-than-expected US CPI report, particularly in the core metrics. Meanwhile, AI concerns continued to mount, with further weakness in memory stocks, while concerns over AI-related financing intensified after CoreWeave's corporate bond yield rose above 15%, with Bloomberg noting that its bonds had reached levels typically associated with distress. AI-related stocks were sold aggressively throughout the session, raising broader concerns over credit risk and the sustainability of AI-related financing, while Financials were lower again as Q3 earnings continue to display a mixed picture.
• SPX -1.05% at 7,724, NDX -2.02% at 29,951, DJI -0.09% at 51,622, RUT -1.90% at 2,730.
• Click here for a detailed summary.

TARIFFS/TRADE

• US and China race to shape AI agenda ahead of the Xi-Trump talks on the sidelines of the APEC summit in Shenzhen in November.
• Japanese Trade Minister Akazawa said Japan and the US agreed on the first chip project under the USD 550bln investment plan, while he added the chip project has great significance in the AI era and they remain strongly committed to last year's trade deal. Akazawa also commented that the latest chip project is to enhance Japan and US ties further, and stated that collaborating on chip supply is key for economic security.
• SK Hynix (000660 KS) seeks US approval to export chip‑making equipment to China as a condition for its new US factory, according to sources.

NOTABLE HEADLINES

• Fed Beige Book stated that most districts described little or no net change in overall employment levels and that since the prior Beige Book, two of the twelve Federal Reserve districts reported moderate growth in economic activity. It stated three districts reported modest growth, while four reported slight growth, and three reported no significant change.
• Fed's Daly (2027 voter) said they are more likely than not to need more rate hikes, but still deliberating on timing, while she added they are not in a posture of urgency and better to be thoughtful and deliberate. Daly stated it is reassuring that after the market's initial 'robust' reaction to CPI data, markets are calmer, while she said it feels imprudent to react when there is time to make a good decision.
• Fed's Goolsbee (2027 voter) said a hotter-than-expected reading on September inflation is “discouraging" but wants to wait for more data before taking action to raise rates higher, while he stated that if the underlying trend in inflation is 4% core inflation, it is "not acceptable" and not compatible with the Fed's target, and that policy needs to address it.
• US President Trump says the Fed has interest rates artificially high.
• White House Council of Economic Advisers Chair said, referring to the inflation report, that this is not a good month and stated that Bureau of Labor Statistics data is reliable.
• US Judge limited Justice Department's access to Rep. Ilhan Omar's records in sprawling immigration fraud probe, according to CNN's Jake Tapper. It was separately reported that the Trump administration's investigation into Rep. Omar is aimed at building a case to strip her of her US citizenship and ultimately deport her, according to US officials and other people familiar with the probe cited by WSJ.
• NY Fed desk plans to conduct around USD 14.6bln (prev. USD 15.6bln) in reinvestment purchases between October 15th and November 13th.
• White House official said the first White House AI task force meeting is on Thursday.
• Anthropic revenue rose to USD 16.8bln in Q3 vs prev. USD 11.5bln in Q2, while it told investors it was profitable on an adjusted basis, according to FT.

APAC TRADEEQUITIES

• APAC stocks were lower across the board as the sell-off rolled over into the region following the losses stateside owing to the tech rout and hot CPI data.
• ASX 200 was slightly lower but with the downside limited as underperformance in tech and miners was offset by resilience in financials, telecoms and defensive sectors, while disappointing jobs data further lessened the likelihood of the central bank hiking rates again next month.
• Nikkei 225 slumped by more than 3000 points, with double-digit losses seen in several tech stocks.
• KOSPI was the worst performer and triggered circuit breakers after dropping as much as 8% owing to its large tech exposure and the ongoing bloodbath in the sector.
• Hang Seng and Shanghai Comp conformed to the broad-based tech-driven weakness, with recent stronger-than-expected lending data doing little to spur risk sentiment.
• US equity futures extended on recent selling with Emini Nasdaq 100 beneath the 30,000 level.
• European equity futures indicate a negative cash market open with Euro Stoxx 50 futures down 0.7% after the cash market closed with gains of 0.4% on Wednesday.

FX

• DXY continued to weaken after wiping out the knee-jerk gains from the hotter-than-expected CPI report, with the reversal coinciding with a drop in yields as bonds rallied amid a flight to safety, while there were also recent Fed comments with Bowman stating there is no urgency to take further action on interest rates, while Goolsbee said a hotter-than-expected reading on September inflation is “discouraging" but wants to wait for more data before taking action to lift rates higher.
• EUR/USD clawed back recent losses as the dollar dwindled, while participants got to digest rhetoric from ECB officials, with Simkus stating that he doesn't see a role for ECB intervention in France at present and doesn't see evident second-round effects yet. Furthermore, Pereira said the good news is that inflation is not spreading and if inflation starts broadening, central banks will be forced to act.
• GBP/USD benefited from the broad dollar weakness and reclaimed the 1.3200 handle, with a report noting that UK Chancellor Healey said he will follow IMF advice to stick to deficit reduction plans in the October 28th Budget, while participants now look ahead to monthly GDP and production data.
• USD/JPY fell beneath the 158.00 handle owing to the softer buck, haven demand and stronger-than-expected Machinery Orders, while there were comments from BoJ board member Koeda that the central bank should not become overly cautious about raising the policy interest rate, and Japanese Finance Minister Katayama said there was no change in the US-Japan message since intervention.
• Antipodeans were mixed with AUD/USD underperforming following the latest jobs data, which showed an unexpected contraction in headline Employment Change, which was solely due to part-time work, while the Unemployment Rate rose, although it coincided with a fall in the Participation Rate.

FIXED INCOME

• 10yr UST futures extended their rebound from post-CPI lows as the tech sell-off triggered a flight to quality, while comments from Fed officials pointed to a lack of urgency for immediate rate increases.
• Bund futures remained underpinned amid the stock rout and a pullback in oil.
• 10yr JGB futures tracked the rebound in global peers as yields declined, with prices ignoring the stronger-than-expected Machinery Orders data.

COMMODITIES

• Crude futures retreated overnight amid the broad risk-off mood and gave back the prior day's geopolitically fuelled gains amid little sign of a breakthrough or de-escalation of tensions.
• US Weekly Private Inventory Data (bbls): Crude -11.1mln (exp. +1.9mln), Gasoline +1.1mln (exp. -0.8mln), Distillate -1.5mln (exp. -2.0mln), Cushing +1.8mln.
• Russian diesel is expected to reach the US market before the November 3rd Midterm Election, according to sources cited by the New York Post.
• US is reportedly discussing lifting some sanctions on shadow fleet vessels in an attempt to lower global freight rates and boost oil flows in the Middle East, according to an official.
• Spot gold rallied amid a softer dollar and as the global tech sell-off spurred haven demand.
• Copper futures steadily declined alongside the broad negative risk sentiment.

CRYPTO

• Bitcoin declined with price action choppy on both sides of the USD 81,000 level.

NOTABLE ASIA-PAC HEADLINES

• BoJ Board Member Koeda said she believes that the bank should adjust the policy interest rate in a timely manner with an eye on the economic and price situation, while keeping in mind the estimated range of the neutral interest rate. Koeda said given that there have been considerable upside risks to prices in addition to continued accommodative and financial conditions, the bank should not become overly cautious about raising the policy interest rate. Koeda believes it will be necessary to pay attention to both AI-related exports and imports, and stated that recent interest rate increases are not necessarily expected to reduce overall consumption of the working generation.
• RBNZ Chief Economist Conway said New Zealand is feeling the effects of the oil price shock, while he affirmed the direction of the OCR is most likely up and the next OCR decision is wide open.

DATA RECAP

• Japanese Machinery Orders (Aug MM) 5.2% vs. Exp. 3% (Prev. -3.7%)
• Japanese Machinery Orders (Aug YY) 18.6% vs. Exp. 15.7% (Prev. 11.2%)
• Australian Employment Change (Sep) -39.3K vs. Exp. 20K (Prev. 39.5K)
• Australian Full Time Employment Change (Sep) 34.4K (Prev. -6.3K)
• Australian Part Time Employment Chg (Sep) -73.7K (Prev. 45.8K)
• Australian Unemployment Rate (Sep) 4.7% vs. Exp. 4.6% (Prev. 4.6%)
• Australian Participation Rate (Sep) 66.8% vs. Exp. 67% (Prev. 67.1%)

GEOPOLITICS

RUSSIA-UKRAINE

• US proposed that European countries unfreeze some Russian sovereign assets in an effort to revive peace talks during discussions in Miami last week between Trump's peace negotiators and officials from Ukraine, France, Germany, the UK, the EU and NATO, while European delegates rebuffed the plan, according to FT.
• Ukrainian President Zelensky said Ukraine will resume strikes on Russian refineries, while expressing anger at the 'dangerous' withdrawal of US intelligence sharing and weakening of Starlink satellite internet service, according to an interview with FT.
• Ukrainian President Zelensky said 'yes' when asked if he felt betrayed by US President Trump's diesel deal with Russia, but added that the situation was complicated, while a Zelensky adviser said Russian reports about refinery strikes were fake.
• Ukrainian President Zelensky's top advisors spoke with White House counterparts on Wednesday and asked whether there'd be a decision to shut down Starlink services and what could be done to fix the situation, while a senior US official said the Trump administration had nothing to do with the alleged Starlink service constraints, but Ukrainian officials remained suspicious, according to sources cited by Axios's Ravid.
• UK Chancellor Healey called on other nations to stay the path regarding Russia sanctions and said a tighter ban on Russia-linked shipping services is needed.

OTHER

• North Korea said it tested submarine-launched cruise missiles, according to KCNA.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Healey said he will follow IMF advice to stick to deficit reduction plans in the October 28th Budget, while it was separately reported that Healey is preparing to take a hit on his fiscal headroom, according to sources cited by Sky News.
• BoE's chief economist Pill said they should not give the impression that a hike now would be at the start of a series of increases.
• French RN leader Le Pen said she believes that France is not in a position to finance Ukraine.
• ECB's Dolenc said he doesn't see second-round effects yet and the labour market isn't so tight anymore, while he said they must be vigilant on inflation data and are approaching a restrictive policy stance. Dolenc also stated that the ECB may not have to do much if markets tighten and has tools including TPI, which will be used if needed.
• ECB's Pereira said the rise in yields is more related to fiscal issues and the good news is that inflation is not spreading, while he added if inflation starts broadening, central banks will be forced to act. Furthermore, he said growth is surprising on the upside and wouldn't be surprised if it continued in the next few months.

• US President Trump said he will make a decision on Iran very soon; Israeli PM Netanyahu and Trump reportedly discussed launching a major new operation against Iran before the US and Israeli elections.
• Yemeni Army said operations towards Saudi airports and oil facilities will continue and urged civilians, workers and shipping companies to evacuate airports and firms.
• US equity futures mixed; ASML gains on an upbeat Q3 report and raised guidance.
• DXY flat; Antipodeans outperform following strong Chinese trade data.
• Fixed income benchmarks climb, led by Gilts on pre-budget reports.
• Looking ahead, highlights include US Inflation (Sep). Speakers include Fed’s Barkin, ECB's Schnabel. Earnings from Bank of America, BlackRock, Morgan Stanley, Progressive & State Street.

