• US Secretary of State Rubio said good progress had been made re. Ukraine, and none of the outstanding issues are insurmountable.
• European bourses opened stronger, but sentiment has waned a touch in recent trade; US equity futures are mixed.
• DXY is marginally subdued, EUR gains a touch amidst geopolitical progress whilst the JPY lags.
• Lacklustre trade across fixed income with USTs flat whilst Bunds are firmer by a handful of ticks.
• Oil complex has been pressured by progress on Ukrainian peace talks, XAU trades rangebound.
• Looking ahead, highlights include US National Activity Index (Oct), Dallas Fed Manufacturing Index (Nov), Speakers including ECB’s Cipollone, Elderson & Lagarde, Supply from the US.

TARIFFS/TRADE

• White House is reportedly preparing a tariff fallback ahead of the court ruling, according to Bloomberg.
• US President Trump’s team was reported on Friday to internally float selling NVIDIA (NVDA) H200 chips to China, according to sources cited by Bloomberg. Trump’s team held internal talks about H200 chip shipments to China in recent days, although the sources stressed no final decision has been made, and it’s entirely possible that the idea remains an internal debate and never results in actual license approvals, which are required under export controls that Washington first imposed in 2022.
• EU plans to tighten foreign investment rules to prevent Chinese firms benefiting from the open market without contributing to local workers or tech transfer, according to FT.
• China welcomed more Italian companies to enter the Chinese market and hopes Italy will provide a fair, transparent, and non-discriminatory business environment for Chinese investment in Italy, according to Xinhua.
• Canadian PM Carney and German Chancellor Merz discussed partnerships in critical minerals, clean energy, AI, aerospace, energy and defence, while Carney also met with French President Macron, and it was stated that the leaders remained focused on key global priorities such as critical minerals, clean energy and AI. Furthermore, Carney said that he and Indian PM Modi launched negotiations for a trade deal that could more than double their trade to USD 70bln and separately commented that they are intensifying free trade negotiations with Mercosur.
• UK abolished its "de minimis" rules, which exclude cheap imports below GBP 135 from paying tariffs, according to a report on Friday by Sky News.
• EU Trade Commissioner Sefcovic says there have been productive talks with US Commerce Secretary Lutnick and USTR Greer in the last two days, adds that there is more work to be done on steel talks with the US. Will discuss critical and raw materials with the US. On EU-India trade, he hopes to travel to India again soon.

EUROPEAN TRADEEQUITIES

• European bourses (STOXX 600 +0.2%) opened stronger across the board, following on from a mostly firmer APAC session and as markets digested the latest geopolitical progress between Ukraine and Russia, whereby US Sec of State Rubio suggested "tremendous progress" has been made. However, as the morning progressed, a hefty bout of pressure took indices to session lows to now display a mixed picture in Europe - a move which lacked catalysts.
• European sectors opened with a clear cyclical bias. Autos, Travel & Leisure and Basic Resources lead whilst Energy underperforms as the oil complex remains pressure amidst the constructive geopolitical environment; a factor which has led to downside across Defence names, with the likes of Rheinmetall (-2%) on the backfoot.
• US equity futures (ES +0.1% NQ +0.3% RTY U/C) are mixed, with the NQ leading after the Tech sector outperformed in Asia overnight. Quiet newsflow from a US perspective, and with only some Tier 2 datapoints scheduled for today.
• Click for the sessions European pre-market equity newsflow
• Click for the additional news

