Futures Hit Another All Time advanced As Government Shutdown Enters Day 3

US equity futures are heading into Day 3 of the US government shutdown on pace for what is now another daily all time high. S&P 500 and Nasdaq 100 futures rose 0.1% as of 8:15 am in New York, on course for the longest winning streak since July. Pre-market, Mag 7 are all higher led by TSLA (+1.6%), NVDA (+0.6%) and AMZN (+0.6%). European stocks enjoyed similar as the tech-fueled rally continues. Nikkei rose almost 2% after Japan’s Hitachi teamed up with OpenAI and Fujitsu, expanding its collaboration with Nvidia. Today’s job report will become the latest casualty of the Democrats’ government shutdown, and that’s actually helping to keep volatility subdued, according to ING strategists. Bond yields are mostly unchanged; USD is lower. Energy and precious metals are both higher. Gold was on track for a seventh weekly gain, fueled by central bank buying amid falling US interest rates and lingering inflation concerns. There’s also a view that the underlying labor market likely isn’t as weak as the ADP print estimated this week. There have not been much incremental updates overnight as investors are still waiting for updates from the White House. The only major data release we will receive will be ISM Services which is expected to print at 51.7 vs. 52.0 prior.

In premarket trading Mag 7 stocks are all higher (Tesla +1.2%, Meta +0.5%, Nvidia +0.4%, Amazon +0.4%, Alphabet +0.2%, Microsoft +0.1%, Apple +0.1%).

• Applied Materials (AMAT) is down 2.6% after the semiconductor-equipment maker said net revenue for FY 2026 is set to decrease by $600 million due to a new rule by the US Department of Commerce’s Bureau of Industry and Security.
• Freeport-McMoRan Inc. (FCX) rises 1.3% after UBS upgraded the metals company to buy from neutral.
• Maplebear (CART), doing business as Instacart, falls 1% after Piper Sandler analyst Tom Champion cut his recommendation on the delivery-services provider to neutral from overweight, citing intensifying competitive pressures.
• Tronox Holdings (TROX) is down 2.7% as JPMorgan downgrades to neutral from overweight, saying conditions in the titanium-dioxide industry have become more difficult near term.
• Baidu Inc. US shares (BIDU) are up 1.2% after Morgan Stanley raised its price target on the China-based search engine to $140 from $100.
• USA Rare Earth (USAR) shares rise 9.6% after CNBC reported that the company is in close communication with the Trump administration, when asked whether it would be open to a deal with the US government.

In corporate news, Boeing’s 777X is said to fly commercially for the first time in early 2027 instead of next year, a fresh setback to the US planemaker. A large blaze has broken out after an explosion at a Chevron refinery in Los Angeles County, according to CBS News. Tesla was sued over claims that defects in the doors of a crashed Cybertruck made it a “death trap.”

Investors are wagering that the billions pouring into the AI sector will translate into profits and extend gains in tech shares. So far none of that has happened. Meanwhile, the rally underscores how bullish momentum is overshadowing concerns about a US government shutdown, now in its third day and prompting a blackout in key economic data. In fact, it’s been 114 trading sessions since the S&P 500 had a 5% pullback, as US stocks take investors on a one-way ride up. Not surprisingly, Bloomberg Intelligence found that bears are becoming a vanishing breed, as bullish call option volumes posts new records and shorting has become increasingly dangerous in the meme-stock era. Global equity ETFs saw $152 billion of inflows in the past three weeks, the most on record, according to BofA strategists citing EPFR Global data.

“Financial market volatility is falling across the board, partly driven by the US government shutdown and the delay to key data releases such as the September jobs data,” wrote ING strategists Chris Turner and Francesco Pesole. “Instead, investors remain transfixed by the AI-driven rally in megacap tech shares, which shows no signs of slowing.”