SNAPSHOTEUROPEAN TRADEEQUITIES

• European bourses (STOXX 600 +0.6%) are firmer across the board, with outperformance in the AEX (+0.9%), following positive ASML (+1.6%) earnings. The Co. reported Q3 top- and bottom-line beats, while also lifting its Q4 and FY guidance. In the prepared remarks, the CEO highlighted that the planned supply for 2027 and 2028 will not fully meet the demand and are looking at ways to increase capacity for 2028 beyond the 30% increase previously communicated.
• Sectors highlight the positive bias. Real Estate tops the sector pile, with Tech and Consumer Products & Services following closely behind. The sector laggards include Autos, Insurance and Banks.
• US equity futures are broadly firmer, with the NQ flat. More bank earnings to report, with BofA on deck. Outside of earnings, US CPI is expected to tick higher to 3.6% (prev. 3.4%). Pointing to UST positioning, traders are short with BofA FMS pointing to this being a crowded trade. A dovish surprise could see a large unwind of this positioning and can also support the equity space.
• ASML (ASML NA) Q3 2026 (EUR): Basic EPS 12.95 (exp. 10.68), Revenue 11.66bln (exp. 11.58bln). Q4 guidance: Net Sales 14.2-15.2bln (exp. 14bln). FY guidance: Total net sales 44-45bln (exp. 43.6bln, prev. guided 43-45bln).
• Click for the sessions European pre-market equity newsflow
• Click for the additional news

FX

• DXY was initially under mild pressure following on from the dovish remarks from Fed’s Williams and as crude benchmarks moved lower in early morning trade. However, a bounce back in oil prices and hawkish commentary from the Houthis has allowed the index to sit around the unchanged mark, within a 102.07 to 102.23 range. To recap that announcement, the group warned that it will continue operations towards Saudi airports/oil facilities in the coming days; it also warned global shipping companies.
• G10s are mixed against the USD, vs initial gains across all majors early doors. The Antipodeans remain the outperformers, on the back of stronger-than-expected Chinese Export data, and with Chinese CPI Y/Y rising from the prior, albeit less than expected. The broader positive risk tone across markets is also facilitating the strength in Antipodeans today. Typical havens (CHF and JPY) are the slight underperformers this morning, given the broader risk tone.
• GBP and EUR are both essentially flat. For the former, UK press have been boosting their coverage ahead of the Autumn Budget (Oct 28th). The Times reported that UK Chancellor Healey is expected to pay for new giveaways in this month's budget, with higher taxes or spending cuts rather than more borrowing. This will offer investors some confidence on the fiscal side of things. Elsewhere, UK Chancellor Healey is to target online marketplaces in a GBP 1bln tax crackdown, in which the UK plans to make them responsible for collecting tax owed by retailers selling on their platforms.

FIXED INCOME

• USTs are firmer, but only modestly so, in a bit of a holding pattern ahead of US CPI this afternoon, which will be scoured for insight into near-term Fed bets. A cool print could add to the dovish move seen after the September NFP report, and thus further push back on end-2026 tightening bets. Conversely, a hot series would likely see that NFP-driven move unwind. As it stands, that sees USTs three ticks firmer in 104-22 to 104-29+ confines, while yields are lower across the curve with the short-end leading the downside currently.
• EGBs are in fitting, with no real reaction to the energy developments thus far. Instead, the bloc is focused on the fiscal front, as France’s Le Pen speaks later and is expected to once again push back on the level of French contribution to the EU budget. Elsewhere, confrontation is expected between Spanish PM Sanchez and Italian PM Meloni, according to Politico, on the migration situation.
• Bunds similarly bid by about 10 ticks, in narrow confines. More generally, the OAT-Bund 10yr yield spread is holding at 137bps and is modestly narrower on the session vs a c. 140bps start. While the BTP-Bund equivalent is around 108bps, and slightly wider as it stands.
• Finally, Gilts see relative outperformance today, supported by the FT report that Chancellor Healey’s fiscal giveaways will be funded via taxation and/or spending cuts, rather than via more borrowing. Additionally, BoE Chief Economist Pill pushed back on the extent of market pricing for hikes by end-2027; however, his commentary was more pragmatic on the data-dependent and uncertainty points, rather than a complete dovish reassessment from the known hawk. Firmer by 50 ticks at best, hitting an 84.37 peak, but around 10 ticks shy of Tuesday's best as things stand.
• Germany sells EUR 1.882bln vs Exp. EUR 2.5bln 3.40% 2047 and 2.90% 2056 Bund.
• The UK sells GBP 5bln 4.625% 2030 Gilt: b/c 3.41x (prev. 3.24x), average yield 4.945% (prev. 4.786%), tail 0.2bps (prev. 0.3bps).
• Japan sells JPY 1.9tln 5-year JGBs; b/c 3.56x (prev. 3.42x), average yield 2.379% (prev. 2.239%), Tail in price 0.02 (prev. 0.04).

COMMODITIES

• WTI Nov and Brent Dec futures are currently flat/mildly firmer, in what has been a volatile session for the complex. Overnight strength was facilitated by ongoing uncertainty related to the Strait of Hormuz; thereafter, the complex came under mild pressure, but lacked a clear driver. Some modest upticks were then seen after the Houthis warned that further operations against Saudi airports/oil facilities could happen in the coming days. Iranian press then reported that a tanker was sunk in the Strait of Hormuz after hitting a mine; a report which failed to lift prices any further.
• As it stands, WTI and Brent are holding towards the bottom end of their respective USD 93.97-95.41/bbl and USD 105.21-107.15/bbl ranges.
• Dutch TTF is also firmer but off its best level amid the aforementioned Middle Eastern tensions, with winter conditions underpinning demand at a time supply remains uncertain. TTF has fallen from a EUR 87.44/MWh high to sub-EUR 86.00/MWh at the time of writing, but remains well above its USD 84/MWh low.
• Precious metals are subdued, with spot gold posting mild losses, given the broadly positive risk tone. The yellow metal will await US CPI for further direction; it currently trades within a USD 4,141-4,170/oz range.
• Base metals are firmer, with copper benefiting from renewed Chinese demand and stronger-than-expected trade data, alongside the broader recovery in Asian technology stocks. Chinese exports (USD) rose 36.3% Y/Y (exp. 25.5%), while imports increased 31% (exp. 24.5%), although factory-gate inflation accelerated to 5.0% Y/Y (exp. 4.5%). Some mild pressure was seen in Copper after BHP’s Escondida mine reached a prelim agreement with its union, to avoid a strike.
• US President Trump said they are going to announce two deals today and stated every permit needed has been granted regarding Alaska LNG, while Trump then stated that Taiwan has agreed to buy 30% of gas coming off Alaska pipeline and is to invest USD 4.4 billion in the project, on top of the USD 50bln South Korea committed to invest. Trump later posted that "Massive Oil, Gas, and Mineral Exploration is getting ready to begin in our new and beautiful Greenland!"
• IEA OMR (Oct): Sees world oil demand falling by 2.6mln BPD in 2026 on Iran war disruption and rising prices (prev. 2.5mln BPD drop).
• BHP's (BHP AT) Escondida mine has reportedly reached a preliminary agreement with Supervisor's Union and is to be ratified by members, with a strike being avoided, according to sources.
• Japan's aluminium premium for Oct-Dec delivery set at USD 255/t, -35% Q/Q, according to sources.

TRADE/TARIFFS

• UK Business Secretary said the UK will not put tariffs on Chinese vehicles and he will not change trade rules due to EU pressure, according to The Guardian.
• Germany is reportedly set to push the EU to impose caps on additional Chinese imports, according to Bloomberg.
• China bought 8-10 cargoes of US soybeans for December shipment, according to traders.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Healey is to target online marketplaces in a GBP 1bln tax crackdown, in which the UK plans to make them responsible for collecting tax owed by retailers selling on their platforms, according to The Times.
• UK Chancellor Healey is expected to pay for new giveaways in this month's budget, with higher taxes or spending cuts rather than more borrowing, according to FT
• UK Chancellor Healey is reportedly making plans to cut the cost of hiring under-25-year-olds at the UK Budget, according to CityAM citing sources.
• The EU Commission proposed a one-year delay to the implementation of specific provisions of the EU Methane Regulation related to importers.
• French National Rally (RN) leader Le Pen sees the extraordinary political events of late-2026 and 2027 as ushering in significant European change, the FT reported. The report added that Le Pen thinks EU Commission President von der Leyen no longer has the confidence of many EU governments and describes the EU attempt to agree a seven-year budget before the French Presidential election as "deeply objectionable". Furthermore, Le Pen has the "will and conviction" to cut France's contribution to the EU budget, adding that the heavy European debt burden is more of a concern than any French-EU clash over fiscal contributions. To end, Le Pen added that she wants the ECB to be able to finance borrowing for priorities such as defence and the energy transition.
• Spanish PM Sanchez is expected to hold an "intense" debate at the European Council over migration, Politico reported citing sources, Sanchez expected to be combative with Italian PM Meloni on the issue.
• Italian PM Meloni said they see a deal with the EU being close on measures to cut the impact of gas costs on electricity prices.

NOTABLE EUROPEAN DATA RECAP

• German Wholesale Prices (Sep YY) 8.7% (Prev. 6.8%).
• German Wholesale Prices (Sep MM) 1.9% vs. Exp. 0.7% (Prev. 0.9%).
• Spanish HICP Final (Sep YY) 5.0% vs. Exp. 5% (Prev. 4.6%).
• Spanish HICP Final (Sep MM) 0.6% vs. Exp. 0.6% (Prev. 0.7%).
• Swedish CPIF Final (Sep YY) 1.5% vs. Exp. 1.5% (Prev. 0.7%).
• Swedish CPIF Final (Sep MM) 0.9% vs. Exp. 0.9% (Prev. -0.3%).

CENTRAL BANKS

• Fed's Collins (2028 voter) said tightening monetary policy will help return inflation to 2%, and she expects the Fed to raise interest rates 'a bit further' by the end of the year, while she expects inflation to stay above 2% due to high energy prices. Furthermore, she supported the Fed raising rates at the September meeting and stated the future path of monetary policy in the new year will depend on data.
• ECB's Lagarde said inflation has been rising predominantly, but not exclusively as a result of energy prices, while she noted that they are not seeing any second-round effects yet and they cannot wait until they are in full view, but can anticipate and look for hints. Furthermore, she responded that the primary and first solution lies in French fiscal policy when asked about French debt, and stated that growth is not brilliant, but 1.1% growth in 2026 is not bad.
• ECB's Wunsch said they are probably going to have to hike again, but he's not making any bets because they have so much uncertainty on the energy front and maybe also in AI, according to Bloomberg.
• ECB's Moulin said inflation is mainly due to conflict in the Middle East and energy-related, while he added that inflation expectations by corporates and households in the medium term are well anchored. Moulin also stated that a rise in yields may affect demand and prompt a more moderate response to an inflation shock.
• BoE Governor Bailey said UK companies are focusing intensely on containing costs amid surging energy prices caused by the Iran war, while he reiterated that broader UK inflation pressure from the energy shock has remained subdued so far.
• BoE Chief Economist Pill said he is somewhat more sceptical of market pricing for four rate hikes over the next year.
• Monetary Authority of Singapore kept its FX-based policy settings unchanged, with the rate of appreciation of the policy band maintained (exp. very slight tightening), while it made no changes to the width and level the band is centred. MAS said Singapore's economy is expected to continue expanding steadily in the quarters ahead and core inflation should remain slightly elevated in the immediate quarters ahead, but is projected to ease discernibly from the middle of next year.

