* US President Trump and Japanese PM Takaichi signed an agreement on the US-Japan alliance and framework for securing the supply of critical minerals and rare earths.
* European bourses are mostly lower; ES/NQ are flat, whilst the RTY is marginally lower ahead of a slew of earnings.
* USD flat/lower, JPY boosted on US-Japan trade developments and mild haven allure; GBP lags a touch.
* Bonds are firmer given the risk tone; USTs await supply.
* XAU briefly dipped under USD 3.9k/oz with base metals also broadly in the red; crude complex lower with some focus on reports that OPEC+ is looking at another oil production hike.
* Looking ahead, US Richmond Fed (Oct), US CaseShiller Home Prices (Aug), US Consumer Confidence (Oct), Supply from the US.
* Earnings from Visa, Electronic Arts, PPG Industries, SoFi, PayPal.
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TARIFFS/TRADE
* US President Trump and Japanese PM Takaichi signed an agreement on the US-Japan alliance and framework for securing the supply of critical minerals and rare earths. White House said that the US and Japan plan to use economic policy tools and coordinated investment to accelerate the development of diversified, liquid, and fair markets for critical minerals and rare earths. Furthermore, within six months of the framework's date, Japan and the US intend to take measures to support projects that generate end products for delivery to buyers in the US, Japan, and like-minded nations, while they will work to secure their critical minerals and rare earths supply chains by addressing non-market policies and unfair trade practices.
* Japanese senior government official said Japan and the US governments are preparing to release a fact sheet that includes potential investment projects in the US, while the fact sheet will include power generation and automobile-related products as potential investment projects and is expected to include company names such as Mitsubishi Heavy Industries.
* China and ASEAN signed a free trade area 3.0 upgrade protocol, according to Xinhua.
EUROPEAN TRADE
EQUITIES
FX
* DXY is essentially flat and trades towards the upper end of a 98.56 to 98.79 range. Initial European action saw mild pressure in the Dollar, hampered by strength in the JPY and as the USD/CNY was once again fixed lower. Most trade-related headlines have been focused on US-Japan (discussed below), and with traders now counting down the clock to the Fed policy announcement on Wednesday. Before that, focus will be on US Consumer Confidence and the S&P Case-Shiller house price index later today.
* JPY is the clear G10 outperformer today, for three main factors. 1) Haven allure, given the subdued risk tone (also reflected in modest CHF upside), 2) some jawboning from the Japanese Economy Minister who said it is important to avoid rapid, short-term fluctuations in foreign exchange moves, 3) positive US-Japan trade developments. On the latter, US President Trump and Japanese PM Takaichi signed an agreement on the US-Japan alliance and framework for securing the supply of critical minerals and rare earths. Trump appeared pleased with the meeting, offering Takaichi "anything you want". USD/JPY trades towards the mid-point of a 151.77-152.87 range.
* EUR is flat vs the Dollar. Focus today has been on the latest ECB SCE; 1yr inflation expectation revised a touch lower whilst the 3yr and 5yr remained unchanged - little move on this release. The ECB BLS, at the same time, highlighted that "Demand for loans to firms increased slightly, but is still weak overall". Overall, traders are now awaiting the ECB policy decision on Thursday, but will likely lack fireworks given that markets almost entirely price in no change to the current rate. EUR/USD in a 1.1645 to 1.1667 range.
* GBP is slightly softer vs the Dollar. Started the European session flat, but was subject to a bout of pressure soon after. Nothing really behind the downside, but perhaps as traders focused on the recent FT article, which highlighted that the OBR is expected to cut its trend productivity growth forecast by about 0.3%, which is said to threaten a GBP 20bln hit to UK public finances. The move could also be technical, with EUR/GBP making a breach just above the 0.8750 mark, to make a peak at 0.8764.
* Antipodeans are essentially flat, and ultimately little reactive to the subdued risk-tone and the pressure across the metals space.