One way to play the AI mania is to barbell valuation extremes using cheap cyclical assets against rich tech, according to BofA’s Michael Hartnett. Fueling the excitement this week: Global Infrastructure Partners is in advanced talks to acquire Aligned Data Centers, while OpenAI continues to announce new partnerships. VC’s have poured $192.7 billion into AI startups so far this year, setting new global records according to PitchBook data.

The continued optimism around AI is stoking questions over how far the rally can run. Concerns are growing that valuations look overheated as spending has yet to translate into earnings.

“The market may well start asking questions whether current valuation levels are justified,” said Wolf von Rotberg, equity strategist at Bank J. Safra Sarasin. “Further upside is set to be much more gradual, with risks of a setback fairly elevated.”

Even as investors remain transfixed by AI and the hype that surrounds it, they’re keeping one eye on the relentless rally in gold. Central banks around the world are accumulating the metal, while a gauge of gold mining stocks has significantly outperformed chip makers this year.

European stocks are on track for their strongest week since May, gaining for a sixth day in a row, driven by investor optimism over artificial intelligence developments. In individual stocks, Barry Callebaut shares jump after Bloomberg News revealed the Swiss company’s main shareholder previously explored taking the chocolate maker private. Stoxx 600 rises 0.4% to 569.9 with 461 members up, 128 down, and 11 unchanged. Here are the biggest movers Friday:

• Barry Callebaut shares rise as much as 8.2%, climbing to their highest level since March, after Bloomberg News reported that the Swiss company’s main shareholder previously explored taking the chocolate maker private
• Galapagos rises as much as 7.7%, hitting their highest level since 2024, after a report by newspaper De Tijd that former CEO Paul Stoffels has formed a consortium to table a bid for the biotech company’s cell therapy business
• Raiffeisen gains as much as 8.9% after the FT reported the EU is preparing to lift sanctions on assets linked to Russian oligarch Oleg Deripaska to compensate Raiffeisen Bank International for damages it had to pay in Russia
• Diploma gains as much as 4.1% after the building components supplier received a double-upgrade from RBC Capital Markets, with analysts describing the firm as “one of the safest growth names in the wider sector”
• Kongsberg gains as much as 2.1% after being upgraded to hold from sell at Pareto Securities, with the broker noting the Norwegian company has underperformed its European defense-sector peers, but has recently re-rated
• Intertek Group rises as much as 1.2% as BofA Securities describes the testing group as “best in class” and reinstates coverage with a buy rating and 5,990p price target
• Zinzino gains as much as 7.4%, the most since July, after the Swedish nutritional health firm reported preliminary 3Q sales figures, posting a 48% increase in 3Q sales to SEK786.7 million from the year ago period
• J D Wetherspoon shares tumble as much as 6.2% after the UK pub chain reported annual results. Earnings came in ahead of expectations, although analysts at Jefferies said investors are remaining cautious
• Shares of European chip equipment makers edge lower on Friday after Applied Materials warned that a US export restriction published earlier this week will reduce its revenues

Earlier in the session, Asian stocks rose to head for a fifth consecutive session of gains, driven by technology shares on continued optimism over artificial intelligence. The MSCI Asia Pacific Index rose as much as 0.7%, taking its weekly advance to 2.7%. Japan was among the region’s top gainers ahead of the ruling party’s leadership election this weekend, while stocks slumped in Hong Kong. Markets were shut for holidays in mainland China and South Korea.
Heightened risk appetite fueled regional market gains Friday, with TSMC and Hitachi among the top contributors to the benchmark’s advance. Hitachi jumped 10% on a new strategic partnership with OpenAI while Fujitsu Ltd. expanded its collaboration with Nvidia. The day’s rally highlighted how global investors are largely brushing aside concerns about a potential bubble in tech shares. Meanwhile, Global Infrastructure Partners was in advanced talks to acquire Aligned Data Centers, a major beneficiary of the AI spending boom, in a deal that could value the company at about $40 billion. Hong Kong’s stock benchmarks slipped, taking a breather after recent gains. Most tech and EV shares were down, while Alibaba extended its rally.