FX

• DXY is a little lower today and trades within a thin 100.08 to 100.29 range. Newsflow has been relatively quiet for the index this morning, but may pick-up later this week as Fed speak and the Fed's Beige Book will give further insight on the health of the economy.
• EUR/USD has picked up a touch since the European cash open, and has recently made a peak of 1.1540 vs the session low of 1.1503. No clear catalyst for the move itself, but potentially as markets digest the latest bout of geopolitical updates between Russia and Ukraine. Elsewhere, no move after a subdued German Ifo set, which saw Expectations slip below the lower end of analyst expectations.
• Muted price action also in GBP/USD, currently within a narrow 1.3086-1.3111 range. Price action this morning has been sideways, with newsflow light and as traders count down their clocks to Wednesday's UK Budget. Sky News recently outlined that the UK's OBR will reportedly say that growth is lower in 2026 and every Parliament year in the Budget. Pertinently, the Treasury hopes to surprise with bigger than expected headroom, an outcome that would be welcome by markets; as a reminder, consensus is in a broad GBP 10-20bln+ range for headroom, vs the GBP 9.9bln Reeves had last time.
• JPY is the underperformer today, likely thanks to the broader risk-tone, but with Japanese participants also away on holiday. Currently towards the upper end of a 156.43 to 156.93 range. Weekend newsflow has been light aside from commentary via Japanese government panel member, who suggested that PM Takaichi is open to JPY intervention. A report which has seemingly been shrugged off by markets, as the JPY continues to weaken.
• Antipodeans are mildly lower vs the Dollar, with no real catalysts driving things for the moment; focus remains on the RBNZ announcement on Wednesday, where a 25bps cut is widely expected.
• Barclays FX month-end rebalancing: strong USD buying against all majors.
• Click for NY OpEx Details

FIXED INCOME

• Bond price action is lacklustre this morning. Overnight action was subdued as Japanese participants were away for holiday, and the European morning has lacked material newsflow to shift sentiment.
• USTs are trading rangebound in a tight 113-05+ to 113-09 range. Trade updates this morning have been non-incremental, with some focus on a Bloomberg piece suggesting that the White House is preparing a tariff fallback ahead of the court ruling. The rest of the day is fairly light, aside from some Tier 2 US data - more focus will be on the coming days, where markets will get more Fed speak, Retail Sales, Weekly Claims and the Beige Book.
• Bunds are firmer by a handful of ticks, but ultimately following the above and trades within a 128.81 to 129.00 range. This morning German paper saw a slight pick-up and attempted (but failed) to lift above the 129.00 mark, alongside pressure in WTI and Brent (spurred on by geopol progress). Thereafter, some sideways trade before then catching another slight bid, as the European risk tone slipped off best levels. Elsewhere, no move to a subdued German Ifo survey, which saw New Expectations slip below the most pessimistic of analyst expectations.
• Gilts opened higher by three ticks and now flat, echoing the bias in core peers. A lot of final weekend press reporting around the budget, the main developments focused on pensions. Earlier, Sky News reported that the OBR is set to lower the growth view for every parliamentary year, Chancellor Reeves reportedly to argue this is not due to the government (reminder, Reeves recently identified Brexit as the structural factor behind the challenging UK environment). Furthermore, the Treasury is said to be looking to surprise with bigger than expected headroom, an outcome that would be welcome by markets; as a reminder, consensus is in a broad GBP 10-20bln+ range for headroom, vs the GBP 9.9bln Reeves had last time.
• BTPs are firmer by 22 ticks at most, notching a 121.05 peak. Following Moody's upgrading Italy to Baa3 (prev. Baa2), Outlook Stable (prev. Positive) on Friday.
• OATs are firmer, but only modestly so, awaiting fiscal updates. On Friday, the Revenue section of the budget bill failed in the National Assembly. As such, the text now goes to the Senate and Parliament has until the 23rd of December to deliberate it. Now, attention turns to the Social Security Financing Bill, a joint committee set to rule on it on Wednesday before it then (if it passes) goes to the National Assembly and then Senate for approval. Politico sources report a "one in three chance" that the joint committee would approve it. Unsurprisingly, pension reform is the sticking point.
• German Finance Agency's Diemer says 2026 issuance is likely to exceed EUR 500bln, via Econostream. Adds: Same issuance structure in 2026 but with higher volumes. Higher term premia will be considered in determining the 2026 maturity profile. Confident that no mid-year revisions to issuance plans will be necessary. Will continue to use syndications in 2026 but will focus on longer maturities. Says that they see only very isolated structural demand for ultra long bonds, will not launch a strategic market presence there for the foreseeable future. Issuance in foreign currencies is not currently planned.

