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European bourses are mixed and have traded choppy throughout the morning; US equity futures are modestly lower, ahead of a slew of earnings. DXY is underpinned by the downbeat risk tone and easing credit concerns; JPY underperforms as Takaichi becomes Japanese PM. Global fixed paper are bid amid the softer risk tone and reports around AA rating criteria. Metals sell off as “debasement trade” loses momentum; Crude is essentially flat in choppy trade. Looking ahead, Canadian CPI (Sep), NBH Policy Announcement, CCP 4th Plenum (20th-23rd), Speakers including ECB’s Nagel & Lagarde, Fed’s Waller, BoE's Bailey & Breeden Earnings from Netflix, Intuitive, Texas Instruments, Capital One Financial, Coca-Cola, GE Aerospace, Elevance Health, Lockheed Martin, Philip Morris, RTX, General Motors, 3M, Nasdaq & Danaher. Newsquawk in 3 steps: 1. Subscribe to the free premarket movers reports 2. Listen to this report in the market open podcast (available on Apple and Spotify) 3. Trial Newsquawk’s premium real-time audio news squawk box for 7 days TARIFFS/TRADE US Trade Representative Greer said they will take action over Nicaragua's labour rights policies and he proposed additional duties of up to 100% on Nicaragua following the conclusion of a Section 301 investigation, while he proposed to suspend all of Nicaragua's benefits under the Central America-Dominican Republic Free Trade Agreement, either immediately or phased in over 12 months. EUROPEAN TRADE EQUITIES European equities (STOXX 600 +0.2%) are mixed and have traded choppy throughout the European morning. A lack of fresh catalysts and quiet stock-specific newsflow has led to indecisive trade so far. European sectors are split down the middle, with no clear out/underperformer today. Real Estate benefits from the relatively lower yield environment, joined closely by Utilities whilst Chemicals lags a touch. US equity futures (ES -0.1% NQ -0.1% RTY -0.2%) are modestly lower across the board, paring back some of the upside seen in the prior session. A slew of earnings today will keep traders busy; some of the main companies incl. Netflix, Texas Instruments, Coca-Cola, GE Aerospace and Lockheed Martin. Click for the sessions European pre-market equity newsflow Click for the additional news Click for a detailed summary FX A firm day for the broader Dollar and index, with some suggesting the ease of credit market concerns, and reinforcement by solid Zions Bancorp earnings excluding the fraud losses. Newsflow has been relatively quiet today, whilst on the trade front there is little to update on since Monday, although US President Trump kept a conciliatory tone whilst maintaining the November 1st threat of 100% additional tariffs on China. DXY resides in a 98.50-98.89 range with clean air seen until the 99 psychological level. Subdued trade for the EUR in quiet newsflow with little action seen from ECB commentary as the clock ticks down to next week's ECB confab, with pricing firmly at a hold (98.4% chance). That being said, analysts at ING posit "not all the Governing Council may be entirely comfortable with an even stronger euro, even if direct comments on FX have been rather rare of late." EUR/USD falls further under its 100 DMA (1.1653) and trades in a current 1.1614-1.1655 parameter. USD/JPY holds a firmer bias and moved back to the 151.00 territory amid the fresh record highs in Tokyo stocks, with focus on the parliamentary vote in which LDP leader Takaichi won to become Japan's first female Prime Minister; source reports that the BoJ have no urgency to hike next week will also be weighing on the JPY. Japan's incoming Finance Minister Katayama echoed the outgoing Finance Minister Kato, and said it is desirable for FX to move in a stable manner reflecting fundamentals; no comments at this moment when asked about BoJ hikes. USD/JPY resides in and at the upper end of a 150.47-151.77 range with the next upside level at the 151.87 mark. Cable marginally softened and breached the 1.3400 level to the downside in the absence of any UK-specific catalysts. Though, action has seemingly been influenced by broader action in the USD in recent trade. The latest PSNB metrics printed shy of expectations, but above the OBR's own view from March; While elevated yields continued to push the borrowing figure higher, that narrative has improved from a Treasury perspective since October 10th. GBP/USD resides in