Market drivers and catalysts
Equities: Tech-led U.S. rebound. Europe firmer on miners and chips. Asia weaker as Hong Kong slid
Volatility: VIX cools to 19. Trade risks ease. Earnings and Fed speakers may stir markets
Digital Assets: BTC ~$113–116k. ETHA recovers. ETF flows, geopolitics in focus
Fixed Income: US treasuries continue to rally, Japanese government bonds rally on political uncertainty
Currencies: Japanese yen rallies overnight on political uncertainty. AUD weakest on US-China trade tensions.
Commodities: Debasement focus see precious metals smash through resistance
Macro events: Germany Oct ZEW Survey Expectations, Powell and Bailey speeches
Macro headlines
While US Treasury Secretary Scott Bessent indicated yesterday that he believes a meeting between President Trump and Chinese leader Xi Jinping might still take place in late October in South Korea, a general standoff remains on key issues and Bessent positioned China’s as the chief instigator of tensions. “This is China versus the world…They have pointed a bazooka at the supply chains and the industrial base of the entire free world. And you know, we’re not going to have it.” Today, China announced fresh measures against US shipping interests, prohibiting any Chinese individuals or companies doing business with five US entities of Hanwha Ocean tariffs and export controls.
Investors are hedging against ballooning budget deficits through the so-called “debasement trade,” shifting from sovereign debt and currencies into havens like precious metals and to a lesser extent Bitcoin. Gold has surged 57% this year, silver 78%, while Bitcoin remains up more than 20%. Some see further upside, though others argue this is merely a momentum trade, with fiat and bonds unlikely to be replaced.
Japan’s DPP opposition party is trying to rally other opposition parties around its candidate for the premiership, Yuichiro Tamaki, casting doubt on whether the LDP candidate Sanae Takaichi is set to become the next prime minister.
UK retail sales rose 2% year-on-year, slowing from 2.9% in August due to inflation fears and expected tax rises. This fell short of 2.5% market expectations. BRC's Helen Dickinson attributed slower spending to budget concerns and higher bills, while electrical sales thrived with new Apple product launches.
French President Emmanuel Macron addressed a political crisis by unveiling a new cabinet and reappointing Prime Minister Sébastien Lecornu.
Macro calendar highlights (times in GMT)
US Government data are impacted by shutdowns and are likely to be delayed
0600 – US Aug ILO Unemployment Rate
0600 – Germany Sept CPI
0800 – IEA’s Monthly Oil Market Report
0900 – Germany Oct ZEW Survey Expectations
1620 – Fed's Powell Speaks
1700 – BOE's Bailey Speaks
Earnings this week
Today: JP Morgan, Johnson & Johnson, Louis Vuitton, Wells Fargo, Goldman Sachs, Blackrock, Citigroup
Wednesday: ASML, Bank of America, Morgan Stanley, Abbott Laboratories, Rio Tinto, Progressive
Thursday: TSMC, Charles Schwab, Interactive Brokers, Nestle, ABB, Essilor Luxottica
Friday: American Express, Reliance Industries, Volvo
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: S&P 500 +1.6%, Nasdaq 100 +2.2%, Dow +1.3% as a softer U.S.–China tone and AI headlines restored risk appetite. Broadcom jumped 9.9% on an OpenAI custom-chip and networking pact, Oracle rose 5.1% on cloud tie-in optimism, Nvidia added 2.8%, while AMD gained 0.7%. Banks steadied the tape as earnings approach, with focus turning to mega-cap guidance and shutdown-delayed data.
Europe: STOXX 50 +0.7%, STOXX 600 +0.4% as basic materials led on firmer metals. Fresnillo surged 9.1% and Antofagasta 5%, with Anglo American up 4%. ASML rose 3.7% ahead of Wednesday’s results as chip equipment regained footing. Banks tracked higher and U.K. benchmarks edged up despite fresh provisions at select lenders.