* PBoC set USD/CNY mid-point at 7.0856 vs exp. 7.1029 (Prev. 7.0881)
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* Click for NY OpEx Details
FIXED INCOME
* A firmer start to the day, but only modestly so for USTs. USTs at a 113-18+ peak, taking out the 113-16 peak from Monday and now approach the cluster of highs from last week between 113-20+ to 113-29. Upside that comes as equities fail to sustain the momentum seen yesterday to the benefit of FX havens and fixed, though XAU continues to slide; note, JPY also influenced by overnight trade developments. For fixed, specific a little light since Monday's auctions. Firstly, the 2yr sale passed without impact, featuring an in-line cover though it did see the first tail, 0.1bps, for a 2yr tap since April. Thereafter, the 5yr tap stopped through by 0.1bps vs when issued, improving from the last outing. Additionally, the b/c marginally surpassed the six-auction average. Ahead, USD 44bln of 7yr notes due.
* Bunds were firmer early doors, in-fitting with the above. A move that has since continued, as, despite European equity sentiment lifting off worst levels, the tone remains a tepid one for the region. Bunds to a 129.73 peak, as is the case in USTs, this takes us above Monday's 129.64 peak and closer to but yet to test the cluster of highs from last week between 130.02 and 130.38. For EGBs generally, the latest ECB SCE passed without impact with the 3yr and 5yr inflation views maintained while the 1yr view eased to 2.7% (prev. 2.8%). Ahead, a German Bobl tap.
* Elsewhere, France remains in focus as the debate around potential wealth taxes opens up day. The results of this will likely determine whether Lecornu's 2nd attempt at government lasts or not in the near-term, as the Socialist Party have made clear that a workable compromise on wealth taxes is a key condition for their support.
* Gilts gapped higher, acknowledging the modest bullish bias in EGBs that emerged into the European cash equity open. Opened higher by 18 ticks and then climbed another 13 to a 93.96 peak. UK newsflow remains focused almost exclusively on the budget. The FT reported that the OBR is expected to cut its trend productivity growth forecast by about 0.3pps, a cut which equates to around a GBP 21bln hit to the fiscal situation. As a reminder, reports in recent weeks had generally been looking for a 0.2pps cut to the productivity view, equating to a GBP 14bln hit. If correct, the Chancellor will need to find another GBP 7bln from tax rises and/or spending cuts in the Autumn Budget.
* UK sells GBP 1.5bln 1.125% 2035 I/L Gilt: b/c 2.94x (prev. 3.09x) & real yield 1.571% (prev. 1.673%).
* Italy sells EUR 2.0bln vs exp. EUR 1.75-2bln 2.10% 2027 BTP Short Term & EUR 1.5bln vs exp. EUR 1-1.5bln 1.80% 2036 BTPei.
* Click for a detailed summary
COMMODITIES
* WTI and Brent are significantly lower today, but without a clear driver. The complex began the European session with very mild losses, but then extended lower as the morning progressed. Geopolitics have been a little more tense (oil positive), with Israeli PM Netanyahu reportedly to hold an emergency meeting related to Hamas's "violations" of the Gaza ceasefire. Perhaps more focus on the recent Bloomberg report, which suggested that OPEC+ is leaning towards another small oil output increase. Brent Dec'25 is currently trading just off lows in a USD 64.08-65.76/bbl range.
* Spot gold is also posting hefty losses, down by around USD 90/oz thus far; the yellow metal has slipped below the USD 3.9k mark and trades at the bottom-end of a USD 3,894.86-4,019.72/oz range. Nothing fresh is really driving the pressure today, but very much a continuation of the pressure seen over the past few days for the metal.
* Base metals are entirely in the red, as the complex pares back some of its recent advances and given the subdued risk-tone overnight. 3M LME currently at the lower end of a USD 10,864.35-11,052.4/t confine.
* Indian companies will not buy oil from Rosneft and Lukoil supplied by traders, according to Reuters, citing Indian government sources.
* IEA chief Birol said a significant chapter for LNG is starting soon and that 300bcm of LNG is to hit markets in the next five years. Birol said that, absent major geopolitical tensions, oil and gas prices are expected to be lower, while he added that sanctions could push oil prices upward, but the effect is likely to be limited due to surplus capacity and slowing demand.
