Futures Rise As Trade, Credit Fears Fade Ahead Of Earnings Deluge

US equity futures are higher led by small caps, with sentiment TACOed for a second consecutive weekend thanks to Trump’s comments that the US will “be fine” with China ahead of trade talks between the two sides. It’s going to be a busy week for earnings, with Tesla, Netflix and General Motors among companies reporting. As of 8:00am, S&P futures are up 0.3%, with Nasdaq futures up 0.4%. Pre-mkt, Mag7 names are all higher; Tesla climbed in pre-market trading ahead of its report Wednesday, the first from the Magnificent Seven cohort of big-tech companies. There are also notable moves higher in Fins as credit concerns subside. Treasuries, which rallied last week amid trade-war and credit quality jitters, are steady today around 4.00% on the 10Y. The yield curve is flatter with 2Y and 5Y yield higher, while 10Y yields are mostly unchanged at 4.00%. Ahead of a resumption in US/China talks this week in Malaysia, Trump said rare earths, fentanyl and soybeans are the US’s top issues with China, and told Fox News that his threatened 100% tariff on Chinese goods was “not sustainable,” though “it could stand.” Concerns about more “cockroaches” in credit markets also ease ahead of many small regional banks reporting this week. The USD is higher. Commodities are also higher across all 3 complexes, yet crude is weaker. Almost 20% of SPX reports this week. The US economic calendar is empty today. September’s delayed CPI print will be released Friday. Fed’s external communications blackout ahead of the Oct. 29 Fed policy decision began Saturday

In premarket trading, Magnificent Seven stocks are all higher (Amazon +0.1%, Tesla +1%, Apple +1.4%, Meta +0.4%, Nvidia +0.2%, Microsoft flat, Alphabet +0.2%).

• Celcuity (CELC) is up 46% after the biotechnology company said it has successfully recruited enough breast-cancer patients with the PIK3CA mutation to complete Phase 3 clinical trials of a novel treatment that incorporates the drug gedatolisib.
• Cooper Cos. (COO) shares climb 4% after the Wall Street Journal reported that activist investor Jana Partners has built a stake in the medical device company and plans to push for strategic alternatives.
• Exelixis (EXEL) drops 11% after the drugmaker gave data from two separate late-stage cancer trials.
• Hologic Inc. (HOLX) climbs 5% as Blackstone Inc. and TPG Inc. are in advanced negotiations to acquire the company in a deal that could value the medical device maker at more than $17 billion including debt. A transaction could be announced in the coming days, according to people familiar with the matter.
• Olema Pharmaceuticals (OLMA) tumbles 28% after the drug developer gave data from an early-mid stage breast cancer trial, that Oppenheimer says is overshadowed by disappointing results from peer developer, Roche.
• Sable Offshore Corp. (SOC) rises 15% after US Secretary of Energy Chris Wright made an X post Friday night supporting the company’s effort to restart one of its California oil projects that is awaiting state approval.

In corporate news, Amazon Web Services suffered a widespread disruption, affecting services for companies including Perplexity, Coinbase and Robinhood. Sales of Apple’s latest generation of iPhones are off to a faster start than usual, with its most basic model surging in popularity. Kering agreed to sell its beauty division to L’Oreal in a €4 billion deal.

Amid fears about more “cockroaches” in credit markets, Bloomberg Economics Chief US Economist Anna Wong said that “the problem isn’t yet flashing red.” But nerves remain. Deutsche Bank strategists noted that overall equity positioning tumbled last week in the biggest weekly cut since the April selloff, and sentiment fell to net bearish for the first time in four weeks, which is odd because Goldman saw the reverse: the first positive sentiment print since February.

After recent stock wobble, Goldman’s US equity sentiment indicator turns positive for the first time since February. pic.twitter.com/379r1u1zzU

— zerohedge (@zerohedge) October 20, 2025

Meanwhile, Morgan Stanley’s Michael Wilson said that there needs to be follow through on a US-China deal and stability in EPS revisions to clear the risk of a further correction in stocks.

“The market trend is rather positive with this new lull on the trade war front,” said Andrea Tueni, head of sales trading at Saxo Banque France. “The earnings so far have been rather good and the AI frenzy has helped a comeback from the tech sector.”

The latest bout of volatility has spared a sector rotation in the US and Europe, with investors taking profit in crowded sector while defensive plays are back in favor. The Relative Rotation function on the terminal shows momentum has faded for tech in the US, while optimism has returned to health care.

