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US equity futures drop as the Trump-Xi trade truce was in line with expectations and hasn’t provided impetus for stocks to move another leg higher, after Fed Chair Powell’s pushback on another rate cut in December being a lock, while Mag7 stocks are under pressure (META -7.8%, MSFT -3.2%) as we await AAPL and AMZN tonight. As of 8:00am ET, S&P futures are down 0.2% with another wave of results due and nearly half of S&P 500 companies now having reported. Pre-market we are seeing Defensives over Cyclicals, with the exception of Metals / Miners. Gold / Silver continue their rebound as Ags and Energy are lower. Bond yields are trading near session highs, up 2bps to 4.10%, while the USD is near session highs. Besides the trade deal with China, US / Canada resumed talks and US / Mexico extended their trade truce an additional 90 days, earlier this week. The US economic calendar remains blank as government shutdown delays publication of weekly jobless claims data and 3Q GDP estimate. Fed speaker slate includes Bowman (9:55am) and Logan (1:15pm). Besides Amazon and Apple reporting after the close, the non-Mag7 earnings focus is mostly on healthcare. Ex-US, the ECB rate decision comes at 9.15a EST. In premarket trading, Mag 7 stocks mixed: Alphabet (GOOGL) gained 7% on Q3 results that beat expectations. Analysts are especially positive on its cloud-computing business. Meta Platforms (META) sank 8% after the Facebook parent reported third-quarter results and gave an outlook. Analysts noted some concern over the company’s heavy spending. Microsoft (MSFT) was down 2% after the software company reported its first-quarter results. Analysts are broadly positive on the report, especially growth in its Azure cloud-computing business, but said investor expectations were elevated (Apple (AAPL) +0.7%, Nvidia (NVDA) is flat, Tesla (TSLA) -0.5%, Amazon (AMZN) -0.5%) Calix (CALX) rises 8% after the application software company reported third-quarter results that beat expectations and gave an outlook that is above the analyst consensus. Carvana (CVNA) falls 7% after the used-car retailer failed to live up to “elevated buy-side bar.” The company said its loan performance was solid amid rising concerns about delinquencies and distress in subprime auto lending. Chipotle (CMG) falls 17% after the restaurant chain lowered its full-year projection for comparable sales for a third time this year as customer traffic at its restaurants fell. Eli Lilly & Co. (LLY) gains 4% after raising its full-year guidance as revenue from its blockbuster weight loss and diabetes drugs beat analysts’ estimates in the third quarter. FMC Corp (FMC) sinks 29% after the agricultural chemical company reported worse-than-expected revenues and cut its guidance for the full year below analyst estimates. FormFactor (FORM) rises 14% after the semiconductor manufacturing company reported third-quarter results that beat expectations and gave an outlook that is seen as strong, prompting an upgrade. Guardant Health (GH) rallies 26% after the biotech company boosted its revenue guidance for the full year, beating the average analyst estimate. Huntington Ingalls (HII) rises 3% after the military shipbuilder reported revenue for the third quarter that beat the average analyst estimate. Insmed (INSM) climbs 12% after the biotech firm posted quarterly results. MediaAlpha (MAX) climbs 11% after the insurance technology company reported its third-quarter results and gave an outlook that analysts are positive on. REV Group (REVG) rises 6% after Terex agreed to buy the manufacturer of specialty vehicles. Sprouts Farmers Market (SFM) tumbles 23% after the grocery store chain reported comparable store sales that missed estimates and lowered its forecast for full-year comp sales. TransMedics (TMDX) drops 10% after the transplant-therapy company reported total revenue for the third quarter that fell short of the average analyst estimate. In corporate news, AI startup OpenAI may target a $1 trillion valuation in an IPO as soon as next year, Reuters reported citing unidentified sources. Calpers is is planning to vote against Elon Musk’s $1 trillion Tesla compensation agreement. On Wednesday, the Fed delivered its second straight rate reduction to support a softening labor market and said they would stop shrinking the portfolio of assets from December. Still, Chair Jerome Powell cautioned that another cut this year wasn’t a foregone conclusion, prompting money markets to pare the odds of a quarter-point move to about 60% from near certainty. The European Central Bank is due to announce its policy decision later Thursday. “After a month of strong growth across global equity markets, I think it’s quite healthy, frankly, to take a breather,” said David Kruk, head of trading at La Financiere de l’Echiquier. “The path of the Fed — with Powell’s surprise hawkish tilt yesterday — is a big question, as is the extent of capex announced by the Mag 7.” Trump and Xi agreed to extend a tariff truce, roll back export controls and reduce other trade barriers in the first sitdown between leaders since Trump’s return to the White House. Despite speculation over potential additional concessions, including opening access to Nvidia’s Blackwell chips, the President indicated such issues hadn’t been part of the discussions. Mag 7 sentiment was muted with META