In FX, dollar weakens against most of the G-10. The yen lags after BOJ Governor Kazuo Ueda avoided any clear hints on the rate path.

In rates, treasury yields are within a basis point of Thursday’s closing levels as US session gets under way, with government shutdown in its third day to postpone the release of September employment report. Yields kept to narrow ranges overnight, leaving 10-year near 4.08%; Gilts outperforming in Europe, with yields edging lower: UK 10-year is ~2bp richer vs US after weaker-than-expected UK services PMI. IG dollar issuance slate empty so far and expected to remain light; weekly total stands at $13.7 billion vs dealers’ projection of $25 billion. Services gauges from S&P Global and ISM are unaffected, however, and several Fed officials are slated to speak.

In commodities, oil prices bounced, though still set for a hefty weekly loss, Brent trading just below $65/barrel. Oil headed for its biggest weekly decline since late June, ahead of an OPEC+ meeting that’s expected to result in the return of more idled barrels. Gold slightly higher, up about $5 for the session and off records hit earlier in the week. Gold was on track for a seventh weekly gain, fueled by central bank buying amid falling US interest rates and lingering inflation concerns. And despite all the hype around AI and the surge in chip stocks this year, gold miners have actually been the better bet. An MSCI Inc. gauge of global gold equities has soared about 135% in 2025. It’s on course for its biggest-ever outperformance against the index compiler’s measure of major semiconductor firms, which is up 40%.

Looking at today’s US economic calendar we get the September final S&P Global US services PMI (9:45am) and September ISM services (10am); September jobs report would normally land at 8:30am but it is being delayed. Fed speaker slate includes Goolsbee (8:30am), Miran (9:35am, 3:30pm), Logan (1:30pm) and Jefferson (1:40pm)

Market Snapshot

• S&P 500 mini +0.3%
• Nasdaq 100 mini +0.3%
• Russell 2000 mini +0.4%
• Stoxx Europe 600 +0.4%
• DAX +0.1%
• CAC 40 +0.3%
• 10-year Treasury yield +1 basis point at 4.09%
• VIX -0.4 points at 16.27
• Bloomberg Dollar Index little changed at 1201.41
• euro +0.2% at $1.1733
• WTI crude +1% at $61.09/barrel

Top Overnight News

• US President Trump said there could be firings and project cuts if the shutdown continues, according to an interview.
• The Trump administration is pursuing deals across up to 30 industries, involving dozens of companies deemed critical to national or economic security, according to more than a half dozen people familiar with the talks. In some cases, the administration is offering tariff relief in exchange for concessions, revenue guarantees, or taking equity stakes in troubled companies, among other types of help. RTRS
• The White House has compiled a list of agencies it plans to target for federal firings and is expected to announce it as soon as today. CNN
• US administration to enlist powerful businesses and labor groups to push Democrats to end shutdown, reports: Axios.
• Government report flags security risks from China’s DeepSeek models, though they remain behind American counterparts: Axios.
• The US banking system’s reserves, a key factor in the Federal Reserve’s decision to keep shrinking its balance sheet, tumbled for the eighth straight week to a new mark below $3 trillion. Bank reserves fell by about $20.1 billion to $2.98 trillion in the week through Oct. 1, according to Fed data released on Thursday. That’s the lowest level since January. RTRS
• Google will locate a new data centre in West Memphis, Arkansas, with a multi-billion USD investment: Reuters.
• Hedge funds are gearing up for Japan’s LDP leadership election tomorrow, with some investors looking to take risk off the table, while others are looking to profit from possible yen strength. BBG
• Huawei Technologies Co. used advanced components from Asia’s largest technology firms (TSMC, Samsung, and SK Hynix) in at least some of its leading Ascend AI processors, a research firm discovered during teardowns, highlighting China’s reliance on foreign hardware as it works to boost domestic production of AI semiconductors. BBG
• The yen weakened after Kazuo Ueda failed to indicate whether the BOJ will raise rates this month. The unemployment rate rose to its highest in more than a year. BBG
• A senior Hamas official said the Palestinian militant group will respond to Donald Trump’s plan to end the war in Gaza “very soon.” BBG
• Applied Materials fell premarket (AMAT -3% in pre) after the firm warned of a $600 million sales hit in fiscal 2026 from the latest US curbs on China. BBG
• President Trump has projected unwavering confidence that he is winning the messaging war over the government shutdown. But behind the scenes, his team is increasingly concerned that the issue at the center of the debate will create political vulnerabilities for Republicans. Advisers are worried that the GOP will take the blame for allowing healthcare subsidies to expire, raising costs for millions of Americans ahead of next year’s midterm elections, according to administration officials. WSJ
• Fed’s Williams (voter) does not comment on the outlook for monetary policy. Says, robust policy works to anchor inflation expectations