Elsewhere, China’s economy grew at the weakest pace in a year in the third quarter as a boost from booming exports was undermined by weak spending and investment. The 4.8% expansion was still a touch better than economists expected. The data came just ahead of a four-day meeting of China’s political leaders, with markets watching for fresh measures to extend the country’s strongest equity rally in eight years and shore up the yuan.

The new tariff threats “were ultimately a case of ‘the boy who cried wolf,’ and the more it occurs, the less people take it seriously,” said Michael Field, an analyst at Morningstar Investment Service. “Investors took a little bit off the table and now maybe they’re getting a bit more optimistic as we head into earning season.”

Back home, as the government shutdown entered its 20th day, a keenly-awaited CPI reading will finally be released on Friday. Bloomberg Economics expects core consumer price inflation, which strips out volatile food and energy prices, to slow to 0.23% in September from 0.35% the prior month, taking the annual measure down to 3.0% from 3.1%. That should give the Fed a green light to cut rates next week.

European stocks reboudned, with the Stoxx 600 rising 0.6%, paring Friday’s decline as signs of easing global trade frictions helped boost broader risk sentiment. Industrial,bank and energy stocks are leading gains while autos provide a drag. The CAC 40 underperforms as a sharp drop in BNP Paribas shares weighs on the index.  Here are the biggest movers Monday

• European defense stocks are outperforming on Monday, as tensions rise in the Middle East and thanks to some positive newsflow
• Kering shares rise as much as 5.5%, to the highest since July 2024, after the Gucci owner agreed to sell its beauty division to L’Oreal SA as part of a long-term strategic alliance in a $4.7 billion deal
• Holcim shares gain as much as 2.1% after the Swiss building materials company agreed to acquire European walling systems firm Xella
• Tomra gains as much as 5.2%, the most since August 7, after brokers upgraded their views on the Norwegian recycling equipment company to buy, including ABG Sundal Collier and Nordea, while Kepler Cheuvreux reiterated its buy rating
• Siltronic shares jump as much as 11% after the manufacturer of silicon wafers was upgraded at Jefferies, which cited scope for a re-rating ahead of better conditions next year
• Mota-Engil, Portugal’s biggest builder, rises as much as 3.2% in Lisbon after winning a contract worth about €820 million to build a stretch of railway in Mexico
• BNP Paribas fell as much as 8.8%, the steepest decline since early April after losing a court case that analysts said could result in a costly settlement
• B&M European Value Retail shares drop as much as 20% to hit an all-time low, after the retailer cut its guidance less than two weeks after issuing a profit warning, while announcing Chief Financial Officer Mike Schmidt is stepping down
• Forvia shares fall as much as 8%, the most since April, after the automotive technology company said Stellantis’s decision to temporarily halt operations at several plants in Europe will cost it “some tens of millions of euros” in sales this year
• GlobalData shares drop as much as 11% to the lowest since 2019 after the data analytics firm cut its 2H adj. Ebitda margin forecast and said that acquired businesses are being integrated more slowly than expected

Earlier in the session, Asian stocks advanced across the board, lifted by hopes for policy support from a key political meeting this week in China and easing trade tensions. The MSCI Asia Pacific Index rose 1.9% to close at a record, propelled by shares of TSMC and Tencent. Japan’s benchmarks were among the region’s best performers on expectations that stimulus advocate Sanae Takaichi will become the country’s first female prime minister. Stocks in Hong Kong and China also rallied as the so-called Fourth Plenum, a four-day gathering that helps shape China’s long-term policy, kicked off in Beijing. The Hang Seng China Enterprises Index rose 2.5%, the most since August, after officials affirmed the economy is on track to reach this year’s expansion target. The CSI 300 Index added 0.5%, even as data showed the weakest growth pace in a year.  There’s “optimism building around possible new measures to support domestic consumption and stabilize the property sector,” Billy Leung, an investment strategist at Global X Management, said, referring to the plenum.  Singapore and Malaysia markets were closed for a holiday. Vietnamese stocks plunged by the most in six months amid concerns over corporate bond issuance violations. 

In Fx, the Bloomberg Dollar Spot Index was flat, pausing after its slide to its lowest in nearly two weeks late last week
USD/JPY slipped 0.1% to the day’s low of 150.27, before reversing; the yen clawed back initial losses as an agreement between the LDP and the Japan Innovation Party quells some political uncertainty. The yen was also bolstered by hawkish comments from a BOJ policymaker. “The key focus is whether they maintain a consistently hawkish stance,” and whether they’ll signal a strong intention to hike again in December, said Marito Ueda, general manager of market research department at SBI Liquidity Market, referring to the BOJ. The kiwi and Swedish krona outperform slightly among the G-10 currencies.