a 1.3372-1.3416 range, with clean air seen until the Oct 15th low at 1.3315. CAD is softer amid USD strength at the time of writing, although Loonie traders look ahead to CPI from the country. The headline is seen unchanged M/M (prev. -0.1%), while the annual rate is seen rising to 2.3% Y/Y from 1.9%. This is the last inflation report before the October BoC meeting. Antipodeans are the G10 laggards amid the cautious risk tone after failing to benefit from the positive risk appetite overnight. NZD/USD is the laggard after slightly softer exports and credit card spending data overnight. Click for a detailed summary FIXED INCOME USTs are firmer, moving directionally in-fitting with peers as outlined above. Thus far, to a 113-24 peak but with upside of just a handful of ticks at most. Ahead, the US docket is focused on several pertinent earnings releases and comments from Fed’s Waller; however, the blackout period is in force ahead of the October policy decision. A contained start to the day, with Bunds initially firmer but only by a handful of ticks in a quiet early morning where newsflow was dominated by stock specifics and events in Japan. Since, benchmarks generally but initially OATs derived a bid from a Bloomberg article that BlackRock (BLK) and State Street (STT) have recently stopped using indexes with AA rating criteria as the benchmark, according to sources. Meaning that the firms will continue to be able to hold French debt even after the downgrade by S&P on Friday. This lifted OATs to a 123.29 peak for the season with gains of 17 ticks at most. No reaction to remarks from ECB’s Lane this morning. A speech/text that had some interesting points, but ultimately stuck to familiar lines on EZ monetary policy. Ahead, Lagarde and Nagel are scheduled with a text expected from the President. Gilts are firmer today. The morning’s PSNB data showed a slightly lower borrowing figure than expected, though a touch above the OBR’s view from March, while the prior was subject to a revision lower. For the FY to September 2025, borrowing stood at GBP 99.8bln vs the GBP 92.6bln forecast by the OBR in March. Modest outperformance in Gilts this morning, seemingly a function of the slightly better than expected borrowing view. To a 92.92 peak with gains of 25 ticks at most. If the move continues, resistance from last week factors at 93.02 and 93.17. Ahead, BoE’s Bailey and Breeden appear before the House of Lords; however, as they are discussing reform since 2008, it remains to be seen whether the remarks will factor into the discussion around current policy. JGBs are stronger overnight as markets awaited the parliamentary votes on the next Japanese PM and also acknowledged stronger demand at the latest climate-related auction. Orders for Italy's new 7 year BTP Valore bond reach EUR 6bln since the start of the offer. BlackRock (BLK) and State Street (STT) have recently stopped using indexes with AA rating criteria as the benchmark, via Bloomberg citing sources; this will allow exposure to French debt to be maintained. UK sells GBP 1.5bln 1.5% 2053 Green Gilt: b/c 3.17x (prev. 3.2x), average yield 5.294% (prev. 5.169%), tail 0.8bps (prev. 0.8bps). Germany sells EUR 0.733bln vs exp. EUR 0.75bln 1.30% 2027 Green Bobl and EUR 0.718bln vs exp. EUR 0.75bln 2.50% 2035 Green Bund. Click for a detailed summary COMMODITIES Crude is currently trading around the unchanged mark, and very much off worst levels, after a recent (albeit fleeting) pick-up in prices. Nothing really driving things at the moment for the complex, as Middle Eastern geopols take a backseat. More focus on Russia-Ukraine, after it was reported that President Trump's plans for a quick meeting with Russian President Putin may be stalled. Brent Dec'25 currently trading towards the upper end of a USD 60.58-61.20/bbl range. Precious metals have been falling as the European session got underway, with spot XAU easing from USD 4,375/oz to a trough of USD 4,244/oz after the yellow metal formed a new ATH late in Monday’s session. XAG has slipped back below USD 50/oz as the precious metal space comes under pressure, but is currently off worst levels. Base metals are slowly falling lower despite a lack of newsflow as markets await the meeting between US Treasury Secretary Bessent and Chinese Vice Premier He Lifeng. 