NOTABLE US HEADLINES

• Fed Governor Cook's lawyer denounced the Trump administration's new investigation and said she will not be able to attend the hearing on November 5th, according to The New York Times.
• Anthropic is to disclose new revenue numbers at pre-IPO investor day today, CNBC reported citing sources.

GEOPOLITICS

MIDDLE EAST

• US President Trump said during a rally in Alaska that they've been taking more oil out of the Strait of Hormuz than before the war, while he reiterated that the war with Iran will end soon and that Iran will not possess a nuclear weapon. Trump also commented "Wait and see what we do to Iran. We're going to hit them hard. Wait and see what we do to Iran, because we've had enough".
• US Central Command rejected a claim by the IRGC Navy Commander that the Strait of Hormuz is under Iranian control and that any approaching US warships would be sunk, while it stated that "IRGC's navy commander has no navy. American forces and regional partners clearly control the Strait of Hormuz. Just yesterday US forces assisted Gulf partners in shipping more than 19mln barrels of crude oil through the strait."
• A source told the Tehran Times that the assessment is that the US President Trump, under pressure from Israeli President Netanyahu, is seeking a new confrontation in the region, but does not have the capacity to expand or sustain this.
• Iran is reportedly shifting tactics to step up attacks on shipping ahead of US midterms, according to two Iranian officials cited by Reuters.
• IRGC Navy said that a container ship carrying 2,500 containers sank south of the Strait of Hormuz, Sepah News reported.
• Iran and Oman Foreign Ministers held a call and discussed latest regional developments, including developments in Yemen, and examined ways to achieve peace and stability in the region.
• Pakistan's Foreign Minister said they have discussed Bab el-Mandeb with Oman, further efforts need to be made to resolve the current situation.
• Oman Foreign Ministry said that discussions with Iran on Hormuz have concluded, adding that the finalisation depends on US-Iran talks.
• Yemeni Army Spokesperson said operations towards Saudi airports and oil facilities will continue in the coming days and warned for global shipping companies, civilians and workers to evacuate such airports and firms, as they are legitimate targets. The spokesperson confirmed that forces carried out a military operation targeting the Aramco company in Dhahran in the Eastern Province and King Khaled International Airport and the Aramco refinery in Riyadh with a large number of ballistic missiles.
• Houthi official warned that Saudi oil and vital installations will be visited overnight.

RUSSIA-UKRAINE

• UK PM Burnham will host Ukrainian President Zelensky in Downing Street on Wednesday as Ukraine and its allies scramble to respond to Trump's diesel deal with Putin, while Burnham will tell Zelensky that Britain's support is rock solid with faster delivery of lightweight, multi-role missiles to help Ukraine defend itself, according to Bloomberg.
• A US official said the idea of cutting off intelligence-sharing with Ukraine is being discussed inside the White House, Semafor reported.
• Russian air attack hit energy facilities in Ukraine's capital Kyiv, according to the mayor.

CRYPTO

• Bitcoin has lacked a clear bias and trades in a USD 83.1k-84.06k range, as it remains contained within Tuesday's range.

APAC TRADE

• APAC stocks were ultimately mixed as the region clawed back some of the recent tech-related losses, while participants also digested key releases from China, including inflation and trade figures.
• ASX 200 declined with the index dragged lower by underperformance in the top-weighted financials sector, while sentiment amongst miners was not helped by the indecision in Rio Tinto following its quarterly production update.
• Nikkei 225 reclaimed the 68,000 level as tech stocks got some reprieve from recent selling.
• KOSPI was among the biggest gainers as tech rebounded from the recent underperformance.
• Hang Seng and Shanghai Comp were flat as participants digested a slew of data, including stronger-than-expected trade figures and mixed inflation numbers in which CPI printed softer-than-expected, while PPI was hot and showed a faster-than-anticipated acceleration in factory gate prices.

NOTABLE ASIA-PAC HEADLINES

• China's Customs Vice Minister said in the first three quarters, China's foreign trade has effectively dealt with various external shocks and China's foreign trade has kept good development momentum, while it has shown resilience despite rising international changes, risks and challenges. However, the official also stated that China's trade development still faces many challenges, and for full-year trade, there are many uncertainties globally, including geopolitical conflicts.

NOTABLE APAC DATA RECAP

• Chinese Trade Balance (Sep) 133.53B vs. Exp. 118.1B (Prev. 119.09B).
• Chinese Exports (Sep YY) 36.3% vs. Exp. 25.5% (Prev. 25%).
• Chinese Imports (Sep YY) 31% vs. Exp. 24.5% (Prev. 28.2%).
• Chinese CPI (Sep YY) 0.9% vs. Exp. 1% (Prev. 0.8%).
• Chinese CPI (Sep MM) 0.2% vs. Exp. 0.3% (Prev. 0.4%).
• Chinese PPI (Sep YY) 5.0% vs. Exp. 4.5% (Prev. 3.8%).
• Chinese M2 Money Supply (Sept): 7.2% Y/Y (exp. 7.4%); YTD Aggregate Financing (CNY): 27.46tln (exp. 27.25tln); YTD New Yuan Loans (CNY): 11.52tln (exp. 11.47tln).

• US President Trump said he will make a decision on Iran very soon; Israeli PM Netanyahu and Trump reportedly discussed launching a major new operation against Iran before the US and Israeli elections.
• Iran reportedly stepped up attacks on shipping ahead of the US midterms. Saudi Arabia and the Houthis continued exchanging strikes.
• APAC stocks were mixed as the region clawed back some recent tech-related losses; US equity futures mildly rebounded, European futures briefly dipped on ASML earnings.
• DXY remained softer following yesterday's decline alongside lower US yields; crude futures climbed amid continued Middle East tensions, while spot gold lacked firm direction.
• Looking ahead, highlights include German Wholesale Prices (Sep), Spanish Final Inflation (Sep), US Inflation (Sep), IEA OMR. Speakers include US President Trump, Fed’s Bowman & Barkin, BoE’s Pill & Breeden, BoC’s Macklem, ECB's Lagarde, Zigman, Elderson & Schnabel. Supply from the UK & Germany. Earnings from Bank of America, BlackRock, Morgan Stanley, Progressive & State Street.

SNAPSHOT

• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump said he will make a decision on Iran very soon and that he spoke with the Saudi Crown Prince, while he responded "I might" when asked if he would ask Turkey to join the Yemen response. Furthermore, Trump stated that the Houthis are behaving very badly and that somebody should explain to them that he is not running in the elections and has already won, but will be there after the elections and will never forget.
• US President Trump said during a rally in Alaska that they've been taking more oil out of the Strait of Hormuz than before the war, while he reiterated that the war with Iran will end soon and that Iran will not possess a nuclear weapon. Trump also commented "Wait and see what we do to Iran. We're going to hit them hard. Wait and see what we do to Iran, because we've had enough".
• US Central Command rejected a claim by the IRGC Navy Commander that the Strait of Hormuz is under Iranian control and that any approaching US warships would be sunk, while it stated that "IRGC's navy commander has no navy. American forces and regional partners clearly control the Strait of Hormuz. Just yesterday US forces assisted Gulf partners in shipping more than 19mln barrels of crude oil through the strait."
• IRGC Navy Commander challenged the US claim that the Strait of Hormuz is open and under its control, stating "they should step into the field and see who is in control of it". IRGC Navy Commander also said Iranian forces were waiting for American ships to approach the entrance to the Strait of Hormuz so they could sink them, adding that they were counting down the days until this happens, according to Tasnim.
• Israel's N12 News reported that Iran conducted a series of ballistic missile firing tests in recent days, although there was no intelligence that justifies an Israeli-US move in the coming weeks, while Israel, the US and Gulf states are coordinating and preparing for a variety of scenarios.
• Iran is reportedly shifting tactics to step up attacks on shipping ahead of US midterms, according to two Iranian officials cited by Reuters.
• Iran and Oman Foreign Ministers held a call and discussed latest regional developments, including developments in Yemen, and examined ways to achieve peace and stability in the region.
• Israeli PM Netanyahu spoke with US President Trump last week about renewing the war on Iran, according to reports. US officials were reportedly impressed that Netanyahu wanted to attack before the elections. Netanyahu discussed renewing the war with Iran with Trump several times, while Trump reportedly told him, "Well, you know what, Bibi, go ahead and get ready." However, Trump did not make a firm commitment, saying it could happen now, be too late or never happen.
• Israeli PM Netanyahu and US President Trump discussed last week the possibility of launching a major new operation against Iran before the Israeli and US elections, according to Axios citing officials. Netanyahu and Trump spoke about a potential joint US-Israeli operation that would hit military and nuclear targets, while Netanyahu was concerned about Israeli intelligence indicating Iran was taking troubling steps to reconstitute its nuclear program, although his call with Trump about the possible attack took place before Trump said he would not strike Iran ahead of the Midterms.
• Israeli Defence Minister warned anyone who attacks Israel "before or after the elections" will have their hand cut off and will pay the price, according to Al Hadath.
• UKMTO said it received a report of an incident within the Strait of Hormuz on October 13th in which a container ship was struck by an unknown projectile.
• Saudi-led coalition said it intercepted a missile in Al-Kharj and destroyed two drones and three missiles in Riyadh and the southern region, although the Saudi Energy Ministry announced that Saudi Aramco's Dhahran headquarters was struck in a Houthi missile attack and a limited fire broke out at the facility, but there were no casualties recorded.
• Saudi-led coalition said it had attacked an oil facility in Sanaa used by the Houthis to support their attacks in Yemen.
• Houthi official warned that Saudi oil and vital installations will be visited overnight.
• Yemeni Deputy Defence Minister said the battle with the Houthis was "open" on all fronts, according to Al Hadath.
• France's Foreign Ministry said France was participating in efforts to protect navigation in the Red Sea and the Bab al-Mandab Strait, according to Al Arabiya.

US TRADEEQUITIES

• US stocks were mixed, with the Nasdaq 100 pressured again by weakness in memory names, highlighted by the memory ETF DRAM closing with losses in excess of 3%. The move follows a sharp decline in the Kospi overnight, following the recent concerns regarding competition from China. Overall, sectors were varied as Health underperformed and was hit on poor JNJ results, while Energy sat atop of the pile. Furthermore, US Q3 earnings season got underway and has been a mixed bag so far, in which JPM, GS, WFC, JNJ, and C all saw losses, while the highlights on Wednesday include ASML, BAC, and MS.
• SPX -0.01% at 7,806, NDX -0.31% at 30,569, DJI -0.35% at 51,671, RUT -0.39% at 2,784.
• Click here for a detailed summary.