In rates, treasuries are little changed on the day, with yields across the curve within a basis point of Friday’s closing levels. US 10-year is near 4.01%; UK counterpart outperforms and Germany’s lags, each by around 1bp; French 10-year is about 2bp cheaper on the day. In Europe, French bonds underperformed after S&P Global Ratings downgraded the nation’s sovereign credit score in an unscheduled move late Friday, widening the 10-year yield spread with Germany to around 79 basis points after S&P downgraded France. Monday session has no major scheduled events. Treasury auctions later this week include 20-year bond reopening Wednesday and 5-year TIPS new issue Thursday.  

In commodities, spot gold is little changed. WTI crude futures fall 0.3%. Bitcoin rises 1.8%.

US economic calendar calendar empty for the session. September’s CPI print, delayed from last week by US government shutdown that began Oct. 1, is expected to be released Friday. Fed’s external communications blackout ahead of the Oct. 29 Fed policy decision began Saturday

Market Snapshot

• S&P 500 mini +0.3%
• Nasdaq 100 mini +0.4%
• Russell 2000 mini +0.8%
• Stoxx Europe 600 +0.6%
• DAX +1.1%
• CAC 40 little changed
• 10-year Treasury yield +1 basis point at 4.01%
• VIX -0.1 points at 20.68
• Bloomberg Dollar Index little changed at 1207.97
• euro little changed at $1.1662
• WTI crude -0.3% at $57.37/barrel

Top Overnight News

• Trump Lists Top Demands on China Before Trade Talks Resume: BBG
• China’s economy slows as trade war, weak demand highlight structural risks: RTRS
• Stocks resumed gains on Monday as signs of easing trade frictions helped boost sentiment after volatility tied to concerns about US regional lenders: BBG
• US said on Friday that about 1,400 workers will be furloughed at the Nuclear Weapons Security Agency as of Monday due to the government shutdown.
• Microsoft leaders are reportedly worried that meeting OpenAI’s rapidly expanding computing demand could lead to overbuilding servers that might not generate a financial return: The Information.
• New analysis of download trends and daily active users provided by Apptopia showed that ChatGPT’s mobile app growth may have hit its peak as estimates indicate that new user growth, measured by percentage changes in new global downloads, slowed after April: TechCrunch.
• Fall in China’s exports of rare earth magnets stokes supply chain fears: RTRS
• Gaza Violence Spills Into Another Day, Testing Cease-Fire Deal: WSJ
• Global companies hit by more than $35 billion in US tariffs, but outlook stabilizing: RTRS
• Amazon’s AWS recovering after major outage disrupts apps, services worldwide: RTRS
• BNP Slumps After Sudan Ruling Raises Risk of Costly Settlement: BBG
• Gaza Violence Spills Into Another Day, Testing Cease-Fire Deal: WSJ
• Trump accused Colombian President Gustavo Petro of being an “illegal drug leader,” saying the US will halt all aid to the country and impose fresh tariffs in a dramatic escalation of tensions with one of Washington’s closest security partners in Latin America: BBG
• Runaway Insurance Costs Bring Back Talk of Price Caps: WSJ
• South Korea’s top policy chief said the country made “substantial progress” on most key issues in tariff talks with the US, following a weekend of meetings that also saw Seoul’s top tycoons attend a golf event with Trump at his Mar-a-Lago estate: BBG
• How China Took Over the World’s Rare-Earths Industry: WSJ
• Australia’s prime minister is set to pitch his nation’s vast resource holdings as a solution to China’s rare earth curbs at a meeting Monday with Trump, as the US and other countries scramble to diversify supply of critical minerals: BBG
• Blackstone and TPG are in advanced negotiations to acquire Hologic in a deal that could value the medical device maker at more than $17 billion including debt, according to people familiar with the matter: BBG
• Holcim agreed to buy Xella, a European walling systems company, in a €1.85 billion deal, expanding its building solutions business following the spin off of its North American unit: BBG
• Wall Street Is Betting on an Obamacare Deal. That Won’t Fix Insurers’ Troubles: WSJ
• KKR & Co. is in talks to buy a minority stake in Hong Kong-based Peak Reinsurance, according to people familiar with the matter: BBG
• Kering Backs Away From Beauty With $4.7 Billion L’Oreal Deal: BBG
• Replimune Soars After FDA Accepts Resubmitted Drug Application: BBG