and MSFT both under pressure; reaction to releases from tech giants was mixed as investors sought evidence that huge outlays are paying off. Alphabet demonstrated that its spending is fueling growth across Google’s businesses, particularly in cloud computing and search advertising, and said capex for the year will be $91 to $93 billion. Meta said capex in 2026 will be “notably larger” than in 2025, when it expects to spend as much as $72 billion, while Microsoft’s CFO reiterated the company can’t meet current demand for AI and other services, even after spending tens of billions in recent quarters. The three bellwethers together spent $78 billion in capex last quarter, up 89% from a year earlier. Taking a broader look at Q3 earnings, out of the 248 S&P 500 companies that have reported so far in the earnings season, 81% have managed to beat analyst forecasts, while 15% have missed. Advance Auto Parts, Biogen, Bristol-Myers, Cigna, Comcast, Estee Lauder, Hershey, Eli Lilly, Mastercard, Altria, Merck, Roblox and S&P Global are among companies expected to report results before the market opens. Lilly’s ability to meaningful increase guidance at 3Q results may hinge on the effect of the partial loss of CVS-Caremark formulary coverage for Zepbound that started in July, according to BI. “There has been a lot of good news priced in,” Nancy Curtin, global chief investment officer at Alti Tiedemann Global, told Bloomberg TV. “Having said that, we are still in the midst of the third-quarter earnings. If we end up again with 12-13% earnings growth in this quarter, with expectations on the rise for next quarter - that helps sustain markets.” Carmakers around the world are planning to scale back production after an export freeze on Chinese semiconductor company Nexperia threatened to disrupt the industry’s supply chains, with Volkswagen the latest to caution that its outlook depends on sufficient supply of chips. Consumer trends are in focus with Chipotle lowering projections for a third time this year as customer traffic fell, while eBay gave a weak profit outlook for the holiday period. In Europe, Carlsberg sees lower beer sales on weaker consumer demand and Remy Cointreau cut its outlook amid subdued demand across markets including China, Europe and the US. European stocks fell as investors responded to a busy roster of earnings and looked ahead to an interest-rate decision by the European Central Bank. Drinkmaker Campari leads gains on the Stoxx 600 after a strong report, while at the other end of the index, weaker results hurt the shares of Norwegian defense group Kongsberg and advertising agency WPP. Stoxx 600 falls 0.3% to 573.49 with 374 members down, 216 up, and 10 unchanged. Here are the biggest movers Thursday: Campari jumps as much as 9.6% and was the best performing stock on the Stoxx 600 after the Italian spirits group announced surprising progress in terms of profitability despite disappointing sales for its Aperol brand Jeromino Martins jumps as much as 8.1% after retailer reported higher-than-expected profitability in 3Q. For analysts it shows that the company was able to mitigate slowing like-for-like sales in Poland by higher cost discipline Lufthansa shares rise as much as 5.4%, the most since June 24. The German flag carrier reiterated its expectation for a significant increase in full-year adjusted Ebit and reported a slight profit beat in the third quarter Raiffeisen shares rise as much as 5.9% after the Austrian lender delivers consensus-beating third-quarter results; KBW sees a good set of results supported by another quarter of benign asset quality Airbus gains as much as 2.7%, setting a new record high, after the airplane and military equipment manufacturer reports third-quarter adjusted Ebit that beat consensus expectations ING Groep shares rise as much as 3.3%, the most in four months, as the Amsterdam-headquartered bank’s third-quarter profits come in ahead of forecasts, largely driven by higher revenues Ayvens gains as much as 11%, the most since May 2024, as analysts welcomed the car leasing company’s third-quarter results, which included a share buyback and a special dividend Kongsberg shares drop as much as 15%, the most since May 2022, after the military technology company reported Ebitda for the third quarter that missed the average analyst estimate Stellantis falls as much as 6.4% as analysts focus on the potential one-off charges in the second half of the year and what they could mean for cash flow. JPMorgan notes that the carmaker’s pricing failed to fully offset FX impact Prysmian falls as much as 8% after the cables manufacturer’s guidance disappointed investors; JPMorgan says the extend of the upgrade is likely to disappoint the market going forward Credit Agricole falls as much as 3.4% as a miss on costs saw pre-provision operating profit come in broadly in-line with expectations despite a small beat on revenue Schneider Electric falls as much as 5% on solid albeit merely in-line third-quarter report, according to analysts, with JPMorgan flagging buy-side expectations may have been more elevated leading into the report WPP shares slump as much as 13% to the lowest since 2008, after the advertising agency reduced organic growth guidance that was already slashed in July. Its 3Q revenue drop was also more severe than analysts had expected Amplifon drops as much as 6.4%, the most since