TARIFFS/TRADE

• Vietnam's Deputy PM said Vietnam and the US have basically almost completed negotiations for a trade deal and Vietnam sent the final text of a trade deal to the US.
• China's Customs Vice Minister said in the first three quarters, China's foreign trade has effectively dealt with various external shocks and China's foreign trade has kept good development momentum, while it has shown resilience despite rising international changes, risks and challenges. However, the official also stated that China's trade development still faces many challenges, and for full-year trade, there are many uncertainties globally, including geopolitical conflicts.

NOTABLE HEADLINES

• Fed's Williams (voter) said there was no need for a rate hike in 2027 at this time and that disinflationary forces remained in play, while he added that the economy was not overheating and that one more interest-rate hike this year was appropriate. Furthermore, Williams saw no evidence that the labour market was contributing to inflation and noted that broad price pressures were not evident outside of AI and energy.
• Fed's Barkin (2027 voter) said 2% inflation is not some unicorn, and is something they can hit.
• Fed's Collins (2028 voter) said tightening monetary policy will help return inflation to 2%, and she expects the Fed to raise interest rates 'a bit further' by the end of the year, while she expects inflation to stay above 2% due to high energy prices. Furthermore, she supported the Fed raising rates at the September meeting and stated the future path of monetary policy in the new year will depend on data.
• Fed Governor Cook's lawyer denounced the Trump administration's new investigation and said she will not be able to attend the hearing on November 5th, according to The New York Times.

APAC TRADEEQUITIES

• APAC stocks were ultimately mixed as the region clawed back some of the recent tech-related losses, while participants also digested key releases from China, including inflation and trade figures.
• ASX 200 declined with the index dragged lower by underperformance in the top-weighted financials sector, while sentiment amongst miners was not helped by the indecision in Rio Tinto following its quarterly production update.
• Nikkei 225 reclaimed the 68,000 level as tech stocks got some reprieve from recent selling.
• KOSPI was among the biggest gainers as tech rebounded from the recent underperformance.
• Hang Seng and Shanghai Comp were flat as participants digested a slew of data, including stronger-than-expected trade figures and mixed inflation numbers in which CPI printed softer-than-expected, while PPI was hot and showed a faster-than-anticipated acceleration in factory gate prices.
• US equity futures mildly rebounded alongside the mostly improved sentiment in Asia, although gains were capped with US inflation data on the horizon.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.2% after the cash market closed with losses of 0.6% on Tuesday. Futures initially dipped following ASML earnings before paring most of the move.

FX

• DXY remained softer after weakening yesterday alongside lower US yields and choppy crude prices, while there were several Fed comments, with the highlight coming from NY Fed President Williams, who sees one more rate hike as appropriate in 2026 and doesn't see a need for a rate hike in 2027 at this time, citing an optimistic view on inflation returning to 2% and is not seeing broad price pressure outside AI and energy, while the focus turns to the incoming US CPI report later today.
• EUR/USD benefited from the softer buck and reclaimed the 1.1200 level. There were some comments from ECB officials, including Lane, who stated that the increase in long-term interest rates constitutes a material tightening and is relevant for the ECB in setting policy stance, while Lagarde said inflation has been rising predominantly, but not exclusively, as a result of energy prices, but added they are not seeing any second-round effects yet.
• GBP/USD extended on the prior day's rebound but with price action remaining at the 1.3200 handle, while the latest comments from BoE Governor Bailey provided very little incrementally.
• USD/JPY was contained in the absence of tier-1 data from Japan and following a previous source report that the BoJ is to lean against back-to-back hikes in October, but could adjust the language regarding the inflation target to "approx. 2%" from "approaching 2%".
• Antipodeans edged higher amid an improvement in risk sentiment and after stronger-than-expected Chinese trade data.
• PBoC set USD/CNY mid-point at 6.7249 vs exp. 6.6922 (prev. 6.7298).

FIXED INCOME

• 10yr UST futures slightly gained in range-bound trade as participants await the US inflation report, while there were also recent comments from Fed officials, including Williams, who said one more interest-rate hike this year was appropriate and that there was no need for a rate hike in 2027 at this time.
• Bund futures eked mild gains after pulling back yesterday, although the rebound was limited with little reaction seen to several ECB comments and as German supply looms.
• 10yr JGB futures eventually climbed with support seen in the aftermath of the 5yr JGB auction, which showed moderately improved results compared with the previous auction.

COMMODITIES

• Crude futures climbed higher as geopolitical headlines remained abundant and continued to show no signs of abating, with further exchanges of strikes between Saudi and Houthis, including an attack on the Aramco HQ in Dhahran. Furthermore, both the US and Iran asserted their control over the Strait of Hormuz, while there were reports that Israeli PM Netanyahu and US President Trump had discussed the possibility of launching a major new operation against Iran before the Israeli and US elections, although the call occurred last week before Trump declared that he would not strike Iran ahead of the Midterms.
• US President Trump said they are going to announce two deals today and stated every permit needed has been granted regarding Alaska LNG, while Trump then stated that Taiwan has agreed to buy 30% of gas coming off Alaska pipeline and is to invest USD 4.4 billion in the project, on top of the USD 50bln South Korea committed to invest. Trump later posted that "Massive Oil, Gas, and Mineral Exploration is getting ready to begin in our new and beautiful Greenland!"
• Spot gold lacked firm direction following the prior day's indecision and as US CPI data looms.
• Copper futures climbed higher as stock markets got some reprieve from the recent tech selling.

CRYPTO

• Bitcoin gained in a somewhat choppy manner with prices remaining beneath the USD 84,000 level.

NOTABLE ASIA-PAC HEADLINES

• Monetary Authority of Singapore kept its FX-based policy settings unchanged, with the rate of appreciation of the policy band maintained (exp. very slight tightening), while it made no changes to the width and level the band is centred. MAS said Singapore's economy is expected to continue expanding steadily in the quarters ahead and core inflation should remain slightly elevated in the immediate quarters ahead, but is projected to ease discernibly from the middle of next year. MAS expects Singapore's economy to continue to expand at a firm pace in the immediate quarters ahead, but stated there continues to be significant uncertainty surrounding the macroeconomic outlook and that for now, risks to inflation remain tilted to the upside.

DATA RECAP

• Chinese PPI YY (Sep) 5.0% vs. Exp. 4.5% (Prev. 3.8%)
• Chinese CPI YY (Sep) 0.9% vs. Exp. 1% (Prev. 0.8%)
• Chinese Trade Balance (USD)(Sep) 133.53B vs. Exp. 118.1B (Prev. 119.09B)
• Chinese Exports YY (USD)(Sep) 36.3% vs. Exp. 25.5% (Prev. 25%)
• Chinese Imports YY (USD)(Sep) 31% vs. Exp. 24.5% (Prev. 28.2%)
• Chinese Yuan-Denominated Trade Balance (Sep) 906.0B (Prev. 809.3B)
• Chinese Yuan-Denominated Exports YY (Sep) 29.6% (Prev. 18.6%)
• Chinese Yuan-Denominated Imports YY (Sep) 24.6% (Prev. 21.7%)
• Singapore GDP Growth Rate Adv (Q3 QQ) 1.1% vs. Exp. 1.2% (Prev. 1.4%)
• Singapore GDP Growth Rate Adv (Q3 YY) 5.4% vs. Exp. 5% (Prev. 5.9%)

GEOPOLITICS

RUSSIA-UKRAINE

• Russian air attack hit energy facilities in Ukraine's capital Kyiv, according to the mayor.
• US President Trump said he was working with Russia and Ukraine to end the war and believes both Ukrainian President Zelensky and Russian President Putin want it to end. Trump said Russia was releasing diesel to the world and that both Russia and Ukraine were "a little bit off", while he said he would provide an update later when asked whether Russia had broken the ceasefire.
• UK PM Burnham will host Ukrainian President Zelensky in Downing Street on Wednesday as Ukraine and its allies scramble to respond to Trump's diesel deal with Putin, while Burnham will tell Zelensky that Britain's support is rock solid with faster delivery of lightweight, multi-role missiles to help Ukraine defend itself, according to Bloomberg.

OTHER

• China's PLA Navy organised the Liaoning aircraft carrier strike group to conduct training exercises in the waters of the Western Pacific, while it was stated that the routine exercise organised in accordance with the annual plan is aimed at enhancing troops' combat readiness.
• Japan's Foreign Minister said the Japanese embassy in Russia is requesting information from Russian authorities regarding a detained Japanese citizen and Japan is requesting fair treatment of the detained Japanese citizen from Russian authorities.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Healey is expected to pay for new giveaways in this month's budget, with higher taxes or spending cuts rather than more borrowing, according to FT
• UK Chancellor Healey is to target online marketplaces in a GBP 1bln tax crackdown, in which the UK plans to make them responsible for collecting tax owed by retailers selling on their platforms, according to The Times.
• BoE Governor Bailey said UK companies are focusing intensely on containing costs amid surging energy prices caused by the Iran war, while he reiterated that broader UK inflation pressure from the energy shock has remained subdued so far.
• ECB's Lagarde said inflation has been rising predominantly, but not exclusively as a result of energy prices, while she noted that they are not seeing any second-round effects yet and they cannot wait until they are in full view, but can anticipate and look for hints. Furthermore, she responded that the primary and first solution lies in French fiscal policy when asked about French debt, and stated that growth is not brilliant, but 1.1% growth in 2026 is not bad.
• ECB's Lane said the increase in long-term interest rates constitutes a material tightening and is relevant for the ECB in setting policy stance, while he said the potential for AI to replace some workers may weaken their bargaining power and moderate wage growth.
• ECB's Moulin said inflation is mainly due to conflict in the Middle East and energy-related, while he added that inflation expectations by corporates and households in the medium term are well anchored. Moulin also stated that a rise in yields may affect demand and prompt a more moderate response to an inflation shock.
• ECB's Wunsch said they are probably going to have to hike again, but he's not making any bets because they have so much uncertainty on the energy front and maybe also in AI, according to Bloomberg.

NOTABLE EARNINGS

• ASML (ASML NA) - Q3 2026 (EUR): Basic EPS 12.95 (exp. 10.68), Revenue 11.66bln (exp. 11.58bln), New lithography systems sold 113 (prev. 86 Q/Q), Gross margin 57.5% (prev. 54% Q/Q), Net Income 4.96bln (prev. 2.92bln Q/Q).

• US President Trump said the war with Iran will end very soon and that oil prices will fall once the conflict concludes, while Saudi Arabia conducted further strikes against Houthi targets in Yemen.
• The BoJ is reportedly leaning back against back-to-back hikes in October but could hawkishly adjust inflation language, according to Bloomberg.
• US equity futures mixed, with the NQ underperforming as chip names continue to slip.
• DXY pushed lower by higher yields; JPY outperforms following BoJ sources.
• Fixed income benchmarks gain on a flight to safety and lower energy prices (Brent -1.7%).
• Looking ahead, highlights include US ADP Employment Change Weekly, Existing Home Sales (Sep), OPEC MOMR. Speakers include ECB's Lane, Fed’s Barkin & Collins. Earnings from UnitedHealth, JPMorgan, Goldman Sachs, Wells Fargo, Citi, Johnson & Johnson.