Trade/Tariffs

• US President Trump said he wants China to buy soybeans at least in the amount they were buying before, and he believes that China will make a deal on soybeans, while he added that they can lower what China has to pay in tariffs, but China has to do things for them too and they do not want China to play a rare earth game with them.
• US President Trump signed a proclamation on Friday to address the threat to national security from imports of medium and heavy-duty vehicles, parts and buses, while an official had announced that Trump is to impose 25% tariffs on heavy-duty trucks effective November 1st and will impose 10% tariffs on imported buses, as well as provide significant tariff relief for automakers’ US production.
• US President Trump’s administration is reportedly quietly watering down some tariffs and has exempted more products from US tariffs in recent weeks, while it offered to exempt hundreds of more goods from farm products when countries strike deals with the US, according to WSJ.
• US Treasury Secretary Bessent and Chinese Vice Premier He Lifeng engaged in candid, in-depth and constructive discussions regarding trade and will meet in person in the week ahead to continue their discussions.
• Dutch Economy Minister Karremans said the Nexperia intervention was needed due to the former CEO’s actions, and he will speak with a Chinese government official about Nexperia within days. Furthermore, he said China and Europe both have an interest in solving problems around Nexperia, and commented that China has the wrong impression that the Netherlands and the US ‘teamed up’ on Nexperia.
• South Korea sees a higher chance of a trade deal with the US by the APEC summit.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were higher amid tailwinds from recent trade-related rhetoric including US President Trump’s comments on Friday that 100% tariffs are not sustainable and that he will be meeting with Chinese President Xi, while it was also reported that US Treasury Secretary Bessent and Chinese Vice Premier He engaged in candid, in-depth and constructive discussions regarding trade and will meet in person in the week ahead to continue their discussions. ASX 200 marginally gained amid strength in tech and industrials, although the index notably lagged behind regional peers amid weakness in the commodity-related sectors. Nikkei 225 surged to a fresh all-time high above the 49,000 level amid a reignition of the Takaichi trade with the LDP leader on track to become Japan’s first female PM following an agreement to form a coalition with Japan’s Innovation Party. Hang Seng and Shanghai Comp joined in on the positive mood with the Hong Kong benchmark led higher by strength in tech, and as participants digested the latest Chinese data releases, including GDP, Industrial Production and Retail Sales which either matched or topped forecasts, while the CPC Central Committee is also holding a four-day closed-door meeting through to Thursday to discuss the five-year development plan.

Top Asian News

• Chinese Loan Prime Rate 1Y (Oct) 3.00% vs. Exp. 3.00% (Prev. 3.00%)
• Chinese Loan Prime Rate 5Y (Oct) 3.50% vs. Exp. 3.50% (Prev. 3.50%)
• PBoC Governor Pan said on Friday that the Chinese economy remains on track with positive signs and noted that prices remain stable with Core CPI picking up, while he also said that monetary policy will remain appropriately loose.
• Chinese tech giants paused stablecoin plans after Beijing raised concerns about the rise of currencies controlled by the private sector, according to FT.
• Japan’s LDP and the Japan Innovation Party agreed to form a coalition government. It was separately reported that Japan’s Innovation Party (Ishin) is considering staying out of the Cabinet and cooperating from outside, while Ishin party leader Yoshimura is to meet LDP leader Takaichi at 10:00BST/05:00EDT to finalise the coalition agreement.
• BoJ’s Takata said monetary policy remains accommodative even as the achievement of the inflation target is in sight and the initial fear over the impact of tariffs has diminished, while he added they must be mindful of the risk Japan may see inflation overshoot expectations. Takata stated that the BoJ must communicate with markets on the assumption inflation target has been roughly achieved and they need to discuss monetary policy on assumption the price target has already been achieved, as well as noted that the BoJ needs to gradually shift policy in several stages, as Japan’s economy is on the cusp of seeing a “true dawn”.
• Japan LDP Leader Takaichi intends to appoint Toshimitsu Motegi as Foreign Minister, via Kyodo, looking to appoint Minoru Kihara as Chief Cabinet Secretary.
• BoJ reportedly likely to maintain the view that the economy is on course for moderate recovery, despite headwinds from US tariffs, and may slightly revise up economic growth forecast for FY25 at the October meeting, according to Reuters sources.
• Japan’s LDP leader Takaichi and Innovation Party Yoshimura sign agreement to form coalition government (as expected)