July 30, after trimming its full-year sales growth guidance, while maintaining its adjusted Ebitda margin goal. JPMorgan says 3Q results fell short of expectations Carlsberg shares slip after the brewer reported third-quarter results in line with low expectations, with consumer weakness in markets including China and Ukraine weighing on volumes Earlier in the session, Asian stocks turned lower after Donald Trump and Xi Jinping concluded a meeting that was seen as easing tensions between the world’s two largest economies but may have been largely priced into assets. The MSCI Asia Pacific Index fell 0.4%, reversing an early advance of as much as 0.5%. Softbank and Wesfarmers were among key drags. South Korean stocks gained after the nation sealed a trade deal with the US and Samsung Electronics posted a big bump in profits from its chip business. Details on further aspects of the agreement will be key for the Asian stock rally, with the regional benchmark on course for its seventh straight monthly gain. Stocks rose in Japan after the central bank held interest rates. Shares fell in Australia, India, Vietnam and the Philippines. In FX, the Bloomberg Dollar Spot Index edges higher. The yen weakened below 154 per dollar after the Bank of Japan left its benchmark interest rate unchanged and offered no new hints on when it might hike. In rates, treasuries are lower with most yields about 1-2bps higher vs Wednesday’s closing levels. US 10-year near 4.09% slightly exceeds Wednesday’s high, adding to losses that lifted tenors other than the 30-year at least 10bp; German and UK yields are cheaper by 2bp to 4bp across curves. Fed-dated OIS also hover around Wednesday’s closing levels, pricing in around 15bp of easing for the December rate decision. German 2-year topped 2% for the first time in three weeks ahead of the ECB monetary-policy decision at 9:15am New York time. European yields are higher across the curve. French GDP comfortably topped estimates, German output stagnated. Focal points of US session include speeches by Fed’s Bowman and Logan. S&P 500 are down slightly amid evaluation of US-China trade truce. In commodities, gold prices rising and testing $4,000/oz, oil slipping with WTI sitting around $60/barrel and Brent short of $65/barrel. Looking ahead, the US economic calendar remains effectively blank as government shutdown delays publication of weekly jobless claims data and 3Q GDP estimate. Fed speaker slate includes Bowman (9:55am) and Logan (1:15pm) Market Snapshot S&P 500 mini -0.1% Nasdaq 100 mini little changed Russell 2000 mini +0.2% Stoxx Europe 600 -0.3% DAX little changed CAC 40 -0.4% 10-year Treasury yield -1 basis point at 4.07% VIX -0.9 points at 16.05 Bloomberg Dollar Index little changed at 1214.55 euro +0.2% at $1.1624 WTI crude -0.5% at $60.15/barrel Top Overnight News Donald Trump hailed an “amazing meeting” with Xi Jinping that resulted in them extending a tariff truce for another year, rolling back export controls and reducing other trade barriers. Beijing agreed to pause controls on rare-earth magnets and, as Trump put it, buy “tremendous” amounts of American soybeans. The leaders didn’t discuss approving sales of NVDA’s Blackwell chips to China. BBG The Senate votes 50-46 to block Trump’s tariffs on Canada (this action, the second in as many days after the Senate voted to remove Trump’s Brazil tariffs, is most likely symbolic since it likely will not pass in the house). WaPo China pledged to work with Washington to resolve the fate of TikTok’s US business, stopping short of saying it’s agreed to Trump’s proposed deal. BBG President Trump's administration taps three different funds to pay US troops this Friday: Axios. Senate Majority Leader John Thune said Wednesday he expects to engage “pretty soon” with a group of rank-and-file Senate Democrats about ending the 29-day-and-counting government shutdown. If a meeting happens, it would be a rare bipartisan gathering involving a top party leader. Politico The Bank of Japan kept interest rates steady on Thursday, with its governor sending the strongest signal yet that a rate hike was possible as soon as December depending on the outlook for wages next year. RTRS The euro-area economy expanded more than anticipated in the third quarter, displaying resilience to higher US tariffs, with France recording its strongest growth in over two years. German GDP stagnated, as expected. BBG Trump ordered nuclear weapons trials in response to Russia’s recent tests of nuclear-powered underwater drones and cruise missiles. The US’s last nuclear explosive test was in 1992. BBG OpenAI is preparing to file for an IPO as soon as next year that may value the company at $1 trillion. RTRS Gold rebounded after a 5% slide over four sessions as investors digest the outcome of the Trump-Xi meeting and sniff out the chances for more Fed cuts. Bullion has advanced about 50% this year and hit a record $4,380 an ounce last week. BBG Megacaps following last night’s earnings: GOOGL +8%: Topline accelerates across the board with Cloud, Search, and YouTube all ahead; FY25 Capex guide raised… META -8%: 2026 Capex to be notably larger than 2025 with expenses to grow at a faster pace; 3Q Revenues accelerate and 4Q guided ahead… MSFT -2.5%: 1Q Azure growth beats guide by 2pts (inline with whispers); F2Q Azure guided stable and Capex to grow. Goldman Trade/Tariffs US President