SNAPSHOTEUROPEAN TRADEEQUITIES

• European bourses (STOXX 600 +0.6%) have moved higher throughout the session. There was earlier underperformance in the tech–heavy AEX (+0.1%), but it has since climbed into the green. Initial pressure stemmed from the slump in tech behemoths in Asia and throughout the US trading session on Monday. The drivers seem to be two-fold: 1) increased competition after CXMT said they made progress on new memory architecture, as they plan to roll out a new server-memory product by year-end, according to SCMP, 2) Broadcom CEO likens market sentiment to a casino and highlights concerns about AI buildout financing. Tech continues to be in favour for fund managers, with a BofA survey showing that the proportion of managers overweight tech has risen to 37% (prev. 30%).
• Sectors highlight the positive bias. Chemicals top the sector pile, with Health Care and Real Estate following closely behind. The sector laggards include Tech, Consumer Products & Services and Basic Resources.
• LVMH (-1.5%) reported Q3 sales after the close on Monday. Headline revenue beat estimates; however, the widely watched Fashion & Leather Goods fell 5% (exp. -1.57%). As expected, struggles in China were highlighted as a major challenge, while the CFO added that short-term cost-cutting will not increase sales.
• US equity futures are mixed, with underperformance in the NQ. Outside of the tech story, focus will be on banking earnings, with JPM, GS and C set to report.
• Click for the sessions European pre-market equity newsflow
• Click for the additional news

FX

• Snapshot: DXY is under pressure this morning, owing to easing yields and a pullback in energy benchmarks. The downside in oil does not have a specific catalyst, and it appears to be more of a pullback from yesterday’s advances. Overall, the geopolitical situation remains tense with Saudi striking Houthi targets overnight; elsewhere, a merchant ship was sunk off Bulgaria’s Black Sea coast. Given the USD pressure, G10s are stronger, albeit to varying degrees; the JPY outperforms, whilst the CAD posts only mild gains.
• DXY holds within a 102.30 to 102.57 range. As mentioned, pressure comes alongside easing yields/energy, with domestic newsflow focused on the Fed’s Waller. He mentioned that recent high yields are somewhat attributed to the AI buildout. Interestingly, he noted that recent yield levels are doing some of the Fed’s work on demand. No reaction was seen on the comments, but remarks are not too dissimilar from those seen in the ECB Minutes.
• JPY outperforms vs peers, following reports in Bloomberg, citing sources, which suggested that the BoJ is leaning back against back-to-back hikes in October. Instead, the Bank may change the language surrounding its 2% target to signal that it is “approximately” at the level, rather than “approaching” it. This essentially corroborates a Reuters source report from earlier in the month, but still managed to spur a hawkish reaction in the JPY. MUFG (following the Reuters piece) suggested that the language change will back its case for a December hike.

FIXED INCOME

• The bullish APAC performance remains, but has not extended, in the European morning thus far. Despite a number of potential catalysts occurring, nothing has fundamentally shifted the dial from a FTQ on the tech sell-off and energy downside, as the Middle East backdrop has not escalated.
• USTs firmer by around 10 ticks as things stand, but only a tick or two above the APAC peak. No move at the time to Fed’s Waller, but his comment that higher yields are doing some of their work is notable, though in-fitting with his dovish-bias. At the upper-end of 104-18 to 104-30+ parameters.
• Bunds followed suit overnight, and have extended by a few ticks to a 121.44 peak this morning, higher by 49 ticks at best. Specifics for the space light, no move to the unrevised German final inflation print and weak Bobl auction. Regional focus remains on familiar factors for the bloc and Germany specifically.
• Gilts gapped higher by just over 10 ticks, before climbing to an 84.47 peak in short order, and since then have held just off that but still with gains in excess of 50 ticks. Aside from the above points and the usual, relatively speaking, larger move seen on energy action, Gilts react to a few factors today. A UK court ruling which significantly increases the odds of the Treasury keeping c. GBP 4bln in seized crypto holdings; a windfall for Chancellor Healey. Additionally, a FT source report suggests that CGT will not be equalised to Income Tax, though it could still see an increase; a reported view taken by the, unsurprising, view that such an increase would increase capital outflows from the UK.
• Italy sells EUR 7bln vs Exp. EUR 5.5-7bln 3.00% 2029, 3.35% 2033 and 3.95% 2041 BTP.
• The UK sells GBP 500mln 4.00% 2063 Gilt via Tender: b/c 3.98x (prev. 3.51x), average yield 5.802% (prev. 5.722%).
• Australia sells AUD 300mln 3.00% March 2047 bonds: b/c 3.60x, avg. yield 5.6818%.

COMMODITIES

• WTI Nov and Brent Dec futures are softer, extending their pullback from yesterday's gains as Trump reiterated that the Iran war will end very soon, while talks between Washington and Tehran continue through intermediaries. Nonetheless, diplomatic progress remains limited, with reports this morning suggesting the two sides remain divided over the sequencing of an agreement, although Iranian FM Araghchi reiterated that Tehran is seriously pursuing diplomatic efforts. Meanwhile, Iran continues to insist on its conditions for reopening Hormuz, while Houthi attacks on Saudi Arabia and the US Gulf production shut-ins remain supportive for the complex. WTI has fallen to a USD 91.81/bbl low from a USD 93.49/bbl peak, while Brent has declined to USD 104.71/bbl from USD 106.14/bbl highs.
• Dutch TTF is firmer amid upcoming colder weather in the Western Hemisphere alongside continued Middle Eastern supply concerns. TTF has climbed from a EUR 83.90/MWh low to EUR 86.40/MWh highs.
• Precious metals are firmer, with spot gold benefiting from lower global yields and a softer DXY amid softer oil prices, although expectations of further Fed tightening keep upside capped. Spot gold has risen from a USD 4,151/oz low to USD 4,201/oz while spot silver has gained within a USD 59.58-60.73/oz range.
• Base metals are mixed, with copper flat amid the broader risk-off tone across the tech sector. 3M LME copper has risen within a USD 14,549.68-14,667.00/t range, while COMEX copper is firmer within a USD 6.7030-6.7725/lb range.
• Maersk (MAERSKB DC) and Hapag-Lloyd (HLAG GY) will re-launch the FM1 service on the route between Asia and the Middle East.
• Kuwait lowered November crude prices for November, according to the pricing document.

TRADE/TARIFFS

• Western auto executives warned the EU’s deal with Beijing to restrict hybrid vehicle imports into the bloc will offer only “temporary” protection, as Chinese rivals push ahead with their ambitions to expand sales across the continent, according to FT.
• China proposes civil aviation dual-use export rules to facilitate compliant exports for aviation enterprises.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Healey is reportedly rejecting calls to equalise capital gains tax and income tax rates, the FT reported citing sources. The report added that the Treasury could still decide to raise CGT by a small amount and also said the Treasury is working on CGT relief to encourage entrepreneurs who sell their business to reinvest back in the UK.
• Retail bosses are to warn UK Chancellor Healey that a tax raid on shops will push up prices and worsen the cost of living crisis, according to Telegraph.
• UK grocery price inflation accelerates to 2.5% in the four weeks to October 4th (vs 2.3% in the 4 weeks to Sep), according to Worldpanel.
• German Chancellor Merz said Germany needs to increase its long-term growth potential. Merz added that he wants a comprehensive pension reform and that there will be temporarily higher contributions paid by workers and employers into the pension system.

NOTABLE EUROPEAN DATA RECAP

• German HICP Final (Sep YY) 3.3% vs. Exp. 3.3% (Prev. 2.9%).
• German HICP Final (Sep MM) 0.6% vs. Exp. 0.6% (Prev. 0.2%).
• UK BRC Retail Sales Monitor (Sep YY) 1.0% vs. Exp. 0.7% (Prev. 0.5%).
• UK Barclays Consumer Spending YY (Sep) 2.0% (prev. 2.1%).

CENTRAL BANKS

• Fed's Waller (Voter, Dovish) said the US remains the dominant country in building AI models and that AI could contribute to widening GDP per capita. If AI investment falls off, it will put a check on prices and that hyperscalers are still planning on spending trillions of dollars over the next three years. On the bond market and yields, Waller said the AI build-out is definitely having an impact on yields and that real yields reflect the impact of real growth. Waller went on to say that higher yields could do some of the Fed's work on demand and that inflation expectations are well anchored.
• Fed's Hammack (2026 voter) reiterated that more restriction is needed, but she is keeping an open mind on pace of rate hikes and noted that policy restriction will need to hit demand, either through capital spending or consumption. Furthermore, she said inflation pressures are broadening out from AI, with other firms all doing well and ready to invest, while she doesn't want to discourage growth but stated that they may need to 'pull it back a little bit'.
• The BoJ is reportedly to lean back against back-to-back hikes in October, Bloomberg reported citing sources. The source added that the BoJ could adjust language on the 2% inflation target from "approaching 2%", to "approximately 2%", while also suggesting that December is still in play.
• BoJ Governor Ueda reiterated the BoJ's stance that market determines long-term interest rates and will continue to closely monitor bond markets, adding that long-term interest rates are determined in the markets and reflecting various factors. Ueda said core inflation is gradually nearing 2% and that it is important to anchor inflation around 2% now.
• RBA Minutes from the September Meeting stated the Board was concerned excess demand in the economy was greater than previously assumed and it saw an increased risk of persistently elevated inflation, while it reiterated it will increase rates further if needed. All board members had agreed that a 25bps rate hike was necessary, and the Board briefly weighed the case for keeping rates unchanged, including a decline in house prices. Furthermore, it discussed upside inflation risks and factors that could sustain higher inflation, as well as noted that some upside inflation risks had already emerged or intensified since August, and the Board highlighted the need to adjust rates in a timely manner to keep inflation expectations anchored.
• BoE's Greene (hawkish dissenter) said a bigger risk is not being proactive enough in tackling inflation than raising rates too soon, while she warned if they wait until second-round effects materialise, it will be too late. Greene noted concern about successive supply shocks and stated they must be proactive in leaning against second-round effects, as well as stated that UK monetary policy is not that restrictive.
• ECB's Elderson said the heatwave in Europe may have imposed costs equivalent to the area's projected 2026 economic output, underscoring a potentially material macroeconomic risk.

NOTABLE US HEADLINES

• IMF raised 2026 Global Real GDP growth forecast to 3.1% (prev. 3.0%), citing AI investment tempering energy price shock in key economies, while it maintains 2027 global growth view at 3.4%. Maintained US 2026 growth forecast at 2.3% and raises 2027 forecast to 2.3% (prev. 2.2%), lowered China 2026 GDP forecast to 4.5% (prev. 4.6%) and cut 2027 forecast to 4.0% (prev. 4.1%), raised Euro Area 2026 GDP forecast to 1.1% (prev. 0.9%).