Trade/Tariffs

• US President Trump said he is considering taxpayer rebates of USD 1,000–2,000 funded by tariff revenue, according to Reuters.
• China launches trade barrier probe into Mexico tariffs; vows necessary measures to defend companies’ rights.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly firmer, taking their cue from Wall Street’s gains amid light newsflow, whilst the looming delay of the US jobs report due to the government shutdown keeps focus on Fed speak and upcoming ISM data. Mainland Chinese and South Korean markets remained closed for holidays. ASX 200 was supported by strength in technology and healthcare names, though gold miners lagged as the yellow metal pulled back. Nikkei 225 outperformed, driven by weakness in the yen and strength in technology, while remarks from BoJ Governor Ueda following this week’s Tankan Survey underlined the need to maintain an accommodative monetary environment, with focus also on the upcoming LDP elections. Hang Seng declined, bucking the regional trend as it failed to benefit from gains in technology, with Stock Connect closed and Mainland participants absent during Golden Week.

Top Asian News

• BoJ Governor Ueda said the Bank will continue raising interest rates if the economy and prices move in line with its forecast, while stressing the need to maintain an accommodative monetary environment to support the economy. He said the likelihood of the baseline forecast materialising will be scrutinised alongside upside and downside risks, with close monitoring of the global outlook, including the US economy, the impact of tariffs on corporate profits, wage and price-setting behaviour, and overall price developments. Ueda noted signs that consumers are cutting back on spending amid rising food prices, which the BoJ is watching carefully. He said corporate profits are likely to stay elevated, though some manufacturers are being hit by tariffs, as seen in exports and output data. He reiterated the BoJ wants to support business activities by keeping policy loose, but warned that tariff policy creates global uncertainty and a 15% tariff rate would weigh on the economy. He added that economic growth is likely to moderate before rising again as overseas economies return to a moderate growth path, and emphasised that judgements will be made without preconceptions on whether the economy and prices are moving in line with the forecast. He repeated that interest rates will continue to be raised if conditions follow the outlook, while noting that the impact of US tariffs has not spread to Japan’s entire economy so far, according to Reuters.
• Japan Finance Minister Kato said tariffs cannot be boosted on countries importing Russian oil from the perspective of compliance with international laws. He added that Japan is watching with high interest the impact of the US government shutdown on markets and the economy.

European bourses (STOXX 600 +0.4%) opened slightly firmer and have traded sideways throughout the morning. No real moves to EZ Final PMI revisions. European sectors have opened slightly firmer with Banks (+1.0%), Basic Resources (+0.8%) and Retail (+0.6%) leading the way. The former benefits from upside in Raiffeisen Bank (+6.2%) after the FT reported that the EU is to lift sanctions on Deripaska to compensate the bank. Towards the bottom of the pile; Technology has been the worst performing sector, with losses broadbased; ASML (-0.8%) and BE Semiconductor (-2.4%) both on the backfoot. This pressure can be attributed to commentary via Applied Materials (-3.8% pre-market) which stated that the US BIS Affiliates Rule will cut Q4 revenue by about USD 110mln and reduce FY26 revenue by about USD 600mln.