Trump said the meeting with Chinese President Xi was amazing and a lot of decisions were made, while they will be providing conclusions on very important things and agreed that Xi will work very hard to stop fentanyl. Trump confirmed that China soybean purchases will start immediately and they agreed to reduce China fentanyl tariffs to 10%, as well as noted that they did discuss chips and will be talking to NVIDIA and others about taking chips, but are not talking about Blackwell chips. Trump said the rare earth issue has been settled and there are no more roadblocks on rare earths, while he said it's a one-year agreement that will be extended and tariffs on China will be 47%, down from 57%. Furthermore, he is going to China in April and Xi will be coming to the US sometime after that, while he rated the meeting a 12 out of 10. Chinese President Xi told US President Trump at the start of the meeting that it is a pleasure to meet him and they do not always see eye to eye, but this is normal and it is normal for economies to have frictions, while he added that China’s development goes hand in hand with the vision to make America great again. Xi also stated that China and the US should be partners and friends, as well as noted that trade teams have reached a basic consensus and they are ready to continue working to build a solid foundation for two-way ties. US Treasury Secretary Bessent said the announcement after the Trump-Xi meeting will be a resounding victory for our farmers. China's President Xi says China's economy is like an ocean, according to the Chinese state media. Conversation is better than confrontation when dealing with trade. On the Trump meeting: Both sides have good prospects for AI, and the US and China should aim to narrow down list of problems and extend cooperation. China Commerce Ministry confirms the agreement to extend some tariff exemption measures, China is to adjust some countermeasures. Says the US is extending the suspension of 24% reciprocal tariffs for one year. To pause countermeasures related to 301 investigation for a year. US is extending the suspension of 24% reciprocal tariffs for one year. US President Trump posts "I had a truly great meeting with President Xi of China", "agreed that they will begin the process of purchasing American Energy", large transaction may occur regarding Alaska. A more detailed look at global markets courtesy of Newsquawk APAC stocks were mixed after the Fed rate cut and Powell's hawkish presser, while participants also digested the BoJ decision and Trump-Xi meeting. ASX 200 lacked demand in the absence of tier-1 data and as markets reflected on the recent deluge of risk events. Nikkei 225 swung between gains and losses with price action indecisive amid the BoJ policy decision in which the central bank maintained rates, as widely expected and refrained from any major clues for when it will resume its rate normalisation. Hang Seng and Shanghai Comp were indecisive as the attention was on the Trump-Xi meeting, where the leaders exchanged pleasantries at the start, but were then quiet with no statements provided upon the conclusion of the meeting. However, Trump later commented that the meeting was amazing and confirmed a reduction in fentanyl-related tariffs, while he also said the rare earths issue was resolved and rated the meeting a 12 out of 10. Top Asian News Chinese Premier Li said it is necessary to implement requirements of high-quality development in all fields and aspects of economic and social development, while he added it is necessary to promote high-quality development as the theme, reform and innovation as the fundamental driving force, and meet the people's growing needs for a better life. Furthermore, he stated it is necessary to focus more on strengthening the domestic cycle, coordinate the implementation of the strategy of expanding domestic demand, and deepen supply-side structural reforms. HKMA cut its base rate by 25bps to 4.25%, as expected. China to announce new financing tool to drive over CNY 6tln in investments, via Bloomberg citing Xinhua. Agricultural Bank of China (1288 HK / 601288 CH) 9-month (CNY): Net Income 222.3bln, Net Fee Income 69.8bln, NII 427bln, NIM 1.3%. Q3 (CNY): net 81.4bln, +3.7% Y/Y; Operating Revenue 181bln, +4.3% Y/Y. ICBC (1398 HK) Q3 (CNY): Net 101.8bln, +3.3% Y/Y. 9-month: NIM 1.28%, Net Income 271.8bln, NII 610.9bln. CNOOC (0883 HK) Q3 (CNY): Revenue 104.9bln (exp. 97.6bln), net 32.4bln (prev. 36.9bln). Bank of Communications (3328 HK) 9-month (CNY): Net income 29.994bln, +0.15% Y/Y; NII 128.65bln, +1.46% Y/Y. China Construction Bank (0939 HK) Q3 net profit 95.3bln, +4.2% Y/Y. European bourses (STOXX 600 -0.3%) opened mixed but have been moving lower throughout the morning. Traders have had a hawkish leaning Powell and the Trump-Xi meeting to digest. On the latter, Trump sounded upbeat following the meeting whilst the China Commerce Ministry confirmed the agreement to extend some tariff exemption measures. European sectors hold a strong negative bias, with only really Tech and Healthcare leading whilst Media is found right at the foot of the pile. In terms of key movers today; Shell (-0.4%, mixed results and announced USD 3.5bln buyback), TotalEnergies (+2.7%, in-line metrics), Stellantis (-5%, 13% Y/Y increase in shipments though warned of one-time hit). BOJ Decision BoJ maintained its short-term interest