European bourses (+0.6%) opened firmer across the board, but have sauntered off best levels as markets digest the ongoing AWS outages. European sectors hold a positive bias. Defence names lead the pile, driven by the heightened geopolitical tensions between both Israel/Hamas and Russia/Ukraine. As for stock specifics, BNP Paribas (-9%) moves lower as traders digest a recent Sudan-ruling and potential implications, alongside S&P’s unscheduled downgrade on France. Elsewhere, Kering (+3.8%) benefits after agreeing to sell its beauty division to L’Oreal (+0.5%).

Top European News

• BoE Governor Bailey said Brexit is to have a negative impact on UK economic growth for the foreseeable future.
• UK Energy Secretary Miliband suggested the government is looking at the possibility of cutting the rate of VAT on energy bills, but said that he would not speculate ahead of the Chancellor’s Budget in November.
• Three pension giants in the UK have made a fresh GBP 3bln wave of commitments to invest in rental homes, infrastructure and fast-growing companies, ahead of a government-backed meeting to discuss how they can work to boost investment, according to FT.
• France’s wealthy are reportedly investing record amounts in Luxembourg-based annuities and shifting other funds to perceived havens such as Switzerland amid concerns about political turmoil at home, according to FT.
• S&P lowered France to ‘A+’ from ‘AA-‘; Outlook Stable, while it cited heightened risks to budgetary consolidation.

FX

• USD is flat/subdued trade during Monday’s early European hours after rangebound price action overnight amid the mostly risk-on mood to start the week and following the recent softer tone from US President Trump on China after he noted on Friday that 100% tariffs are unsustainable and that he will be meeting with Chinese President Xi in two weeks. On the technical front, DXY found support at its 50 DMA on Friday (50 DMA at 98.04 today), with today’s current range between 98.39-98.67.
• Mild upward bias for EUR after rebounding off Friday’s trough but remaining beneath the 1.1700 handle, with gains capped as recent comments from ECB officials provided little to spur prices, and after S&P surprisingly lowered France’s sovereign credit rating to ‘A+’ from ‘AA-‘. Little reaction was seen following German PPI, which eased more than expected. EUR/USD trades in a 1.1652-1.1680 range, within Friday’s 1.1650-1.1728 band, with the 100 DMA at 1.1651 today.
• USD/JPY holds a mild upward bias after briefly topping 151.00 overnight to a 151.20 peak before waning, with initial upside facilitated by the positive APAC risk tone, whilst Japan’s LDP leader is on course to win the PM vote in parliament tomorrow. The pair was later weighed down by hawkish comments from BoJ’s Takata, who said monetary policy remains accommodative even as the achievement of the inflation target is in sight and the initial fear over the impact of tariffs has diminished. Fleeting price action was seen on reports that BoJ is reportedly likely to maintain the view that the economy is on course for moderate recovery, despite headwinds from US tariffs. USD/JPY resides in a 150.34-151.20 range, within Thursday’s 150.20-151.40 range, but after falling to 149.37 on Friday.
• Uneventful trade for GBP thus far with newsflow also on the quieter side for the UK, and with little overall move seen to BoE Governor Bailey suggesting Brexit is to have a negative impact on UK economic growth for the foreseeable future. Meanwhile, BoE’s Greene said on Friday that core and services inflation are going sideways and noted indications that the disinflation process is slowing, while she is concerned about second-round effects and stated that firms are more sensitive to upside inflation surprises. GBP/USD resides in a narrow 1.3406-1.3443 range, within Friday’s 1.3391-1.3472 range, with the 50 DMA at 1.3475 today.
• Mild upward bias amid the positive seen in APAC markets, although the same sentiment is somewhat limited in European trade, with AWS outages reported in the US East region, affecting global firms. Nonetheless, US President Trump Friday said talks with China are progressing. Overnight, PBoC maintained LPRs as expected, whilst Chinese GDP, Industrial Production and Retail Sales either matched or topped forecasts, in turn keeping a mild upward bias in copper.

