Market drivers and catalysts
Equities: Tech-led U.S. records on soft CPI. Europe nudged higher. Asia firm.
Volatility: Trade deal progress tempers risk. VIX ~16. SPX ±1.4% range ahead of FOMC and Big Tech earnings
Digital Assets: Crypto firms on soft CPI and trade optimism
Currencies: USD sideways, JPY weaker, AUD firmer on hopes for US-China trade deal
Commodities: Grains pop, oil firms, and gold eases as U.S.–China trade deal draws closer
Fixed Income: Strong risk sentiment on hopes for US-China trade deal sees higher yields everywhere
Macro events: Germany Oct IFO Business Climate
Macro headlines
Chinese and US officials developed a trade deal framework for Presidents Trump and Xi to finalize, including export controls, fentanyl and shipping levies, while US Treasury Secretary Scott Bessent said Trump’s threat of 100% tariffs on Chinese goods “is effectively off the table”, saying he also believe China would delay its rare-earth restrictions “for a year while they reexamine it”. Trump and Xi will meet Thursday at the APEC summit to finalize the agreement.
September 2025 US inflation rose to 3%, up from 2.9% in August and below the 3.1% forecast. Energy prices climbed 2.8%, with notable increases in fuel oil and gasoline. New vehicle prices slightly rose, while food, used cars, trucks, and transportation services slowed. Shelter inflation stayed at 3.6%. Core inflation dipped to 3%. The monthly CPI increased 0.3%, driven by a 4.1% rise in gasoline, with the core index up 0.2%.
Moody's maintained France's Aa3 credit rating but changed its outlook to negative due to political risks affecting deficit reduction. Recently, Fitch, DBRS, and S&P Global downgraded France's ratings. Finance Minister Roland Lescure emphasized the need for budgetary compromise and is committed to reducing the deficit to 5.4% of GDP by 2025 and below 3% by 2029. S&P rates France at A+ with a stable outlook, while DBRS rates it at AA, also stable.
Trump increased tariffs on Canada by 10% after reacting to an Ontario ad during the World Series. He ended trade talks with Ottawa, citing the ad as misleading. Ontario Premier Doug Ford, after discussions with Prime Minister Mark Carney, announced a pause in the U.S. ad campaign to resume trade talks.
Macro calendar highlights (times in GMT)
US Government data are impacted by shutdowns and are likely to be delayed
0900 – Germany Oct IFO Business Climate
0900 – ECB's 1- & 3-year CPI Expectations
1230 – US Sep Durable Goods Orders
1530 – US Treasury to auction 2-year notes
1700 – US Treasury to auction 5-year notes
Earnings events
Today: Cadence Design Systems, Waste Management, NXP Semiconductors
Tue: Visa, UnitedHealth, Novartis, HSBC, NextEra, Booking Holdings, Southern Copper, Royal Caribbean Cruises, Mondelez, Ecolab, Corning, UPS, Paypal, Regeneron, Electronic Arts, Seagate Technology Holdings
Wed: Microsoft, Alphabet, Meta, Caterpillar, ServiceNow, Airbus, KLA, MercadoLibre
Thu: Apple, Amazon.com, Eli Lilly, Mastercard, Samsung, Merck, Shell
Fri: ExxonMobil, Abbvie, Chevron, Linde
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: S&P 500 rose 0.8% to a record while Nasdaq 100 gained 1.0% as softer inflation boosted Fed-cut odds and semis advanced (Philadelphia Semi +1.9%). Alphabet climbed 2.7% after a tens-of-billions AI-chip deal with Anthropic, while Nvidia added 2.3% as AI momentum held. Ford jumped 12.2% on a clean beat and recovery outlook, and Coinbase surged 9.8% after a JPMorgan upgrade alongside reports of crypto-collateral lending. Intel pared an early spike despite returning to profit and offering an upbeat outlook. Focus turns to earnings from Alphabet, Meta and Microsoft on Wednesday, then Apple and Amazon on Thursday.
Europe: STOXX 50 edged up 0.1% to 5,674 and STOXX 600 added 0.2% to a record 575.8 as flash PMIs beat expectations and earnings guided the tape. Defence led with Saab up 6.1% after lifting its sales outlook, while energy gained as ENI rose 1.6% on stronger Q3 and a bigger buyback. Safran slipped 1.1% despite a solid revenue print as interiors lagged. Autos and discretionary found support from easing yields, and UK benchmarks stayed firm on rate-cut hopes. Into the week, traders watch guidance quality and any margin signals from late-season reporters.