rate target at 0.5%, as expected, with board members Takata and Tamura the dissenters who proposed raising short-term rates by 25bps. BoJ said real interest rates are at significantly low levels and it will continue to raise the policy rate if the economy and prices move in line with its forecast, in accordance with improvements in the economy and prices, while it will conduct monetary policy as appropriate from the perspective of sustainably and stably achieving the 2% inflation target and noted that it is important to scrutinise without any pre-set idea whether the BoJ’s projection will be met, given high uncertainty on trade policy and its impact on the economy. Furthermore, the BoJ stated that underlying consumer inflation is likely to stagnate on slowing growth, but increase gradually thereafter, and is likely to be at a level generally consistent with the 2% target in the second half of the projection period from fiscal 2025 through 2027, while board members' median projections for Real GDP and Core CPI were mostly kept unchanged from the previous aside from the slight upgrade to FY2025 Real GDP to 0.7% from 0.6%. BOJ: Ueda press conference No pre-set idea about timing of next rate hike. A remark that lifted USD/JPY Need some more data until we decide to adjust degree of monetary easing. Possible to change policy even in the middle of the budget being compiled. Will adjust rate irrespective of the political situation. Reason for holding off on rate hikes is due to overall economies and trade policy uncertainties still being high. Expect next wage hikes to be roughly in line with this year's. Want to carefully watch wage negotiations especially in the autos sector given tariff impact. Top European News UK Chancellor Reeves is looking at an early scrapping of windfall tax on the UK oil and gas sector, according to FT. Elsewhere, the Chancellor is said to be considering a 2p rise in income tax, via The Telegraph. UK Chancellor Reeves has admitted she breached housing rules when renting out her family home, via BBC; PM Starmer has dismissed calls for an investigation into the incident. FX DXY is flat, taking a breather following the upside seen in the prior session following the hawkish leaning Fed Chair Powell. To recap, the Fed cut by 25bps as expected, subject to 50bps and U/C dissent; it also announced it will end the balance sheet drawdown. However, Powell's presser thereafter struck a hawkish tone after he raised doubts regarding a December cut, stating that a rate reduction is "far from assured". Fed aside, focus has been on the Trump-Xi meeting. Overall, the POTUS seemed very positive with the outcome whereby he announced that China had agreed to soybean purchases and alluded to an "American Energy" agreement - still awaiting details on that front. The Chinese Commerce Ministry the agreement to extend some tariff exemption measures, adding that the US is extending the suspension of 24% reciprocal tariffs for one year. DXY currently trading in a 98.91 to 99.21 range. EUR is slightly firmer today. A number of key data points to keep traders busy, including; French GDP (beat exp.), Spanish inflation (slightly hotter-than-expected), German GDP (no growth Q/Q, whilst Y/Y beat exp.), State CPIs (point to cooler than exp. Y/Y print for the Nationwide figure, but perhaps to a lesser magnitude than expected). Overall little move seen in the Single-currency; currently trades at the upper end of a 1.1598-1.1637 range. Just after the mainland German inflation figure at 13:00GMT we get the ECB policy announcement. The ECB is expected to maintain the Deposit Rate at 2.0%, less than 1bps worth of easing is currently implied. JPY is the clear G10 underperformer today, following the BoJ. On that, very much as expected, the Bank kept rates steady at 0.50% - a decision which was subject to dissent by Takata and Tamura. Accompanying commentary also lacked surprises, and ultimately lacked any hawkish hints for the next meeting which may be driving the pressure in the JPY today. Moreover, some additional pressure in the Yen was seen during Governor Ueda's presser, in which he stated that there is no pre-set idea about timing of next rate hike. USD/JPY has been gradually edging higher throughout the morning and trades at the upper end of a 152.17-153.88 range. GBP is essentially flat vs USD today. Briefly reclaimed the 1.32 mark overnight but has since been pressured below that mark, to trade within a 1.3182-1.3218 range. Focus on the UK's Budget at the end of next month; reports suggest that UK Chancellor Reeves is looking at an early scrapping of windfall tax on the UK oil and gas sector, according to FT. Elsewhere, the Chancellor is said to be considering a 2p rise in income tax, via The Telegraph. Antipodeans are marginally flat/flat firmer the Dollar today. Ultimately traders are digesting the Trump-Xi outcome and the pressure seen across the metals space this morning. Fixed Income A softer start to Thursday for USTs. The benchmark is holding around the post-Powell lows, but did briefly drop to a 112-22+ base, taking out the 112-24 trough from Wednesday. In brief, the Fed cut by 25bps, a decision subject to 50bps and U/C dissent. They also announced a decision to exit balance sheet reduction, as part of this, the MBA unwind will continue, but offset by T-Bill purchases as/when necessary. The bulk of the action came