Fixed Income

• JGBs are under modest pressure, down to a 135.89 trough taking out the 136.02 base from Friday. Downside comes amid a constructive global risk tone, weighing on the fixed income space broadly, a tone that saw strength in Japanese stocks overnight. Elsewhere, the weekend saw coalition building updates as Ishin and the LDP came to an agreement, this should allow LDP’s Takaichi to secure premiership at Tuesday’s vote. Note, Ishin+LDP leaves Takaichi a few votes shy of the majority threshold.
• OATs are in the red alongside peers but lagging at most points. Pressure that comes after S&P cut France on Friday to A+ from AA-, remarking that uncertainty over France’s finances remain elevated and that unless a significant deficit-reducing measure is unveiled, the consolidation will be slower than previously thought. An update that has sent OATs to a 122.74 base with losses of just over 40 ticks at most. While lower, the benchmark remains comfortably clear of last week’s 121.82 base and the 120.61 low from the week before that. As such, the OAT-Bund 10yr yield spread has widened, but remains within familiar levels; at a 80bps peak.
• USTs are in the red. Weighed on by the general risk tone after the trade updates from Trump. In brief, the US President commented that 100% tariffs are not sustainable and that he will be meeting with Chinese President Xi. Furthermore, Treasury Secretary Bessent spoke with Chinese VP He, a talk described as constructive and ahead of a meeting in the near term. Trade aside, US updates are a little light with the shutdown still going and geopolitics dominating a lot of the newsflow. While the shutdown is on and data remains suspended, we will get the September CPI release on Friday for social security adjustment purposes. Down to a 113-10 low with losses of five ticks.
• Bunds are pressured, and with little driving things for the complex so far. Bunds down to a 129.76 base at worst; similarly to peers.
• Over in the UK, Gilts are marginally outperforming vs peers, seemingly thanks to weekend press reports around the upcoming budget, with pension firms making commitments and further chatter around measures Reeves could take. Furthermore, BoE’s Greene said the rate cutting cycle is not over. Updates that have seemingly tempered the bearish bias seen globally, but only marginally.

Commodities

• Crude benchmarks falling lower despite reports over the weekend that Hamas violated the ceasefire agreement. WTI and Brent briefly extended Friday’s high on the open, peaking at USD 57.43/bbl and USD 61.55/bbl respectively before falling back into Friday’s range and troughing at USD 56.57/bbl and USD 60.68/bbl respectively.
• Spot XAU oscillating in a USD 4219-4274/oz band as precious metals consolidate following Friday’s selloff that saw XAU and XAG drop as much as 3.3% and 5.9% respectively.
• Base metals are trading higher after the latest Chinese data (GDP, industrial production, and retail sales) either matched or exceeded expectations. In addition, the country’s National Bureau of Statistics said the FY target of 5% growth is still on track. 3M LME Copper extended Friday’s high during the APAC session, forming a peak at USD 10.73k/t, before falling to USD 10.65k/t and oscillating between these parameters.

Geopolitics: Middle East

• Israel’s Channel 12 reported that Israel was attacking Gaza, while the Israeli military said Hamas carried out multiple attacks against Israeli forces beyond the ‘yellow line’, violating the ceasefire. It was separately reported by Axios that US and Israeli sources said that Israel notified the US administration in advance of the strikes in Gaza, while the Israeli military said it began a wave of attacks against Hamas targets in southern Gaza, but later said it is resuming enforcement of the Gaza ceasefire after it was ‘violated’ by Hamas.
• Israeli government spokesperson said Israel has continued to fulfil its obligations to the ceasefire and noted that they are in a ceasefire, but soldiers can act to defend themselves.
• Israeli PM Netanyahu instructed that the Rafah crossing will not be opened until further notice, while an opening will be considered based on whether Hamas returns deceased hostages and implements the agreed-upon framework. It was separately reported by Israeli media that Israel is to halt the supply of aid to Gaza until further notice, while an Israeli official said aid into Gaza was halted due to the truce breach by Hamas.
• US informed the guarantor nations of the peace agreement of credible reports indicating an imminent ceasefire violation by Hamas against the people of Gaza, according to the State Department, which stated that if Hamas proceed with this attack, measures will be taken to protect the people of Gaza and preserve the integrity of the ceasefire.
• A US official cited by Axios stated that Israel told the US it will open the crossing to Gaza on Monday morning, while the Palestinian embassy in Egypt earlier stated that the Rafah border crossing with Egypt is to reopen on Monday, which will allow Palestinians residing in Egypt to return to Gaza.
• Israeli PM’s office said Israel received the bodies of two hostages from the Red Cross in Gaza.
• Qatar’s Foreign Ministry said Pakistan and Afghanistan have agreed to an immediate ceasefire during talks mediated by Turkey and Qatar in Doha.
• “According to Arab media reports, a number of people were killed and wounded during the Israeli army’s shooting in eastern Gaza”, according to Iran International.