Asia: Tone soft. Japan was closed for Sports Day. Hang Seng −1.5% to 25,889 as tech and property lagged after weekend tariff noise despite later calming remarks. Xiaomi fell 6.1% after an EV fire headline, China Vanke slipped 3.3% on the chairman’s exit, while Zijin Mining rose 7.8% on record gold and a Kazakhstan mine deal. Mainland indices eased from highs into earnings.
Volatility
Volatility cooled on Monday after last week’s tariff-driven spike. The VIX fell to 19.03 (−12.14%), with intraday nerves easing as headlines suggested possible trade de-escalation. A strong bounce in the S&P 500 (+1.56%) and Nasdaq (+2.18%) reflected improved sentiment, even as macro risks linger. Attention turns to U.S. earnings season and economic data, including NFIB small-business optimism and Fed speeches, which could stir markets intraday. VIX options volume was brisk but showed signs of normalization, with downside strategies deployed to fade Friday’s jump.
- SPX expected move today: ±0.6% or roughly 38 points.
Digital Assets
Crypto markets are stabilizing after last week’s liquidation storm. Bitcoin sits near $113–116k, recovering from weekend lows. ETH trails slightly but holds above $4,000. IBIT and ETHA remain critical sentiment barometers, with IBIT AUM ~$93B and ETHA recovering after a sharp NAV drop. Watch for inflows as macro jitters subside.
Meanwhile, altcoins diverged: SOL −4.5%, XRP −3.9%, but CIFR +19.9% on crypto mining optimism. On-chain themes remain active—Bhutan’s national ID switch to Ethereum highlights long-term adoption potential, even as trade tensions and ETF flows dominate near-term drivers.
Fixed Income
The US had a bank holiday yesterday, so US treasuries did not trade, but overnight, treasuries continued their rally after Friday’s strong surge on weak risk sentiment. The benchmark two-year US treasury yield fell below 3.50%, closing in on the lowest closing level of the cycle since 2022, which is just below 3.49%. The benchmark 10-year yield trades near Friday’s close at 4.03%, just a basis point above the lowest closing level since the April market panic on Trump’s “Liberation Day” tariffs.
Japanese government bonds rallied amidst political turmoil as the DPP party is trying to rally opposition parties to garner support for their candidate Yuichiro Tamaki for the premiership. The benchmark two-year and ten-year yields both dropped three basis points.
European yields fell in line with global counterparts, but worth noting that the France-German sovereign ten-year yield spread remains elevated above 83 basis points as Macron makes last ditch measures to put together a government with Lecornu again to get a budget passed for next year.
Commodities
The debasement trade continues to ripple through global markets as investors continue to seek protection in tangible assets from runaway budget deficits leading to rising debt piles, sticky inflation and politicised monetary policy. Supported by lack of supply in the London spot market, silver is currently leading the surge, up 78% YTD. Yesterday, the COMEX futures contract smashed through USD 50, triggering momentum buying from hedge funds while gold trades at a new record high near USD 4200, with several banks lifting their end 2026 price forecast to USD 5,000.
The crude rebound following Friday’s tariff-related tumble seems to be running out of steam already with Brent struggling near USD 64, the recent low and now resistance, while WTI may encounter resistance above USD 60. OPEC held onto their 2026 global demand forecasts despite emerging signs of a glut, with the IEA releasing their monthly outlook today.
The CBOT December wheat future trades near a contract low, slumping on the prospect of large global supplies amid global harvest pressure and lack of weather problems in key wheat-producing countries. Russia, the top shipper of wheat, has increased exports, thereby increasing competition.
Currencies
The Japanese yen rallied across the board on political turmoil as the opposition DPP party is making a bid to rally opposition parties around its candidate for the premiership, Yuichiro Tamaki. USDJPY fell.
Elsewhere, the US dollar strength eased off, led by USDJPY selling, but EURUSD also backed up to 1.1590+ in early European trading this morning after the 1.1558 low yesterday. The Australian dollar weakened sharply again overnight, likely on sharply rising US-China trade tensions, with AUDUSD falling to a new low overnight since August below +0.6470.