from Powell, who was hawkish regarding the near term path of policy, outlining that there is a growing chorus of feeling they should maybe wait a cycle, in terms of continuing to ease. Ahead, we have Fed’s Bowman (voter) and Logan (2026) scheduled, though Bowman is pre-recorded and Logan is on bank research; remarks should not cover current policy as the Fed is technically still in the blackout period until the end of Thursday. Friday’s docket has Logan, Bostic (2027) and Hammack (2026). Additionally, we will await the dissent letters from Miran (voter) and Schmid (2025) who preferred 50bps and U/C respectively. Since, newsflow has been focussed on tariffs. The mentioned 112-22+ base this morning came alongside a readout from China’s Commerce Ministry on the Trump-Xi meeting, a meeting POTUS described as a 12/10, the readout from China confirmed that the US is extending the suspension of 24% reciprocal tariffs for one year. The Fed weighed on JGBs on Wednesday, to a 135.78 low into the close. Thereafter, JGBs picked up a touch following the BoJ. The decision was unchanged as expected, subject to two hawkish dissenters. However, modest upside was seen in JGBs after the statement as it did not contain any overtly hawkish signals. Specifically, this lifted JGBs above the 136.00 mark after the Tokyo lunch break, a move that continued thereafter to a 136.26 peak just before Ueda began. The main market-moving update was Ueda outlining that there is no pre-set idea about the timing of the next hike. A move that spurred some JPY pressure at the time but didn’t have much impact on JGBs. Bunds hit on the Fed alongside USTs, as outlined above. Early doors, the benchmark held near yesterday’s 129.21 base and then dipped a tick further to the current 129.20 low, a low print that occurred alongside the discussed commentary from China’s Commerce Ministry. Thereafter, Bunds lifted in-line with the likes of XAU as the risk tone dipped a touch; evidenced by European and US equity futures moving into the red vs the slightly firmer performance seen before the European cash equity open. At most, Bunds to a 129.38 peak but still lower by 19 ticks. No move this morning to a much stronger than expected French GDP figure for Q3, while hotter-than-expected Spanish CPI weighed a touch, but EGBs remained well within earlier ranges. Eurozone GDP came in above expectations, printing at 0.2% Q/Q (exp. 0.1%) and 1.3% Y/Y (exp. 1.2%) following the much better than expected French figure and Germany remaining at 0.0% (assuaging some concern around a negative figure). Just after the mainland German inflation figure at 13:00GMT we get the ECB policy announcement. The ECB is expected to maintain the Deposit Rate at 2.0%, less than 1bps worth of easing is currently implied. Gilts opened lower by 23 ticks, as the benchmark had yet to react to the Powell-pressure seen in peers. A move that extended by another 20 ticks to a 93.35 low shortly after the resumption of trade. Since, Gilts have found a base just below the 93.55 opening mark, posting losses of c. 30 ticks on the session. Newsflow for the UK remains focused on the November Budget, amid reports that Reeves is looking at the early scrapping of oil/gas windfall taxes and a potential 2p increase to income tax; the latter would be a manifesto breach. Note, the attention on Reeves herself has intensified owing to her admitting she breached housing rules regarding her family home, PM Starmer has since dismissed calls for an investigation. Italy sells EUR vs exp. EUR 6.5-7.5bln 2.85% 2031, 3.45% 2036 & EUR vs exp. EUR 1.5-2bln 1.645% 2031, 1.594% 2032 CCTeu. Commodities Price action in crude benchmarks have been choppy throughout the APAC session and into the European trading day amid light crude-specific newsflow. WTI and Brent are currently trading around USD 60.20/bbl and USD 64.00/bbl as the market waits for a new catalyst. Spot XAU has stabilised above USD Wednesday’s trough of USD 3915/oz after falling back below USD 4k/oz following the hawkish cut by the FOMC. XAU fell just shy of Wednesday’s low to USD 3916/oz during the APAC session before slowly reversing the losses seen during the FOMC meeting. The yellow metal has returned back above USD 4k/t as the European session continues with XAU currently trading at USD 4004/oz. Base metals have fallen from Wednesday’s record highs as the meeting between US President Trump and Chinese President Xi ended with a lack of statements from both sides, indicating a possibility that the talks didn’t go as well as expected. However, recent comments from both sides indicated that the talks did go well, with the US cutting the fentanyl tariff to 10% and suspending the 24% reciprocal tariff for another year while the Chinese will halt rare earth export curbs and resume US soybean purchases. Russia's Lukoil says it has received an offer to acquire foreign assets from Gunvor Geopolitics US President Trump posted that the US has more nuclear weapons than any other country, which was accomplished during his first term in office, while he stated that because of other countries testing programs, he has instructed the Department of War to start testing US nuclear weapons on an equal basis, and that process will begin immediately. US President Trump said he wasn't able to talk with North Korea leader Kim because he was so busy, but would come back to talk with Kim. US