GEOPOLITICS

MIDDLE EAST

• US President Trump said the Houthis are misbehaving very badly and that he spoke with Saudi Crown Prince MBS about attacks, while he also stated that oil will drop when the war with Iran ends very soon and that the Midterm elections will have no impact on his decisions regarding Iran.
• US President Trump said Iran will never get nuclear weapons and that this war will end very soon, with gas prices to go down as soon as the war ends, while Trump said he had to change the course a little bit on Iran because they couldn't let Iran get a nuclear weapon.
• US President Trump posted, "I see so many comments from the Radical Left Morons and Lunatics that China and Russia are helping the “wonderful” Islamic Republic of Iran. If they are, it’s at a very low level, but I don’t believe they are at all. They have too much to lose, and we would know about it, and know about it very fast!"
• Iran's Foreign Minister Araghchi said that the Foreign Ministry is seriously pursuing the use of diplomatic capabilities to secure national interests, IRIB reported.
• IRGC commander-in-chief said no extra-regional power has the right to threaten and maintain a hegemonic presence or interfere in the Strait of Hormuz and the Persian Gulf.
• Iran and the US remain divided over the sequencing of a diplomatic agreement, Al-Akhbar reported citing sources. The source said that Tehran is demanding an end to the war, removal of the naval blockade and oil sanctions, and release of frozen assets before reopening the Strait of Hormuz and discussing nuclear issues while Washington is insisting on nuclear concessions first.
• Iran is fortifying defences, rallying loyalists and threatening a wider, harsher response against the US and its Gulf allies as it prepares for a potential resumption of attacks after the Midterms and seeks to deter them, according to WSJ.
• Yemen's Houthis said they targeted Riyadh Airport with ballistic missiles on Monday, while the group also carried out an operation targeting Khamis Mushait Air Base with a drone. Furthermore, it was reported that air traffic at King Fahd International Airport in Dammam was temporarily halted.

RUSSIA-UKRAINE

• US President Trump said Ukrainian President Zelensky and Russian President Putin have to get together and end the war, while he added that they both don't know how to make a deal, but he thinks they support the energy ceasefire. Furthermore, Trump said he thinks Putin wants to make a deal more than Zelensky, and that Zelensky has to focus on making a deal, not talk.

OTHER

• North Korea confirmed it test-fired a tactical ballistic missile, while North Korean leader Kim said North Korean weaponry will be developed and completed more strenuously, according to KCNA.
• US President Trump said he may meet with North Korean leader Kim and it would be exciting, while he also said that he is considering firing the US ambassador to Greece.
• Belize's Foreign Ministry rejected China's sanctions and said measures against Belize's Foreign Minister are unwarranted.

CRYPTO

• Bitcoin rebounds from Monday's losses and has regained the USD 83k handle after falling to a trough of USD 80.93k.

APAC TRADE

• APAC stocks mostly declined amid a tech sell-off following the mixed handover from Wall Street, where the Nasdaq underperformed as chip and memory names were pressured by China competition concerns after CXMT announced technological progress on a denser memory chip design.
• ASX 200 outperformed its regional peers with price action range-bound as the downside in tech and miners was offset by strength in energy, financials and defensive sectors.
• Nikkei 225 suffered from the tech-related pressure as participants returned from the long weekend.
• KOSPI slumped alongside the tech sell-off, with a sidecar triggered early on due to heavy losses.
• Hang Seng and Shanghai Comp conformed to the tech-led declines across the region, with weakness in autonames after reports that China will cut the VAT export tax rebate rate on new energy vehicles to 9% from 13%.

NOTABLE ASIA-PAC HEADLINES

• China smartphone shipments fell 15.4% in Q3, according to IDC.
• India's PM Modi said today's technology and data and knowledge and innovation are powers, adding that tech should help new opportunities for millions.

NOTABLE APAC DATA RECAP

• Japanese PPI (Sep YY) 6.8% vs. Exp. 7.6% (Prev. 7.6%).
• Japanese PPI (Sep MM) -0.3% vs. Exp. 0.5% (Prev. -0.2%).
• Australian NAB Business Confidence (Sep) -13 (Prev. -8).

• US President Trump said the war with Iran will end very soon and that oil prices will fall once the conflict concludes, while Saudi Arabia conducted further strikes against Houthi targets in Yemen.
• US President Trump said Zelensky and Putin have to get together and end the war, while he thinks they support the energy ceasefire.
• APAC stocks mostly declined amid a tech-led sell-off following weakness in US chip and memory stocks; US equity futures were pressured, while European futures point to a lower open.
• DXY softened amid lower yields and geopolitical developments; crude futures declined despite continued Middle East tensions and uncertainty over a Russia-Ukraine energy ceasefire.
• Looking ahead, highlights include German Final Inflation (Sep), US ADP Employment Change Weekly, Existing Home Sales (Sep), OPEC MOMR. Speakers include US President Trump, ECB's Elderson & Lane, Fed’s Waller, Barkin & Collins. Supply from the Netherlands, Italy & Germany. Earnings from UnitedHealth, JPMorgan, Goldman Sachs, Wells Fargo, Citi, Johnson & Johnson.

SNAPSHOTLOOKING AHEAD

• Highlights include German Final Inflation (Sep), US ADP Employment Change Weekly, Existing Home Sales (Sep), OPEC MOMR. Speakers include US President Trump, BoE’s Greene, ECB's Elderson & Lane, Fed’s Waller, Barkin & Collins. Supply from the Netherlands, Italy & Germany. Earnings from UnitedHealth, JPMorgan, Goldman Sachs, Wells Fargo, Citi, Johnson & Johnson.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump said the Houthis are misbehaving very badly and that he spoke with Saudi Crown Prince MBS about attacks, while he also stated that oil will drop when the war with Iran ends very soon and that the Midterm elections will have no impact on his decisions regarding Iran.
• US President Trump said Iran will never get nuclear weapons and that this war will end very soon, with gas prices to go down as soon as the war ends, while Trump said he had to change the course a little bit on Iran because they couldn't let Iran get a nuclear weapon.
• US President Trump posted, "I see so many comments from the Radical Left Morons and Lunatics that China and Russia are helping the “wonderful” Islamic Republic of Iran. If they are, it’s at a very low level, but I don’t believe they are at all. They have too much to lose, and we would know about it, and know about it very fast!"
• IRGC commander-in-chief said no extra-regional power has the right to threaten and maintain a hegemonic presence or interfere in the Strait of Hormuz and the Persian Gulf.
• Iran's ambassador rejected the UK's claims regarding the Fairford base, according to IRNA.
• Iran is fortifying defences, rallying loyalists and threatening a wider, harsher response against the US and its Gulf allies as it prepares for a potential resumption of attacks after the Midterms and seeks to deter them, according to WSJ.
• Explosions were reported in Saudi Arabia following a missile and drone attack, according to Sabereen News.
• Houthi official warned the US of a "swift and painful response" if it enters the war in Yemen, while the official said the group would not deliberate over its response if the US became involved in the conflict amid reports that Saudi Arabia had requested US assistance against the Houthis. He also warned employees and workers at Saudi oil facilities and airports to stay away from the sites, describing them as legitimate targets, according to Sky News Arabia citing AFP.
• Yemen's Houthis said they targeted Riyadh Airport with ballistic missiles on Monday, while the group also carried out an operation targeting Khamis Mushait Air Base with a drone. Furthermore, it was reported that air traffic at King Fahd International Airport in Dammam was temporarily halted.
• Saudi Arabia conducted airstrikes on Yemen's Amran and Hodeidah provinces, while local sources reported intense airstrikes targeting Houthi military sites in Sanaa.

US TRADEEQUITIES

• US stocks were mixed on Monday, with the Nasdaq underperforming while the Dow advanced and the S&P 500 was little changed. Most sectors finished in the green, led by Energy and Communication Services, while Technology and Consumer Discretionary lagged, weighing on the Nasdaq. Technology stocks were pressured by weakness in chip and memory names, particularly Micron (MU), after China's CXMT announced technological progress on a denser memory chip design, raising concerns over increased competition in the sector. Nonetheless, it was a relatively quiet session amid the Columbus Day federal holiday, although much of the newsflow centred on geopolitical and energy developments over the weekend. Trump announced an agreement with Russian President Putin to lift sanctions on Russian diesel exports in an effort to lower diesel prices for Americans ahead of the midterms. Trump also touted a potential ceasefire agreement between Russia and Ukraine, although neither side confirmed a deal, while Russia struck a Ukrainian power plant, raising further doubts over the prospect of an imminent agreement.
• SPX -0.05% at 7,807, NDX -0.71% at 30,665, DJI +0.41% at 51,867, RUT -0.39% at 2,796.
• Click here for a detailed summary.

TARIFFS/TRADE

• China proposes civil aviation dual-use export rules to facilitate compliant exports for aviation enterprises.
• Taiwan is to impose anti-dumping duties on China's polyamine films.

NOTABLE HEADLINES

• Fed's Hammack (2026 voter) said further monetary policy tightening is needed, while she prefers smaller, more frequent rate moves and believes inflation is returning to target too slowly. Hammack stated that current policy is not restrictive enough, warned of the risk that high inflation becomes entrenched and noted that firms are passing higher input costs on to customers.
• Fed's Hammack (2026 voter) reiterated that more restriction is needed, but she is keeping an open mind on pace of rate hikes and noted that policy restriction will need to hit demand, either through capital spending or consumption. Furthermore, she said inflation pressures are broadening out from AI, with other firms all doing well and ready to invest, while she doesn't want to discourage growth but stated that they may need to 'pull it back a little bit'.

APAC TRADEEQUITIES

• APAC stocks mostly declined amid a tech sell-off following the mixed handover from Wall Street, where the Nasdaq underperformed as chip and memory names were pressured by China competition concerns after CXMT announced technological progress on a denser memory chip design.
• ASX 200 outperformed its regional peers with price action range-bound as the downside in tech and miners was offset by strength in energy, financials and defensive sectors.
• Nikkei 225 suffered from the tech-related pressure as participants returned from the long weekend.
• KOSPI slumped alongside the tech sell-off, with a sidecar triggered early on due to heavy losses.
• Hang Seng and Shanghai Comp conformed to the tech-led declines across the region, with weakness in autonames after reports that China will cut the VAT export tax rebate rate on new energy vehicles to 9% from 13%.
• US equity futures continued the mixed performance seen during Wall St trade, with the Emini Nasdaq 100 dragged lower by tech woes.
• European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.2% after the cash market closed with gains of 0.5% on Monday.

FX

• DXY softened and gave back some of the prior day's gains amid a decline in yields and as newsflow remained relatively quiet, with geopolitical headlines and commentary remaining in focus, including further strikes between the Saudis and Houthis, while Trump continued to advocate a Russia/Ukraine deal and thinks that Putin wants to make a deal more than Zelensky, as well as called for Zelensky to focus on making a deal, not talk. Elsewhere, Fed's Hammack reiterated her hawkish stance, arguing that further tightening is needed given the slow return of inflation towards target, although she noted that the question for the Fed is now how quickly to make policy more restrictive and expressed a preference for smaller rate adjustments delivered relatively quickly, while the attention this week largely centres on Wednesday's US CPI report, ahead of Fed Chair Warsh's speech at the IMF early Friday morning BST.
• EUR/USD rebounded from a 17-month low but remained in sub-1.1200 territory after underperforming yesterday and as French fiscal concerns linger, while participants also await today's French parliamentary budget debate.
• GBP/USD eked slight gains after support held at the 1.3200 level and as UK PM Burnham seeks closer UK-EU ties.
• USD/JPY retreated amid a weaker dollar and the mostly risk-off mood, but with price action kept within the 158.00 handle, while the latest PPI data from Japan was softer-than-expected.
• Antipodeans were little changed with a muted reaction seen to the RBA Minutes, which noted that the Board was concerned excess demand in the economy was greater than previously assumed and saw an increased risk of persistently elevated inflation, as well as reiterated that it will increase rates further if needed.