* Venezuela's President Maduro announces immediate suspension of energy agreements with Trinidad and Tobago.
* Russia's Kremlin, on US President Trump's statements that countries should cease buying Russian oil, says many say they will figure it out for themselves, partners will make up their own mind about whether or not to buy top-quality Russian energy product.
* Click for a detailed summary
NOTABLE DATA RECAP
* UK BRC Shop Price Index YY (Sep) 1.0% vs Exp. 1.6% (Prev. 1.4%)
* German GfK Consumer Sentiment (Nov) -24.1 vs. Exp. -22.0 (Prev. -22.3, Rev. -22.5)
* Italian Consumer Confidence (Oct) 97.6 vs. Exp. 97.0 (Prev. 96.8); Mfg Business Confidence (Oct) 88.3 vs. Exp. 87.5 (Prev. 87.3, Rev. 87.4)
NOTABLE EUROPEAN HEADLINES
* UK is to stop disclosing identity of stock market short sellers, with the FCA overhauling regulations in a break from EU rules to be more in line with the US, according to FT.
* UK Chancellor Reeves says too much cost trading with the EU is pushing inflation up; sees "huge benefits" in rebuilding some EU relationships.
* ECB Consumer Expectation Survey: 1-year CPI 2.7% (prev. 2.8%), 3-year 2.5% (prev. 2.5%), 5-year 2.2% (prev. 2.2%)
* ECB October 2025 euro area bank lending survey Small, unexpected net tightening of credit standards for loans to firms, Credit standards unchanged for housing loans and moderately tighter for consumer credit. Demand for loans to firms increased slightly, but still weak overall. Housing loan demand continued to increase strongly.
* Nexperia's owner Wingtech says the Co. faces an "existential threat" after the Netherlands took control of management, via FT; hundreds of jobs potentially at risk.
NOTABLE US HEADLINES
* US President Trump says he will send in "more than the National Guard" into US cities if required.
GEOPOLITICS
MIDDLE EAST
* Palestinian TV reported that Israeli vehicles fired on the eastern areas of Gaza City, according to Sky News Arabia.
* Israeli PM Netanyahu is to hold an emergency meeting today to discuss Hamas' "violations" of the Gaza ceasefire, via Sky News Arabia.
* "Channel 12 quoted an Israeli official: We will take steps against Hamas' violation of the agreement to return the bodies", via Al Jazeera.
OTHER
* Russia's Kremlin, on Ukraine peace negotiations, says Russia cannot assess the prospects and Kyiv caused the pause; says there are foreign fighters at the front line in Ukraine and "we shall destroy them". Military overhears foreign languages spoken repeatedly at the front line in Ukraine.
* US State Department senior official said the US expects Thailand will work with Cambodia to begin the release of 18 soldiers immediately, while the official added that US policy towards North Korea remains aimed at denuclearisation, and that US policy on Taiwan has not changed.
* North Korea said Foreign Minister Choe met with Russian President Putin and discussed many businesses to strengthen bilateral relations, while Choe and Russia's Foreign Minister Lavrov agreed on all points while holding strategic discussions on global issues. Furthermore, the North Korean side expressed support for Russian measures to remove the root of the Ukraine conflict, and the Russian side expressed support for North Korean efforts to protect its current position, security interests, and sovereign rights, according to KCNA.
* Ukrainian President Zelensky says Ukraine will 'take no steps back' on the battlefield to cede territory; Ukraine is ready for peace talks anywhere besides Russia and Belarus if it ends the war.
CRYPTO
* Bitcoin is a little lower and trades around USD 114.5k, with Ethereum also on the backfoot and trades just above USD 4.1k.
* JPMorgan (JPM) CEO Dimon says crypto is real, and will be used by "all of us".
APAC TRADE
* APAC stocks failed to sustain the momentum from the record highs on Wall St and were mostly subdued amid some profit taking and positioning ahead of this week's upcoming risk events.