Geopolitics: Ukraine

• US President Trump told Ukrainian President Zelensky in a tense meeting on Friday that he doesn’t intend to provide missiles, at least for now, according to Axios. It was separately reported that Trump urged Zelensky to accept Russian President Putin’s terms and said that Putin warned he would “destroy” Ukraine if it did not agree, according to FT.
• US President Trump said he did not discuss Ukraine ceding the Donbas region to Russia, and the region should stay as it is now, with Russia having some 78% of it.
• Russian President Putin reportedly demanded during a phone call with US President Trump that the territory of the Donetsk region must completely come under the control of the Russian army to end the war, but with Russia now ready to give up “parts” of the territories of Zaporizhzhia and Kherson in exchange for it, according to The Washington Post.
• Russia said its forces captured Pleshchivka in Ukraine’s Donetsk region, while Russian forces also captured Chunyshyne and Poltavka in eastern Ukraine, according to RIA.
• IAEA said work has begun to repair damaged off-site power lines to the Zaporizhzhia nuclear power plant after a four-week outage, following the establishment of local ceasefire zones to allow work to proceed.
• UK PM Starmer said the UK would continue to step up its support and would ensure Ukraine was in the strongest possible position, according to a Downing Street spokesperson.
• Ukraine President Zelensky is expected to partake in a top-level meeting in Brussels this week, via Politico citing sources; diplomats add the Trump-Zelensky meeting was not as “bleak as reported”.
• Ukrainian President Zelensky, when asked about Tomahawk missiles, says in his view, US President Trump does not want escalation with Russia until he has had a chance to have another meeting with Moscow.

Geopolitics: Other

• China said it found evidence of a US cyberattack on a Chinese state agency.
• US President Trump officials are quietly discussing the idea of a meeting with North Korea’s leader Kim during an upcoming Asia trip, according to CNN.
• US President Trump said they destroyed a very large drug-carrying submarine that was navigating towards the US on a well-known narcotrafficking transit route, while US intelligence confirmed the vessel was loaded up with mostly fentanyl.
• US President Trump called Colombian President Petro a ‘drug dealer’ and announced the US would end “large-scale payments and subsidies”, according to The Sunday Times.
• US Republican Senator Graham said President Trump will be announcing major tariffs against Colombia, while President Trump confirmed Senator Graham’s statement on Colombia tariffs and said he will announce more regarding this on Monday.

US Event Calendar

• Fed’s External Communications Blackout (October 18 – October 30)

DB’s Jim reid concludes the overnight wrap

The mood music on tariffs has sounded much more positive in recent days. As it stands, President Trump has threatened additional 100% tariffs on China from November 1, but Treasury Secretary Bessent said that he’d be meeting with China’s Vice Premier He Lifeng in person this week. And on Friday, President Trump said he thought that a meeting with Chinese President Xi in South Korea would still go ahead, and said “I think we’re getting along with China”. So that’s added to investor expectations that those 100% tariffs won’t come into force, and if we look at Polymarket, it’s currently pointing to just a 7% chance they come into effect by November 1.

As all that’s happening, we still have the ongoing government shutdown in the US, which is now on day 20. Bear in mind that only two shutdowns have been longer than this one, which were the 35-day shutdown in 2018-19, and the 21-day shutdown in 1995-96. And as it stands, there’s still no sign of a compromise between Republicans and Democrats that would see the government re-open. In terms of the market implications, this is still affecting the flow of economic data, so we’re not getting regular releases like the weekly initial jobless claims, and we don’t have the payrolls number for September either. However, this week we will get the postponed CPI release for September, which is coming out on Friday, just in time for the FOMC meeting the week after.

In terms of what to expect, our US economists are looking for headline CPI to come in at a monthly +0.42% pace, which would push up the year-on-year rate to +3.1%, and be the strongest monthly print since January. Meanwhile for core CPI, they expect that to come in at +0.32%, with the year-on-year print remaining at +3.1%. Within the data, they’re still looking for signs of tariff impacts in core goods, with a focus on categories like apparel and new vehicles that haven’t yet seen a meaningful tariff pass-through. For more information, see their full preview here.