Top European News

• ECB President Lagarde says Klass Knot would make a good ECB President, via ANP. Says Europe needs to level up regulation of non Banks involved in Bank-like activities.
• UK OBR reportedly wants to end the ongoing status of assuming that the 5p cut to fuel duty will be reversed in the spring and then increase with inflation thereafter, via The Sun citing sources.
• French Prime Minister Lecornu announces he will renounce the use of 49.3 to pass the French Budget.

FX

• USD is flat today and currently trades within a very narrow 97.75 to 97.94 range; most recently, some modest pressure has been seen in the Dollar, but without a clear driver. Nothing really too pertinent for the Dollar by way of newsflow; some focus has been on President Trump, where he stated that he is considering taxpayer rebates of USD 1,000–2,000 funded by tariff revenue, according to Reuters. Elsewhere, the WSJ reported that Trump is looking to send billions in cash bailouts to farmers with taxpayer money. With the jobs report now shelved, focus will now be on US PMIs and ISM Services. The former is generally overshadowed by the ISM report; on that, the consensus expects the headline to fall slightly to 51.8 from 52.0 in September; the business activity gauge is seen falling to 51.8 from 55.0. Additionally, a handful of Fed officials are scheduled today.
• EUR is on a slightly firmer footing today, but without a clear driver. The bulk of the marginal upside was seen around the European cash open and continued to trend higher on the releases of European PMIs. To recap those PMIs, Spain Services and Italian Services both beat expectations whilst the French, German, and then the EZ-wide metrics were revised a touch lower. The EZ release highlighted that the data will likely “confirm the stance” for those ECB members who opt for no more cuts. Sticking with the ECB, some very marginal upside was seen in the single-currency after ECB President Lagarde said former ECB member Knot would make a “good” President at the Bank, via ANP; for reference, Knot was a hawkish member during his tenure. Now focus will turn to ECB’s Schnabel later in the day, who is also speaking at a Knot farewell symposium.
• JPY is the worst-performing G10 currency, albeit very marginally so. Focus overnight has been on BoJ Governor Ueda, who stressed the importance of maintaining an accommodative monetary environment to support the economy – these comments sparked some modest pressure in the Yen. As it stands, markets currently assign a 64% chance of a hold at the October meeting. Ueda aside, focus will be on the weekend’s LDP election. In brief, polls currently suggest Takaichi as the favourite, followed closely by Koizumi; ING suggests that the former would be seen as more bearish for the JPY.
• GBP is incrementally higher today and trades in a 1.3430 to 1.3467 range, and towards the midpoint of the prior day’s range. Today’s focus has been on the region’s Final PMI metrics, where the Services component was subject to a decent downward revision to 50.8 (prev. 51.9); as such, the Composite moved lower to 50.1. The accompanying release highlighted that corporate clients are deferring spending decisions until after the Autumn budget.
• Antipodeans are both slightly firmer vs the Dollar, and with some very modest outperformance in the Kiwi. Nothing really driving the upside today, but perhaps buoyed by the continued upside in base metals prices.

Fixed Income

• A slightly softer start for USTs to a much more limited session than initially scheduled due to the US government shutdown. much more limited session than initially scheduled due to the US government shutdown. Into the ISM Services print, the odds of a Fed move in October have just retreated beneath being fully priced with a c. 97% implied probability at the time of writing, vs the over 100% we saw following the surprising negative ADP print earlier in the week.
• EGBs are contained this morning, limited reaction in OATs to the concession from French PM Lecornu that he will not be utilising Article 49.3 to pass fiscal reform.
• Bunds contained in a very thin range of c. 10 ticks, updates in the space light, no reaction to remarks from Lagarde or final PMIs.
• Gilts trade a little better than peers, but are essentially unchanged on the session. Awaiting any update/leak around the OBR’s first forecast round being presented to Chancellor Reeves, forecasts are expected to be very bleak from Reeves’ perspective. Furthermore, The Sun reports that the OBR wants to end the fuel duty assumption in the forecast, an update that would add further pressure to Reeves.