Defense Secretary Hegseth said they carried out a lethal kinetic strike earlier today on another narco-trafficking vessel operated by a designated terrorist organisation in the Eastern Pacific. Russian and Chinese officials discuss potential war settlement issues, via Tass. US Event Calendar 8:30 am: Oct 25 Initial Jobless Claims, est. 228k 8:30 am: Oct 18 Continuing Claims, est. 1932k 8:30 am: 3Q A GDP Annualized QoQ, est. 3%, prior 3.8% 8:30 am: 3Q A Personal Consumption, est. 3.2%, prior 2.5% 8:30 am: 3Q A GDP Price Index, est. 2.7%, prior 2.1% 8:30 am: 3Q A Core PCE Price Index QoQ, est. 3%, prior 2.6% 9:55 am: Fed’s Bowman Gives Pre-Recorded Remarks 1:15 pm: Fed’s Logan Speaks at Bank Funding Conference DB's Jim Reid concludes the overnight wrap All the action in markets has happened since Europe went home last night with a Fed rate cut - but signals from Powell that a December rate cut was "far from…a foregone conclusion”, mixed tech earnings, a BoJ on hold and a seemingly upbeat Xi/Trump meeting. Meanwhile Nvidia (+2.99%) became the first company to reach a $5trn market capitalisation. Overall this left 10yr Treasury yields spiking by +10.1bps and the S&P 500 (-0.004%) flat on the day even as the NASDAQ (+0.55%) and Mag-7 (+1.03%) powered on to new highs. US equity futures on the S&P (+0.13%) and NASDAQ (+0.14%) are trading higher as I type after headlines from the Trump/Xi meeting are materialising. Looking ahead, the main events today will be Apple and Amazon earnings, along with the ECB’s policy decision, where rates are widely expected to remain on hold at 2%. In a much-anticipated meeting this morning, President Trump met with his Chinese counterpart, Xi Jinping, in Busan, South Korea, to discuss trade, with both leaders expressing optimism about alleviating trade tensions between the two largest economies in the world. President Trump characterized his discussions with Xi as 'fantastic,' emphasizing a 'great relationship' between the two leaders, while Premier Xi noted that both parties had achieved 'a basic consensus' despite ongoing differences. In a nod perhaps to Spinal Tap, Trump said "I guess on the scale from zero to 10, with 10 being the best, I would say the meeting was a 12". According to President Trump’s briefing to reporters aboard Air Force One, the meeting culminated in a trade agreement that would see the US reduce fentanyl-related tariffs on Chinese goods by half, effective immediately. Additionally, the agreement will allow China to resume its soybean purchases and suspend its rare-earths licensing regime for a minimum of one year. Furthermore, the leaders agreed to collaborate on issues concerning Ukraine and stated their intention to eliminate shipping tariffs and fees. Trump has said he'll be going to China in April. At the moment we don't have the official China response to the meeting but that may come as we go to press. So keep an eye out for that. As I press send the FT are reporting that Trump has said that Xi has agreed to a one-year trade deal which will be reviewed annually. So that story will develop this morning. Turning to the Fed, the FOMC cut the fed funds rate by 25bps to 3.75-4.00%, with Kansas Fed President Schmid dissenting in favour of keeping rates steady while Governor Miran favoured a 50bps cut. While the decision itself was widely expected, Chair Powell was more equivocal on future rate cuts, saying that “A further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it”. Powell acknowledged “strongly differing views" within the FOMC, with some primarily concerned about a slowing labour market but others warning that still elevated inflation limited room for further easing. As per our economists’ expectations, the Fed also announced it will end its balance sheet runoff (QT) starting from December 1. On rates policy, our economists maintain a baseline of a 25bps rate cut in December but see the hawkish-leaning signal as consistent with their view of fundamentals pointing to fewer rate cuts than priced by markets. (see their full reaction here). In response, fed funds futures cut back the likelihood of a 25bp December rate cut from effectively fully priced down to 69%, while fed funds pricing for next June moved + 12.9bps higher on the day. That drove Treasuries to their worst day since early June, with 2yr yields up +10.8bps to 3.60% and 10yr up +10.1bps to 4.08%. Powell’s more cautious signal on future cuts weighed on equities, with the S&P 500 erasing gains to trade more than half a percent lower on the day but then recovering back to flat (-0.004%) by close. And while tech stocks rallied, the equity market breadth was increasingly negative, with three quarters of the S&P lower on the day and its equal-weighted version down -1.11%. The S&P 500 has now outperformed its equal-weighted counterpart by 3.0% so far this week, the biggest 3-day performance gap between the two since 2020. Then after the market close, we saw results from Microsoft, Meta and Alphabet send contrasting signals on the payoffs from the AI investment boom. The three tech giants saw their joint capex bill rise +89% y/y to $78bn in the latest quarter. But with Meta delivering in line revenue guidance for the current quarter ($56-59bn vs $57.4bn est.) and Microsoft saying that capacity was still constraining growth in its cloud unit (+39% y/y vs +37% est.), this left questions hanging over