3M LME Copper peaked at USD 10.73k/t before falling through Monday’s range and forming a low at USD 10.63k/t. UBS expects oil prices to stabilise around current levels, though prices may come under some pressure should trade tensions escalate further. MMG (1208 HK) says Las Bambas is now expected to achieve copper production of 400k tonnes in 2025 (vs prior guidance of 360k-400k tonnes) Click for a detailed summary NOTABLE DATA RECAP UK PSNB Ex Banks GBP (Sep) 20.246B GB vs. Exp. 20.8B GB (Prev. 17.962B GB, Rev. 15.318B GB); in the FY to September 2025, borrowing stood at GBP 99.8bln vs the GBP 92.6bln forecast by the OBR in March 2025. NOTABLE EUROPEAN HEADLINES ECB's Lane says monetary policy transmission is progressing smoothly; makes sense to maintain a meeting-by-meeting and data-dependent approach to assessing the strength of monetary transmission at any given point in time. UK reportedly explores private credit stress tests as risk worries grow, according to Bloomberg. NOTABLE US HEADLINES US Director of Federal Housing Pulte said the Trump administration is opportunistically evaluating an offering for Freddie and Fannie, which could occur as early as the end of 2025. US Senate Democrats are launching an effort to repeal a portion of Republicans' budget law that exempts certain "orphan drugs" from Medicare price negotiations, according to Axios sources. GEOPOLITICS RUSSIA-UKRAINE US President Trump's hopes for a quick meeting with Russian President Putin may be stalled, while the anticipated meeting between US Secretary of State Rubio and Russian Foreign Minister Lavrov has been put on hold, according to according to CNN citing a White House official. Russian Foreign Ministry, on the meeting between Russian Foreign Minister Lavrov and US Secretary of State Rubio being postponed, says you cannot postpone what was never agreed upon, says the meeting requires preparation. Russia's Kremlin says neither US President Trump or Russian President Putin named exact date on the Putin-Trump summit timing. Says they cannot postpone what wasn't scheduled. Both the USA and Russia said that careful preparation was needed which requires time. Peace with Ukraine is not easy. Russia's Foreign Minister Lavrov has agreed with US Secretary of State Rubio to continue with phone contact, Russia hasn't change its position since Anchorage, a halt at current frontline means to forget war causes. CRYPTO Bitcoin is a little lower and trades around the USD 108k mark; Ethereum trades around USD 3.8k. APAC TRADE APAC stocks took their cues from the rally on Wall Street as the focus remained on US-China trade with some optimism following US President Trump's comments in which he stated that China has been respectful of them and although he continued to tout a November 1st deadline for additional tariffs, he also reaffirmed that he will be meeting with Chinese President Xi and thinks they will reach a 'fantastic deal'. ASX 200 climbed to a fresh record high with the advances led by the mining and resources sectors after Australia and the US signed a critical minerals agreement, and with mining giant BHP gaining following its quarterly production update. Nikkei 225 rallied and briefly approached to near the 50k level before fading some of the gains, while attention was on the PM vote in parliament where Abe-protege Takaichi was elected to become Japan's first female PM, and which is seen to potentially delay or slow the BoJ hiking rates. Hang Seng and Shanghai Comp were higher amid the hopes for an improvement in US-China trade relations and with the ongoing plenum where China is to map out its next five-year plan. NOTABLE ASIA-PAC HEADLINES Japanese PM Takaichi to speak at 14:00BST. Japanese LDP leader Takaichi won the lower house vote (237 votes out of 465-seats) to become Japan's first female PM, as expected. It was separately reported that Takaichi is to appoint Satsuki Katayama as Finance Minister and Kimi Onoda as Economic Security Minister, while she will appoint Ryosei Akazawa as Trade Minister and Shinjiro Koizumi as Defence Minister, according to FNN. Japan incoming Finance Minister Katayama says it is desirable for FX to move in a stable manner reflecting fundamentals; no comments at this moment when asked about BoJ hikes. Japan's Finance Minister Katayama says he will continue with efforts to pass on prices and was asked to push forward tax credits with handouts. BoJ is said to be closer to rate hike, but with little need to rush and is said to see no urgency to hike rates next week, according to Bloomberg Loading...