Commodities

• Crude benchmarks rebound after WTI and Brent extended below key levels of USD 61/bbl and USD 64.20/bbl respectively in Thursday’s session. Initially, oscillating between USD 60.90-61.27/bbl and USD 64.50-64.85/bbl after picking up modestly during the APAC session. In geopolitics, a senior Hamas official said that they will need more time and are demanding substantial changes to the Trump plan. Crude benchmarks extended modestly on this to session highs of USD 61.38/bbl and USD 65.02/bbl respectively. As a reminder, Trump gave Hamas just three days to consider and accept the US-backed plan for Gaza. This upside was ultimately short-lived and has entirely pared.
• Spot gold has thus far been relatively muted, after selling off from a strengthening dollar yesterday. XAU is currently oscillating within a c. USD 30/oz bound as economic newsflow remains light due to the US government shutdown.
• Base metals continue to extend on gains and are on track for the biggest weekly gain since April as supply disruptions, a weaker dollar, and optimism about demand support gains. 3M LME Copper oscillated around USD 10.5k/t before extending to a high of USD 10.85k/t.

Geopolitics: Middle East

• „A senior Hamas official told the Saudi media: „We have informed the mediators that we need more time for consultations regarding the Trump plan. Hamas Demands Some „Fundamental Changes” in Some of the Plan’s Clauses”, via Kan News.

Geopolitics: NATO

• Germany’s Munich Airport has been closed after drones were spotted over the airport, a federal police spokesperson told BILD.
• Munich Airport later reopened after being closed overnight amid drone sightings, according to witnesses

Geopolitics: Russia-Ukraine

• Russian President Putin also said the possible seizure of vessels would increase the risks of confrontations at sea, and warned that any US supply of Tomahawk missiles to Ukraine would not change the battlefield but would be dangerous, damage relations, and escalate the conflict, according to Reuters.

US Event Calendar

DB’s Jim Reid concludes the overnight wrap

This week continues to see Europe and Asia outperforming the US, as fears about a prolonged government shutdown and some hawkish-leaning data meant sentiment in the US lagged again yesterday. However, a late rally led by Tech meant that the S&P 500 (+0.06%) just reached another record high, while the US 10yr Treasury (-1.5bps) fell back to 4.08%. But in Europe there was a more positive story again, with the STOXX 600 (+0.53%) up to a new record.
In terms of the US shutdown, yesterday brought no sign of an end to the impasse, with investors becoming increasingly concerned that it could drag on into next week. For instance, the Polymarket odds of the shutdown lasting beyond October 15 is currently at 45%, having stood at 34% as we went to press yesterday. So that added to concern about the shutdown having a larger economic impact, particularly given markets are lacking a lot of key data right now. Indeed, we’d normally be previewing the US payrolls number this morning, but the shutdown has seen that postponed, along with the usual weekly jobless claims yesterday.

In terms of progress on negotiations, Treasury Secretary Bessent called for a “clean continuing resolution” on federal spending in a CNBC interview, and warned that the shutdown could lead to a hit to US GDP and growth prospects. Those comments came as Trump posted on Truth Social that he would be meeting with his budget chief to determine which Democratic agencies he would decide to cut federal spending on, and whether these cuts would be temporary or permanent, potentially threatening „thousands” of jobs.

US Treasuries had spent the early part of the US day higher in yield, particularly at the front-end. One cause of that was an unusual release markets don’t normally pay much attention to, which was a payrolls estimate from Revelio Labs. That suggested nonfarm payrolls were up around +60k in September, which contrasted with the contractionary print (-32k) in the ADP’s report of private payrolls on Wednesday. That was also backed up by the Challenger job cut numbers, which found that job cuts in September were down -25.8% year-on-year. So that boosted optimism on the near-term US outlook, and meant investors pared back their expectations for rate cuts, now pricing in 91bps by the June meeting, down -1.0bps on the day. The 2yr yield spiked around 3bps on the data but ultimately settled barely higher (+0.4bps) at 3.539%, whilst the 10yr yield (-1.5bps) closed at 4.08%. Yields are back up just over a basis point overnight in Asia.