COMMODITIES

• WTI and Brent were initially rangebound, but saw negative downticks at the start of the European sessions, and then extended on that pressure taking the complex down to fresh session lows. Brent Feb'26 made a trough of US 61.34/bbl vs peak of USD 62.18/bbl. Downside today has been facilitated by the positive mood music via US Secretary of State Rubio, who suggested a meeting with Ukrainian officials had led to "tremendous progress".
• Dutch TTF Dec'25 has taken a hit following the talks in Geneva, trading below EUR 30/MWh for the first time since May 2024. After opening at EUR 30.06/MWh, Dutch TTF has faltered and remains near session lows at EUR 29.20/MWh.
• Spot XAU fell to a trough of USD 4040/oz at the start of the APAC session following the positive risk tone from the Geneva talks. However, XAU has turned around and is currently trading just shy of session highs at USD 4078/oz, benefitting in part from the risk tone souring a touch after the European open. Note, XAU in a thin sub-40/oz band.
• 3M LME Copper oscillated in a tight USD 10.77k-10.81k/t band to start the European session but briefly dipped to a trough of USD 10.75k/t as global equities pulled back from best, despite a lack of specific newsflow.
• A majority Chinese-owned plant at Indonesia’s most important nickel site is cutting back production due to its tailing site being nearly full, according to Bloomberg citing sources

NOTABLE DATA RECAP

• German Ifo Expectations New (Nov) 90.6 vs. Exp. 91.5 (Prev. 91.6); Ifo Current Conditions New (Nov) 85.6 vs. Exp. 85.5 (Prev. 85.3); Ifo Business Climate New (Nov) 88.1 vs. Exp. 88.5 (Prev. 88.4)

NOTABLE EUROPEAN HEADLINES

NOTABLE HEADLINES

• UK Chancellor Reeves is expected to further protect those on the national minimum wage at the Budget, according to the UK Treasury. It was also reported that Reeves will freeze rail fares in a cost-of-living push and the US is to extend EV subsidies to blunt the tax increase in the Budget, according to Bloomberg.
• UK Budget’s pensions tax raid to raise over GBP 3bln, while the expected move by Chancellor Reeves in the week ahead faces strong pushback from businesses, while she is preparing to lift the two-child benefit cap in the Budget, according to FT.
• UK and Indonesia agreed on a GBP 4bln maritime deal securing 1,000 jobs in the UK.
• ECB President Lagarde warned against viewing monetary policy as a solution to debt problems, implicitly rejecting recent suggestions from France’s far-right party that the ECB should relaunch large-scale asset purchases, according to Bloomberg.
• Moody’s affirmed the UK at Aa3; Outlook Stable, while it raised Italy’s sovereign rating by one notch from Baa3 to Baa2; Outlook Revised to Stable from Positive.
• UK's OBR will reportedly say that growth is lower in 2026 and every Parliament year in the Budget, via Sky News; Chancellor Reeves will argue that government decisions are not responsible. Treasury hopes to surprise with bigger than expected headroom.