Asia: China/HK firmed into policy and geopolitics. Shanghai Composite rose 0.7% to 3,950 and Shenzhen gained 2.0% to 13,289, while Hang Seng added 0.7% to 26,160 as talk of a Trump–Xi meeting supported risk. Chips and travel outperformed with SMIC up 7.4% and Trip.com up 3.3%, while China Hongqiao added 4.1% on metals strength. Sentiment was helped by global cut bets and easing U.S.–China tensions, though investors stayed selective ahead of incoming PMIs and Hong Kong growth data.
Volatility
Markets are trading with a sense of cautious relief this morning. A proposed trade-deal framework between the U.S. and China — including a pause on the 100% tariffs and a likely delay in rare-earth export restrictions — has reduced one major tail-risk for global supply chains and tech exposure. Meanwhile U.S. inflation for September came in at 3.0% y/y (core also 3.0%), a hair under expectations, which strengthens hopes the Federal Reserve might lean toward a more dovish posture. The concern now shifts to the Fed meeting (Oct 28-29) and Big Tech earnings for new volatility triggers. The S&P 500’s implied volatility gauge (VIX) is around 16.4, suggesting calm but watchful markets.
SPX expected move: Options pricing still implies roughly ±96 points (~±1.4%) for the S&P 500 into the end of the week, meaning any outsized move will likely need a headline surprise from either trade, inflation or earnings.
Digital Assets
Crypto is catching a bit of a squeeze upward as sentiment improves. Bitcoin is trading above $115,000 and Ethereum near $4,200 on the back of the trade-deal hope and soft inflation reading. For institutional-flow watchers, the spotlight remains on spot-ETF inflows for tokens like Solana and XRP, but with macro such as Fed policy and U.S.–China developments in play, volatility in crypto may remain elevated. Also keep an eye on daily creations/redemptions in funds like IBIT and ETHA as a barometer of institutional appetite.
Fixed Income
US treasury yields sold off Friday from the lows to close near unchanged, but sold off further in Monday’s Asian session to take yields to more than one-week high as positive risk sentiment washed over global markets in anticipation of a US-China trade deal. The benchmark 2-year treasury yield nudged a few basis points higher and above 3.50%, while the benchmark 10-year rose to 4.04% overnight. The US Treasury will auction 2-year and 5-year treasuries today.
European yields rebounded strongly on Friday in the wake of strong services PMI from Germany, with the benchmark 2-year German Schatz closing four basis points higher at 1.97%, a two week high. German fixed income will likely take its lead today from the October IFO survey.
US high yield corporate bonds rallied on Friday in line with rising risk appetite, as the Bloomberg index of the spread between high yield bonds and US treasuries tightened seven basis points to 281 basis points.
Commodities
CBOT soybeans gained 1.7%, corn 1.6%, and wheat 2.3% during early Asian trading on hopes that the U.S. and China are moving toward a deal that could see China make “substantial” soybean purchases. However, Chinese crushers have already secured most of their near-term needs from alternative suppliers, potentially limiting the scope for new U.S. sales.
Crude prices trade firmer on renewed U.S.–China trade optimism, extending last week’s rally after U.S. sanctions on Russia’s two largest producers helped counter the prevailing narrative of a growing global surplus. The surge was partly driven by short covering, after hedge funds as of 21 October had built a record gross short position in Brent.
Gold extended its first weekly loss in nine weeks, as prospects for a U.S.–China trade deal lowered geopolitical tensions and reduced the haven appeal. Beyond the Trump–Xi meeting later this week, focus will also turn to the upcoming FOMC meeting, with the latest CPI print keeping the door open for further U.S. rate cuts. Key support levels are seen at USD 4,058, 4,000, and 3,971.
Currencies
The US dollar traded sideways once again as the focus of late has been on the weak JPY, where USDJPY pushed at the multi-month highs since February above 153.25 without taking them out, while EURJPY traded to a new record high above at 178.15 overnight before pulling back below 178.00 later in the session.
Elsewhere, the Australian dollar rallied on hopes that the US and China are heading toward making a trade deal, with AUDUSD trading nearly to 0.6550 in the late Asian session, a more than two-week high.
The Scandinavian currencies have continued their recent firming versus the euro, particularly the Norwegian krone as EURNOK fell briefly to the lowest level for the month below 11.59, eyeing the September low and low since June just below 11.54 on sharply firmer crude oil prices. EURSEK trades near 10.90, the low since June. The next major chart point is the 2025 low and low since early 2023 at 10.666.