FIXED INCOME

• 10yr UST futures climbed higher overnight as cash Treasuries reopened following the Columbus Day holiday, while bond yields fell across the curve in tandem with the tech-driven sell-off in stocks.
• Bund futures rallied amid a flight to quality and price action unfazed by upcoming German final CPI data for September and upcoming issuances, beginning with EUR 5bln in Bobls later today.
• 10yr JGB futures conformed to the upside in global peers and returned to above the 125.00 level, which also follows the softer-than-expected PPI data from Japan.

COMMODITIES

• Crude futures pulled back after gaining yesterday in two-way trade as geopolitics remained in focus with Russia striking Ukrainian energy sites despite Trump's energy ceasefire claim, while Trump also commented that he thinks Putin wants to make a deal more than Zelensky, and reiterated that oil will drop when the war with Iran ends very soon.
• Energy and Oil ministers of countries participating in the Declaration of Cooperation held a meeting on the sidelines of the 17th IEF ministerial meeting and the 25th WPC Energy Congress in Riyadh.
• US Gulf shut in 604.5k BPD or 30% oil production, according to MMA.
• Russia’s Novak said regarding the diesel supply deal that there are talks between the governments of Russia and the US on supply and that they have the possibility to make additional supplies of diesel on global markets.
• Goldman Sachs said it doesn't see significant impacts on global diesel prices from Russian diesel releases.
• Spot gold rebounded from an initial dip, with the recovery facilitated by softer yields and a weaker dollar.
• Copper futures marginally declined with headwinds from the broad risk-off mood across Asia.

CRYPTO

• Bitcoin steadily gained throughout the session and rose above the USD 83,000 level.

NOTABLE ASIA-PAC HEADLINES

• RBA Minutes from the September Meeting stated the Board was concerned excess demand in the economy was greater than previously assumed and it saw an increased risk of persistently elevated inflation, while it reiterated it will increase rates further if needed. All board members had agreed that a 25bps rate hike was necessary, and the Board briefly weighed the case for keeping rates unchanged, including a decline in house prices. Furthermore, it discussed upside inflation risks and factors that could sustain higher inflation, as well as noted that some upside inflation risks had already emerged or intensified since August, and the Board highlighted the need to adjust rates in a timely manner to keep inflation expectations anchored.

DATA RECAP

• Japanese PPI MM (Sep) -0.3% vs. Exp. 0.5% (Prev. -0.2%)
• Japanese PPI YY (Sep) 6.8% vs. Exp. 7.6% (Prev. 7.6%)

GEOPOLITICS

RUSSIA-UKRAINE

• US President Trump said Ukrainian President Zelensky and Russian President Putin have to get together and end the war, while he added that they both don't know how to make a deal, but he thinks they support the energy ceasefire. Furthermore, Trump said he thinks Putin wants to make a deal more than Zelensky, and that Zelensky has to focus on making a deal, not talk.
• Ukraine's Foreign Minister said now is the time for real European pressure on Moscow, calling for frozen assets, trade and transit embargoes, maritime bans, entry bans and other measures rather than half-measures.
• Ukrainian official said a Russian drone strike damaged a cargo facility in Mykolaiv, while a Russian governor reported damage to the Nevinnomyssk industrial area following a Ukrainian drone attack.

OTHER

• US President Trump said he may meet with North Korean leader Kim and it would be exciting, while he also said that he is considering firing the US ambassador to Greece.
• North Korea confirmed it test-fired a tactical ballistic missile, while North Korean leader Kim said North Korean weaponry will be developed and completed more strenuously, according to KCNA.
• Belize's Foreign Ministry rejected China's sanctions and said measures against Belize's Foreign Minister are unwarranted.

EU/UK

NOTABLE HEADLINES

• BoE's Greene (hawkish dissenter) said a bigger risk is not being proactive enough in tackling inflation than raising rates too soon, while she warned if they wait until second-round effects materialise, it will be too late. Greene noted concern about successive supply shocks and stated they must be proactive in leaning against second-round effects, as well as stated that UK monetary policy is not that restrictive.
• ECB's Moulin said the French economy is holding up in the face of the energy shock, but the uncertainty gauge is at its highest since April, while he maintained his Q3 growth estimate at 0.1%.

DATA RECAP

• UK BRC Retail Sales Monitor (Sep YY) 1.0% vs. Exp. 0.7% (Prev. 0.5%)
• UK Barclays Consumer Spending YY (Sep) 2.0% (prev. 2.1%)

• US President Trump announced a potential Russia-Ukraine energy ceasefire, while also lifting Russia's diesel export ban.
• Ukrainian President Zelensky said that he was willing to halt strikes if Russia stopped targeting Ukrainian infrastructure, but noted that Russia hit a power plant, following US President Trump's energy ceasefire comment.
• US equity futures are firmer but off best levels as energy rebounds (Brent +1.1%).
• DXY posts mild gains; GBP outperforms as PM Burnham aims for improved EU ties.
• Fixed income gives back earlier upside given the aforementioned energy moves.
• Looking ahead, highlights include BoE's Mann, Fed's Hammack, and LVMH earnings. US cash bond markets are closed for Columbus Day.

SNAPSHOTEUROPEAN TRADEEQUITIES

• European bourses are firmer across the board, initially on the hopes of a Russia-Ukraine energy ceasefire. US President Trump announced an energy ceasefire between the two sides; however, Axios later reported that Trump’s announcement was pre-emptive but expects both sides to agree to the ceasefire. To add, Ukrainian President Zelensky said Russia attacked Ukraine despite Trump’s announcement.
• Sectors highlight the positive bias. Banks top the sector pile, with Utilities and Insurance following closely behind. On the other hand, Media is the laggard, closely followed by Chemicals and Travel & Leisure.
• As the start of the Paris Motor Show gets underway today, the EU announced that China has agreed to limit imports of its hybrid vehicle to 350k/yr, with a 6% annual increase for the second year of application and will apply for four years. This follows the trade talks between the two sides last week, in which hybrid vehicle imports were in focus. European autos continue to benefit from last week’s announcement (Stellantis +2.5%, Volkswagen +1.1%).
• US equity futures are also firmer, with the Q3 earnings season set to get underway this week, starting with big US banks. For the sector as a whole, earnings are seen rising 3.0% Y/Y (vs 1.3% in Q2).
• Click for the session's European pre-market equity newsflow
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FX

• Snapshot: G10s are broadly lower against the USD this morning. GBP leads vs peers, whilst the Swiss Franc is the underperformer. Focus has been on geopolitics, which has been on two fronts. Starting in the Middle East, the Houthis launched a deadly attack on an airport in Saudi’s capital, which could see the US enter on this front. Over in Russia-Ukraine, President Trump announced an “energy ceasefire”, which caught both Ukraine and Russia by surprise. Russia continued its strikes on Ukraine over the weekend. Speaking on the deal, President Zelensky said that he had found out about it through the media, though mentioned that he is ready to sign ceasefire guarantees. Russia has yet to respond.
• Given the aforementioned geopolitical updates, DXY is a touch firmer this morning, currently holding at the upper end of a 102.10 to 102.37 range. Aside from that, the docket is exceptionally thin, with newsflow also likely to remain light on account of Columbus Day. Attention for the week will remain solely on US CPI on Wednesday, which will be a key report heading into the October confab. Whilst money markets assign only a 20% chance of a hike this month, it could help strengthen tightening bets for later in the year.
• GBP is the slight outperformer this morning, ahead of PM Burnham’s speech today, where he is expected to speak on improving the UK’s relationship with the EU. Any progress to improving relations with the bloc could likely be seen as a positive for domestic growth, but will be clouded by what specifically the UK must cough up to strike a deal with the EU. The EUR is under mild pressure this morning, in continuation of the action seen last week (speculative net-short position hit its largest since 2020, via CFTC). Downside which was facilitated by ongoing French fiscal woes; the next point of friction will be on October 13th, when lawmakers will formally begin debate on the draft budget. The final vote is scheduled for 20th October.

FIXED INCOME

• A firmer start to the week for fixed income, on account of the pressure seen in the energy space on steps towards an energy ceasefire between Russia and Ukraine, while in the Middle East Iran acknowledged that some of the seven points have been met, but not all.
• Action which leaves Bunds higher by about 20 ticks, off highs in 121.02 to 121.29 confines, with a pullback seen on recent energy gains. Energy aside, the bloc is focused on ongoing budget deliberations, with Politico reporting that Germany is to push for cuts to agriculture and cohesion, two of the most high-profile funding points.
• Elsewhere, we await the briefing by Chancellor Merz at 12:30BST, where he is expected to outline the changes CDU is making following the poor performance in September’s regional elections. Performance that significantly increased the scrutiny around and pressure on the Chancellor.
• Gilts opened higher by just under 30 ticks, broadly in line with the lead from peers at the time. Upside was a function of the discussed energy moves, and also increased commentary around EU-UK relations ahead of PM Burnham’s update to the House of Commons this afternoon. However, despite peaking at 84.17 with gains of 50 ticks, the benchmark has waned on a bounce in energy and on increased focus around the budget, as the fiscal task Chancellor Healey faces is significant.
• Finally, USTs spent the morning with modest gains but have now slipped to modest losses. In narrow c. 10 tick confines on account of the partial US holiday, which sees cash trade closed.