Back to the Fed, and we also heard a bit from Bessent on the Fed chair interviews, which he said were currently underway, and that he expected “3-to-5” candidates would be put forward for Trump’s consideration. Current Fed speakers continued to display a fairly balanced view. While the market wrestles with how to handicap the health of the US labour market without BLS data, Federal Reserve Bank of Chicago President Goolsbee said officials can turn to other sources. He noted that his staff had produced labor market data that “indicates some steadiness in the labor market and I think the underlying economy is still growing pretty solidly”. Earlier in the day Federal Reserve Bank of Dallas President Logan said that she “has a little bit slower of a normalization of the policy path in order to make sure we get all the way to 2%.” She added that she felt labour market risks are “fairly balanced” and that “It doesn’t appear to be that policy is more than modestly restrictive.”

The S&P 500 (+0.06%) was able to shrug off shutdown jitters to creep to yet another record high. Things had looked even more promising at the open, before faltering following the employment data. Indeed, the S&P was pulled higher as the NASDAQ (+0.39%) managed to reach a new record, even as the Mag-7 underperformed that (+0.08%). Chipmaker stocks outperformed, with the Philadelphia Semiconductor index up +1.94% after yesterday’s overnight news that Samsung Electronics and SK Hynix have partnered with OpenAI as part of its Stargate AI push into data cloud centres.

In Europe, the mood was positive, and the STOXX 600 was up +0.53% to another record. We also saw multiple indices like the CAC 40 (+1.13%) and DAX (1.28%) jump over one per cent, although the UK’s FTSE 100 (-0.20%) lagged behind. That advance for the DAX comes as the multi-year German stimulus package is starting to come into effect, which is something I looked at in my chart of the day yesterday (link here). Meanwhile for bonds, yields on 10yr bunds (-1.3bps), OATs (-1.1bps) and BTPs (-0.6bps) all moved lower. 10yr Gilts (+1.4bps) underperformed as fiscal concerns persist and there was some intraday weakness after data from the Bank of England’s DMP survey which showed business inflation expectations were unchanged at 3.4%, albeit in-line with expectations.

In Asia, Japanese markets are leading the way, with the Nikkei soaring by +1.69%, nearing recent peaks, after a surprisingly dovish speech by BoJ Governor Ueda and ahead of a crucial ruling party vote that would determine the next Prime Minister of the country.

Ueda reaffirmed the bank’s longstanding position on interest rates, thus avoiding signalling any policy changes for this month following recent market speculation about an imminent rate hike. Market pricing has dipped to 59% for an October hike down from 65%. The Yen has weakened around a third of a percent. Staying with Japan, the jobless rate increased to 2.6%, its highest level in over a year in August, from 2.3% the previous month, and against expectations of 2.4%. Additional data revealed that the job-to-applicant ratio decreased to 1.20 from 1.22, marking the lowest number of job openings since 2022.

In other markets, the S&P/ASX 200 is up by +0.37%, whereas the Hang Seng is down by -0.94%, impacted by losses in EV stocks following a decline in Tesla overnight. Trading volumes are subdued due to market holidays in China and South Korea, with Chinese markets remaining closed until the middle of next week. US equity futures are up a couple of tenths of a percent.

To the day ahead now, we’ll get UK September official reserves changes, France August industrial production, Italy September services PMI, August retail sales, Q2 deficit, and Eurozone August PPI. For central banks, we’ll hear from the Fed’s Williams and Jefferson, ECB President Lagarde, and the ECB’s Sleijpen, Villeroy and Schnabel, and BOE Governor Bailey.