NOTABLE US HEADLINES

• US President Trump is expected to announce as early as Monday a general framework to address healthcare costs, proposed legislation would eliminate zero premium subsidies currently offered under the ACA, according to MS NOW. It was later reported that US President Trump is to sign an executive order on Monday at 16:00EST/21:00GMT.
• US President Trump said there is massive crime and rioting in the Chicago loop area, following an incident where 7 people were shot on Friday.
• US Treasury Secretary Bessent said they are seeing prices get better and will see an announcement this week on healthcare costs, while he added that inflation is up because of services, not imported goods. Bessent said he expects some prices to come down in weeks and others in months. Furthermore, he said that Republicans should end the filibuster if Democrats close the government again, while he noted the government shutdown caused a USD 11bln permanent hit to US GDP.
• US President Trump's Department of Government Efficiency has disbanded with eight months left to its mandate.
• US Appeals Court rejected the Trump administration’s bid to expand rapid deportations.
• Texas officials asked the US Supreme Court to allow a pro-Republican electoral map that a lower court blocked.
• JPMorgan Chase (JPM), Citi (C) and Morgan Stanley (MS) are among those that have been notified by SitusAMC that their client data may have been taken, according to NYT.

GEOPOLITICS

• Israel’s military said it killed a Hamas commander in Gaza City, while the Israeli military confirmed that Hezbollah military leader Ali Tabtabai was killed in an Israeli strike in southern Beirut.
• Canadian PM Carney and German Chancellor Merz discussed the situation in the Middle East and noted their support for the comprehensive peace plan to end the war in Gaza, while they reaffirmed support for Ukraine and underscored that any settlement must include Ukraine’s involvement.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said they are grateful for all efforts by US President Trump and the US to end the war. Zelensky said they also thank Europe, the G7 and the G20 for helping them protect lives, while they are working on every point and every step to achieve peace. Zelensky also commented that there are signals that the US team is hearing them.
• US President Trump said ‘no’ when asked if his offer is the final one for Ukraine. Trump separately commented that the Ukrainian leadership has expressed zero gratitude for our efforts and that Europe continues to buy oil from Russia.
• US Secretary of State Rubio said we’ve had the most productive and meaningful meeting so far and made good progress. Rubio said there is still some work left to do, and their teams will revert on Sunday night with more updates, while Rubio added this will have to be signed off by their presidents, but he is comfortable about that. Rubio later commented that they made a tremendous amount of progress and have a foundational document, while they were able to narrow down the points of the plan, but added that work remains to be done. Furthermore, he said they are much further ahead than when they began on Sunday morning and noted there are some outstanding issues involving the role of the EU and NATO, but stated that none of the outstanding issues are insurmountable.
• US official said that talks between US and Ukrainian officials so far have been productive and even conclusive in some areas, while it was also reported that US and Ukrainian officials were discussing a possible trip by Ukrainian President Zelensky to Washington to discuss the peace plan, possibly this week, according to sources cited by Reuters.
• European leaders’ summit on Ukraine stated that they believe the US 28-point peace plan required additional work and they are concerned by proposed limitations on Ukraine’s armed forces, while they are clear on the principle that Ukraine’s borders must not be changed by force.
• European counterproposal to the US’s Ukraine peace plan proposes that the Ukrainian military be capped at 800,000 in peacetime and stated that Ukraine joining NATO depends on the consensus of NATO members, which does not exist, while NATO agrees not to permanently station troops under its command in Ukraine in peacetime. The counterproposal also stated that NATO jets will be stationed in Poland and Ukraine will receive a US guarantee that mirrors NATO’s Article 5, as well as noted that Ukraine will be compensated financially, including through Russian sovereign assets that will remain frozen until Russia compensates for damage to Ukraine. Furthermore, Ukraine commits not to recover its occupied sovereign territory through military means, while negotiations on territorial swaps will start from the line of contact, and Ukraine will hold elections as soon as possible after the signing of the peace agreement.
• White House readout stated there was an extensive and productive meeting with the Ukrainian delegation, while it added that the Ukrainian delegation affirmed all of their principal concerns and believes the current draft reflects their national interests. Furthermore, it stated Ukrainians underscored that the strengthened security guarantee architecture meaningfully addresses their core strategic requirements and they agreed to continue consultations as the agreements move toward final refinement.
• Nordic-Baltic Eight Leaders’ joint statement noted that they spoke with Ukrainian President Zelensky and stated that Russia has so far not committed to a ceasefire or any steps leading to peace, while they will continue to arm Ukraine and strengthen Europe’s defence to deter further Russian aggression.
• Russia’s Ryabkov said regarding chances of another Trump-Putin meeting that the issue is on the agenda and nothing can be ruled out, while he added that progress in building dialogue between Russia and the US is impressive and that contacts are yielding results.
• Russia’s Defence Ministry said Russian forces took control of Petrivske in Ukraine’s Donetsk and took control of the Tikhe and Odradne regions in eastern Ukraine, according to TASS. It was also reported that Russian forces captured Nove Zaporizhzhia and Zvanivka in eastern Ukraine, according to RIA.
• Ukrainian drones struck a heat and electricity station in Moscow region’s Shatura, which caused a fire.