* ASX 200 retreated in the absence of major catalysts and was dragged lower by weakness in healthcare, tech and miners.
* Nikkei 225 pulled back from all-time highs amid a firmer currency and despite US President Trump's visit to Japan, where he met with PM Takaichi and signed an agreement on US-Japan alliance and securing supply of critical minerals and rare earths.
* Hang Seng and Shanghai Comp were choppy ahead of the major risk events later in the week including the central bank decisions and the Trump-Xi meeting, while participants also reflected on recent comments from PBoC Governor Pan that they will resume government bond purchases and sales in the open market, as well as continue to maintain a supportive monetary policy stance and implement a properly loose monetary policy.
NOTABLE ASIA-PAC HEADLINES
* China releases proposal for 15th five-year plan, according to Xinhua; says China faces difficult challenges in global trade order, economic growth potential to be fully released. Vows to strengthen national security barriers. To combine an efficient market with a proactive government. Tech self-reliance to be greatly improved. To deepen reform and continue high-quality development. Economic growth potential to be fully released. Domestic demand continues to play a stronger role. Economic growth remains within a reasonable range. Faces difficult challenges in the global trade order. To foster emerging sectors and future industries. To improve the level of tech self-reliance. To promote coordinated development of the economy, society. To drive reasonable economic growth in the next five years. Transformation to accelerate breakthroughs. To increase international influence significantly by 2035. To drive a significant consumption rate among residents. Vigorously boost consumption. To build a modernised infrastructure facilities system. Enhancing fiscal sustainability. Give full play to the role of proactive fiscal policy. To form growth model more driven by consumption and demand. To increase share of central government fiscal spending.
* Japanese PM Takaichi thanked US President Trump for his enduring friendship with late PM Shinzo Abe, while she added that President Trump contributed to Asia's peace, including the Thai-Cambodia deal, and stated that the Middle East deal was an unprecedented historical achievement. Takaichi said she highly values Trump's commitment to world peace and stability, as well as expressed readiness to promote further collaboration with the US to achieve a free and open Indo-Pacific. Furthermore, Takaichi said she will continue to strive as Japan's leader to strengthen the nation's power, including defence capabilities, and wants to realise a new golden age of the Japan-US alliance with President Trump.
* US President Trump said former PM Abe was a great friend of his and noted that the US has received Japan's orders of military equipment, which Trump appreciates, while Trump said they are signing a deal and that the US-Japan trade deal is a very fair deal. Furthermore, Trump said this will be a relationship that will be stronger than ever before and that the US is Japan's ally at the strongest level.
* US Treasury Secretary Bessent highlighted in a meeting with Japanese Finance Minister Katayama the important role of sound monetary policy formulation and communication in anchoring inflation expectations and preventing excessive exchange rate volatility. It was also stated that conditions are substantially different twelve years after the introduction of Abenomics, while Bessent was glad to hear Katayama's perspective on Japanese fiscal measures under consideration and expressed eagerness to learn more as the full package is developed to better understand its potential impact.
* Japanese Economy Minister Kiuchi said foreign exchange moves are determined by various factors and it is important for foreign exchange moves to reflect fundamentals and remain stable, while he added it is important to avoid rapid, short-term fluctuations in foreign exchange moves.
* Japan and South Korea are coordinating to hold the first summit meeting between PM Takaichi and South Korean President Lee on October 30th on the sidelines of the APEC summit meeting in South Korea, according to Asahi.
* Japan's Finance Minister Katayama says there's been no direct talks about the direction of Japanese monetary policy when asked about US Treasury Secretary Bessent's readout. There's no change to US-Japan joint statement on Forex. Bessent wasn't urging BoJ to raise interest rate.
* Ping An Insurance (2318 HK) 9M (CNY) Net Income 132.9bln (prev. 119.2bln Y/Y), Revenue 901.7bln (prev. 861.8bln Y/Y).
* Bank of China (3988 HK) Q3 2025 (CNY): Net 60.1bln (prev. 57.2bln Y/Y), NII 111.0bln (prev. 109.2bln Y/Y).