increasingly lofty expectations. Meta’s shares fell more than -7% in after-hours trading with Microsoft down -4%. By contrast, Alphabet’s solid revenue beat ($87.5bn vs $85.1bn est.) came amid surging demand for its cloud and AI services, leaving investors more optimistic that its capex spend was translating into rising AI-related revenue. Alphabet’s shares rose more than +6% in post-market trading. Before all that, the standout story yesterday was Nvidia (+2.99%) becoming the first company in history to reach a $5 trillion valuation — placing it above the entire listed market capitalisation of every G7 country except the US and Japan. To put that in perspective, Nvidia first crossed $1tn in June 2023, $2tn in March 2024, $3tn in June 2024, and $4tn in July 2025. It dipped as low as $2.4tn in April this year, making its ascent all the more remarkable. There has simply never been a company like it in the history of financial markets. With Microsoft (-0.10%) also surpassing $4tn earlier this week, and Apple (+0.26%) doing so yesterday, these companies are now more akin to countries than corporations. Nvidia’s gains came after Trump said in yesterday’s Asian session that he planned to discuss Nvidia’s Blackwell chips with Xi. That comment pushed the Philadelphia Semiconductor Index up +1.85% to a new high. As a reminder, Trump floated the idea of allowing Nvidia to export scaled-down versions of its Blackwell chips to China back in August. That came as he also approved shipments of Nvidia’s H20 chips — a less advanced model — in exchange for the US administration taking a 15% revenue share. Elsewhere, the US and South Korea announced a trade deal yesterday. The agreement includes a $200bn investment commitment from South Korea (capped at $20bn annually) and an additional $150bn in shipbuilding investment. In return, the US has agreed to reduce auto tariffs to 15% from 25%, bringing them in line with Japan’s rate. On the data front, ahead of the Fed decision, US September pending home sales were unchanged versus expectations for a +1.2% rise, though the annual rate did still pick up to a 10-month high of +1.5% y/y. Today will be a busy day for European data as well. Alongside the ECB meeting, we’ll get Q3 GDP flash estimates for France, Germany, Italy, and the wider Euro Area. Our European economists expect Euro Area growth to come in between 0.0% and +0.1% q/q, with France flat, Germany at +0.2%, and Italy at +0.1%. Spain’s flash estimate yesterday showed +0.6% q/q, in line with market expectations. Staying with Europe, the ECB is widely expected to hold rates at 2% again, with recent growth and inflation data broadly aligned with its forecasts. President Lagarde is likely to reiterate that policy remains “in a good place.” Our European economists expect the tone to stay unchanged, though dovish risks include trade uncertainty, energy inflation, and credit transmission concerns. European equities lagged their US peers for a second consecutive session, with the STOXX 600 down -0.06%. Weakness was led by German and French stocks, with the DAX (-0.64%) and CAC 40 (-0.19%) both under pressure amid ongoing budget concerns. In bond markets, yields drifted slightly lower, led by OATs (-1.8bps) and BTPs (-1.4bps), while gilts (-0.8bps) and bunds (-0.2bps) also edged down. Elsewhere, the Bank of Canada cut rates by 25bps, as expected, with only minor adjustments to its policy assessment. In other overnight news, the liberal centrist D66 looks set to lead attempts to form a new government after early elections in Netherlands. The party is on course to match the seat share of the right-wing populist Freedom Party in a fragmented parliament, with the latter losing nearly a third of its seats compared to the 2023 election. Asian equity markets are mixed with the Nikkei (+0.25%), the KOSPI (+0.39%), and Hang Seng (+0.13%) higher but mainland Chinese markets slightly lower. The S&P/ASX 200 (-0.40%) is lower. Meanwhile, 10yr USTs are -1.16bps lower trading at 4.06% as we go to print. The Bank of Japan (BOJ) has, as widely anticipated, kept interest rates steady at 0.5%, with two members dissenting in favour of a rate increase. This extends the pause in its tightening cycle to a sixth consecutive meeting after a 25 basis points hike in January. In its quarterly economic outlook report, the board has slightly adjusted its economic growth forecast for the current fiscal year ending in March 2026 to 0.7% from 0.6%, while maintaining its projections for the subsequent two fiscal years at 0.7% and 1% respectively. Additionally, it has raised its inflation forecast for fiscal 2026. Simultaneously, the central bank anticipates that underlying inflation will reach 2% in the latter half of the three-year projection period ending in March 2027, retaining the language from the previous report issued in July. Following this announcement, the Japanese yen (-0.05%) weakened before stabilizing to trade flat at 152.71 against the dollar. To the day ahead, the key event will be the ECB decision, alongside a full slate of European data releases — including Germany’s Q3 GDP, October CPI, unemployment rate, France’s Q3 GDP, Italy’s Q3 GDP and September unemployment, Eurozone confidence data, and the region’s Q3 GDP print. On the earnings front, highlights include Apple, Amazon, Eli Lilly, Mastercard, and Samsung Electronics. Loading recommendations...