Otherwise this week, another key data highlight will be the October flash PMIs on Friday, which will give us an initial indication as to how the global economy has fared at the start of Q4. We also have a few CPI prints elsewhere, including from Japan, the UK and Canada. Then on the earnings side, we’ve got more than 80 companies in the S&P 500 reporting this week, including Tesla and Netflix, along with more than 80 from the STOXX 600, including Barclays, NatWest and SAP.

Overnight in Asia, markets have got the week off to a strong start this morning, as easing trade tensions has lifted equities across the region. Japan’s Nikkei (+2.94%) has been the biggest outperformer, which has got a further boost after the Liberal Democratic Party agreed a coalition deal with the Japan Innovation Party, setting up Sanae Takaichi to become the country’s next Prime Minister. She’s been pro-stimulus, similar to her predecessor Shinzo Abe, and their 5yr bond yield (+4.8bps) is up to a post-2008 high of 1.23% overnight.

Meanwhile in China, the Q3 GDP figures overnight have shown growth decelerating to +4.8% year-on-year, the slowest in a year. However, that’s marginally better than the +4.7% reading expected by the consensus, so we haven’t seen much of a direct market reaction, and indices including the CSI 300 (+0.80%) and the Shanghai Comp (+0.69%) have both risen this morning. That’s been echoed elsewhere in Asia, with South Korea’s KOSPI up +1.02%. And US and European equity futures have similarly moved higher, with those on the S&P 500 (+0.33%) and the DAX (+0.67%) pointing to solid gains. The main point of weakness is among French bond futures, which have underperformed their German counterparts this morning after S&P’s move on Friday to lower France’s credit rating from AA- to A+.

Recapping last week now, it was a topsy-turvy one for markets, with several different themes to digest. Initially, risk assets bounced back strongly from the US-China sell-off on the previous Friday, but there was then a big slump thanks to those fresh concerns about regional banks, before more positive trade headlines and earnings results led to a fresh recovery. So at the height of those fears, the VIX index hit an intraday peak of 28.99pts, something we hadn’t seen since April just after the Liberation Day turmoil. But that volatility ultimately subsided, with the VIX ending the week down slightly at 20.78pts, whilst the S&P 500 also ended the week up +1.70%. Those gains were even stronger for the NASDAQ (+2.14%), with a boost from OpenAI’s deal with Broadcom (+7.61% last week) to purchase 10 gigawatts of computer chips. However, regional banks still struggled given the broader concerns around credit quality, and the KBW regional bank index fell -1.72% in its 4th consecutive weekly decline.

Meanwhile for US Treasuries, there was a rally across the curve, particularly at the front-end as investors dialled up their expectations for Fed rate cuts. That was partly driven by the general risk-off tone amidst the regional bank issues, but lower oil prices also helped to lower inflation expectations. So the 1yr US inflation swap fell -4.7bps last week to a 3-month low of 3.10%. And in turn, the amount of cuts priced in by the June 2026 meeting was up +6.3bps on the week to 101bps. So the 2yr yield ended the week -4.4bps lower at 3.46%, whilst the 10yr yield fell -2.3bps to 4.01%.

Over in Europe, there was a very divergent performance. For instance, France’s CAC 40 moved up +3.24% after French PM Lecornu survived no-confidence votes in the National Assembly, whilst the index was also supported by strong earnings from LVMH (+10.93%). However, the STOXX 600 was up by a smaller +0.37%, and the German DAX actually fell -1.69% last week alongside declines for Italy’s FTSE MIB (-0.69%) and the UK’s FTSE 100 (-0.77%). For bonds, however, there was a more consistent rally, with yields on 10yr bunds (-6.4bps), OATs (-11.8bps), and BTPs (-8.8bps) all moving lower. And over in the UK, 10yr gilts (-14.4bps) outperformed as weaker-than-expected data saw investors dial up their expectations for Bank of England rate cuts.

Lastly, precious metals continued to perform very strongly, with both gold and silver prices posting a 9th consecutive weekly gain for the first time since 2020. For gold, that meant prices rose +5.82% last week to $4,252/oz, and they even hit an intraday record of $4,380/oz at one point. Meanwhile silver was up +3.53% to $51.92/oz. Otherwise, Brent crude oil prices fell -2.30% last week to $61.29/bbl, which came as a backdrop of rising OPEC+ supply and lingering trade uncertainty was boosted by easing fears of restrictions on Russian oil. That followed a call between President Trump and President Putin, who agreed to a meeting in Budapest