COMMODITIES

• WTI Nov and Brent Dec futures were initially firmer early doors, supported by renewed Houthi attacks on Saudi Arabia and Trump's suggestion that the US could join Saudi strikes against Yemen. On diplomacy, Iran said the US had accepted some of Tehran's seven conditions, although the response remains insufficient, while exchanges continue through intermediaries. Nonetheless, Tehran reiterated that Hormuz will not reopen until its seven conditions are met, while warning of retaliation against any attack on Kharg Island. The complex reversed opening gains overnight amid Trump's announcement of a potential Russia-Ukraine energy ceasefire and a diesel deal with Moscow, with neither confirmed.
• Since then, prices have risen back into the green after Ukrainian President Zelensky suggested Russia had violated Trump's energy ceasefire. Thereafter, reports Saudi dealing with further strikes in the region, have kept benchmarks afloat.
• WTI currently holds at the upper end of a USD 89.61/bbl to USD 93.13/bbl range (vs Friday's USD 90.01-92.17/bbl range), while Brent sits at the upper end of a USD 102.33/bbl to 106.17/bbl range.
• Dutch TTF is firmer amid continued Middle Eastern supply concerns heading into colder weather in the Western Hemisphere, with TTF extending gains to a EUR 82.90/MWh high from EUR 80.63/MWh lows.
• Precious metals are softer, with spot gold pressured despite a slightly weaker DXY, as expectations of further Fed tightening remain a headwind, while diplomatic developments limit haven demand. Spot gold fell to a USD 4,168/oz low from USD 4,217/oz (vs Friday's USD 4,131-4,208/oz range), while spot silver has pared earlier gains, declining to USD 60.66/oz from USD 61.45/oz highs.
• Base metals are firmer, with copper extending Friday's rebound following the return of Chinese buyers after the National Day holiday. The complex also benefits from China's pledge for further policy support, although broader trade concerns remain. 3M LME copper trades towards the top end of a USD 14,554.55-14,660.00/t range.
• US President Trump said refiners and retailers need to begin dropping prices.
• US authorised an emergency exchange of up to 4mln barrels from the Strategic Petroleum Reserve to address storm-related disruptions.
• Saudi Arabia's Energy Minister signed three energy cooperation MoUs with Kuwait, Qatar and Egypt. It was separately reported that oil executives withdrew from the Riyadh energy congress following missile strikes on the airport. In further comments, the Saudi Energy Ministry said they expect that it will take 2-3 years to increase oil pipeline capacity to 10mln BPD.
• OPEC Secretary General said oil demand growth is expected at 400k BPD this year.
• BP (BP/ LN) is working to restart production at its Na Kika and Thunder Horse platforms in the Gulf of Mexico after shutting output due to Hurricane Isaias.
• IEA urged member countries to accelerate pledged diesel releases and consider supplying additional volumes as global markets tighten.
• Russia’s Deputy PM Novak said Russia has started lifting diesel export restrictions immediately, and that exports are set to increase further in November and December as refineries return to operation following maintenance, TASS reported. Novak added that Russia is ready to supply additional volumes of diesel fuel to the US market, as well as to all its partners, as early as October.
• Canadian PM Carney's office said Carney spoke with US President Trump and that Canada will maximise exports of oil and diesel to the US, with exports to the US yielding over 1mln bpd of diesel.
• China's Agricultural Ministry expects lower corn consumption in 2026-27, with corn consumption now seen at 306.9mln tonnes vs. 311.7mln tonnes in the previous forecast.

TRADE/TARIFFS

• China's NDRC vowed to step up countercyclical support and prepare additional high-impact policy tools as it seeks to achieve this year's economic goals.
• EU Commission Official said the EU has agreed to limit China hybrid imports to 350k/year, with a 6% annually for the second year of application and will apply for four years.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Healey plans short-term Budget giveaways to limit fiscal pressure and is due to unveil further support for energy costs this winter when the Budget is announced later this month.
• UK Chancellor Healey ruled out lowering the mansion tax threshold to GBP 1.5mln.
• S&P affirmed the UK on Friday at AA; Outlook Stable.
• EU leaders will discuss a scaled-back budget at their meeting in Brussels in the week ahead, after Ireland presented a compromise plan for the next seven-year budget that would cut EUR 160bln from the European Commission's proposed EUR 2tln figure.
• Germany, and allies, have informed European Council President Costa that cohesion and agriculture funding will "definitely" need to be cut in the next budget draft, Politico reported citing sources.

CENTRAL BANKS

• NBP's Wnorowski said they could raise the base rate at the November MPC meeting and awaiting updated staff projections.
• BoK Governor Shin affirmed inflation is seen remaining above target for some time and noted that chip strength is supporting faster than expected growth. Shin reiterated that timing and pace of further hikes will be data-dependent.

NOTABLE US HEADLINES

• US Senators reportedly demanded that President Trump reverse the Russian fuel imports deal, while Republican Senator Tillis warned that Trump’s Russian diesel deal may be illegal and put American lives at risk.

GEOPOLITICS

MIDDLE EAST

• US President Trump said he was considering whether the US should join Saudi strikes against Yemen's Houthis, following another attack on the Saudi capital's airport.
• US reportedly accepted some of Tehran’s seven conditions in a response conveyed via the Qatari intermediary, but Iran deems this insufficient, while it reaffirmed that the only way to reopen the Hormuz is to fulfil all seven conditions simultaneously and in a single stage, according to Iranian journalist Ghaderi. This was later confirmed by the Iranian Major General Rezaei.
• US military said it had disabled a commercial cargo vessel in the Gulf of Oman after the crew ignored warnings and attempted to breach the naval blockade against Iran.
• UKMTO announced that a tanker transiting outbound in the Strait of Hormuz was struck by an unidentified projectile, resulting in damage to the vessel.
• IRGC navy said a violating supertanker struck a sea mine in the southern Strait of Hormuz, which caused a fire and was the third tanker since Saturday to hit naval mines, while it warned that vessels disabling navigation and identification systems in the Strait of Hormuz will be treated as "hostile targets" and will face harsh, decisive action.
• Iranian Foreign Ministry spokesperson Baghaei said exchanges of messages with the US continue through intermediaries, while Tehran is still reviewing US positions and will respond via intermediaries once the review is complete.
• Iran's Supreme National Security Council Secretary Rezaei said Iran is fully prepared and will demonstrate new capabilities if war resumes, while he added that US assets in the UAE and around the Strait of Hormuz are highly valuable but have not been placed on Iran's target list to date. Furthermore, he warned that renewed conflict would see many regional undersea cables, data centres, AI facilities and other sites destroyed, assets he valued at more than USD 2tln.
• Iranian Deputy Foreign Minister Gharibabadi said Iran is in a state of war and that no commercial vessel may transit the Strait of Hormuz without prior coordination with Tehran, with the waterway a national security red line. Gharibabadi also stated that Iran is seeking to register with the IMO an agreement with Oman on transit routes, but noted that registration would not guarantee the strait’s reopening, while he added that reopening depends on the US fulfilling its prior commitments.
• Iranian MP Khezrian warned that any attack on Kharg Island will trigger a decisive response by Iran's armed forces at the source of the attack, adding that retaliation will not be limited to US bases, Defapress reported.
• Iranian Foreign Minister Araghchi held a call with Saudi Arabia's Foreign Minister bin Farhan and stressed that Iran is ready to provide any assistance to help start dialogue between Saudi Arabia and Yemen and to help achieve a political solution.
• Saudi Arabia said 12 people were killed and more than 300 injured in an attack targeting King Khalid Airport in Riyadh on Saturday, while the airport was attacked again on Sunday, which caused a fire, as well as killed one person and injured nearly a dozen. Furthermore, the Saudi Civil Aviation Authority also announced that the King Fahd International Airport in Dammam was attacked.
• Saudi Arabia, Turkey, Pakistan and Egypt issued a joint statement condemning continued attacks by Yemeni Houthis on Saudi Arabia, calling them a dangerous escalation and expressing support for Saudi measures to respond.

RUSSIA-UKRAINE

• US President Trump claimed Russia and Ukraine agreed to an energy ceasefire with immediate effect. However, it was reported by Axios that a White House official said Trump's announcement of an energy ceasefire between Russia and Ukraine referred to a potential deal, which he expects Ukrainian President Zelensky to abide by, while the report added that Russia hasn't accepted any kind of ceasefire so far.
• US President Trump demanded that Ukrainian President Zelensky halt attacks on Russian oil refineries, saying he believes it is time for Ukraine to get a new president and that it needs a leader capable of reaching a deal with Russia. Furthermore, the US threatened to cut off intelligence sharing and block arms supplies to Ukraine, while Ukraine's negotiating team cut short its trip to the US after being blindsided by the announcement of the US-Russia diesel deal, although they had worked on a peace proposal that could be sent to Russia before winter, according to FT.
• US President Trump decided to pursue a diesel fuel deal with Russia after Ukrainian President Zelensky ignored half a dozen requests to stop attacking Russian oil refineries, according to a US official with direct knowledge cited by Axios.
• US envoys Witkoff and Kushner have not cancelled plans to visit Moscow but will arrive with a clear understanding of Kyiv's position, TASS sources reported.
• Ukrainian President Zelensky said that he was willing to halt strikes if Russia stopped targeting Ukrainian infrastructure, while he stated that Kyiv is awaiting details of US-Russia talks, but also noted that Russia hit a power plant, following US President Trump's energy ceasefire comment. In further comments, Zelensky said that Ukraine will respond if Russia does not agree to an energy ceasefire but stated that Ukraine is ready to sign ceasefire guarantees.
• Ukrainian President Zelensky said he will organise elections if Russia agrees to 60-day ceasefire.
• European Commission President von der Leyen said the EU will provide additional funding for drones and missiles after talks with Ukrainian President Zelensky, but didn't specify the amount, according to Kommersant. Later, the EU Foreign Representative Kallas said they have adopted over 1.5k Russian sanctions, targeting the missile-industrial complex.
• UK pledged to maintain pressure on Russia through its toughest sanctions regime following Trump's announcement of a deal to buy diesel from Moscow. Separately, UK PM Burnham said Russia interfered in the 2016 Brexit vote and called for European voters to be better informed about efforts to disrupt the democratic process, according to the FT.
• Western intelligence agencies warned Europe’s defence industry bosses that Russia is increasing efforts to assassinate them, prompting companies to increase personal security around their top executives, according to FT.
• Poland's Foreign Minister said NATO members should prepare a robust response for a possible deadly Russian “hybrid” attack amid increasing concerns about Moscow escalating its sabotage campaign on European soil, according to FT.

OTHER

• North Korea launched two ballistic missiles that were believed to have already landed outside Japan's Exclusive Economic Zone, according to NTV.
• South Korean military spokesperson said North Korea's missiles appear to be a demonstration of its capabilities and a show of force in South Korea's hypersonic missile test fire, while the South Korean National Security Council convened an emergency meeting on North Korea's missile test.

CRYPTO

• Bitcoin rose to a peak of USD 84.26k before completely reversing earlier gains and now near the USD 83.3k mark.

APAC TRADE

• APAC stocks were mixed after geopolitical headlines dominated weekend newsflow and amid thinned conditions to start the week due to Sports Day in Japan and the quasi-holiday stateside for Columbus Day.
• ASX 200 was led higher by gains in key local industries with outperformance in mining, materials, financials, resources and tech, while telecoms, real estate, energy and the consumer sectors lagged.
• KOSPI suffered amid pressure in the tech heavyweights, while sentiment was also not helped by North Korea's latest missile launch, which prompted South Korea to convene an emergency meeting.
• Hang Seng and Shanghai Comp were mixed after the PBoC's improved liquidity efforts, while China also released draft rules establishing nationwide requirements for automotive parts remanufacturing and recently agreed to halve hybrid car exports to the EU in a landmark deal.

NOTABLE ASIA-PAC HEADLINES

• China will launch an employment initiative aimed at adapting workers' skills to the development of AI.
• China released draft rules establishing nationwide requirements for automotive parts remanufacturing, including standards for sourcing used components, product quality, traceability and market oversight.
• China proposed banning fully concealed car door handles and requiring physical controls for certain safety-critical functions as regulators seek to strengthen oversight of vehicle design and product testing. Rules would prohibit foldable and flexible vehicle display screens and require additional safety assessments for a range of innovative designs, while the proposal noted some manufacturers launched products without sufficient testing.
• China is to cut VAT export tax rebate rate on NEVs to 9% (from 13%), effective April 1st 2027.
• China's passenger vehicle sales fell 24% Y/Y to 1.7mln units in September, while new energy vehicle sales declined 12% Y/Y to 1.1mln units.