RUSSIA/UKRAINE UPDATES THIS MORNING

• Ukraine's Parliamentary speaker announces a series of Ukraine's red lines in negotiations in regards to the peace agreement between Russia and Ukraine.
• Russia's Kremlin says no official information has been received from the Geneva talks and no meeting has been planned between Russia and the US this week.

OTHER

• Chinese Foreign Minister Wang said China urges Japan to reflect on and correct mistakes as soon as possible and not become obsessed, while he added that Japan’s leader sent a wrong signal of trying to intervene in the Taiwan issue by force and crossed the red line that should not be touched. Wang also said that if Japan continues down this path, countries have the right to re-examine Japan’s historical crimes. It was separately reported that a senior Japanese government spokeswoman said China’s claim that Japan has altered its position is entirely baseless, while Japanese Defence Minister Koizumi said during a visit to the island of Yonaguni in Okinawa that Japan is on track to deploy missiles to the island, which is near Taiwan.
• US is poised to start a new phase of Venezuela-related operations and is weighing options, including to overthrow Venezuela’s government, while covert operations are expected to come first, according to officials cited by Reuters.- Armed bandits kidnapped more than 300 students from a Catholic school in Nigeria on Friday, while it was reported on Sunday that fifty of the kidnapped students have escaped.
• White House said South Africa is refusing to facilitate a smooth transition of the G20 presidency and has weaponised its G20 presidency to undermine the G20’s founding principles.

CRYPTO

• Bitcoin is a little lower and trades just shy of USD 86k whilst Ethereum holds around USD 2.8k.

APAC TRADE

• APAC stocks were mostly positive following last Friday's advances on Wall St, where sentiment was lifted as dovish comments from Fed's Williams rekindled December rate cut hopes, while 'tremendous' progress was said to have been made during Ukraine peace talks in Geneva on Sunday, although conditions were quiet amid a sparse overnight calendar and with Japanese markets closed for Labor Day.
• ASX 200 rallied at the open with outperformance in tech and industrials front running the advances, while there were also some M&A related headlines with Qube surging to a record high on Macquarie Asset Management's fresh AUD 11.6bln takeover proposal. Conversely, BHP shares were indecisive and eventually trickled lower after it was reported to have made a renewed approach for Anglo American, which was rejected, prompting BHP to abandon its pursuit again.
• Hang Seng and Shanghai Comp Chinese markets are mixed with gains led by tech strength, although semiconductor names are pressured, including SMIC, following a report on Friday that US President Trump’s team was internally floating selling NVIDIA H200 chips to China.

NOTABLE ASIA-PAC HEADLINES

• BoJ board member Masu said on Friday that the BoJ is 'close' to the decision to raise rates but can't say which month. Masu stated it is not good for real interest rates to be deeply negative and that Japan's policy rate is lower than the neutral rate, which he strongly believes they need to change quickly, while he said they won't wait until after the Spring wage talks to end in raising rates.
• Japan is said to be open to intervening in the currency market “to mitigate the side effects of a weak yen,” according to a government panel member.
• New Zealand PM Luxon vowed to increase the pension saving scheme, according to Bloomberg.