Market drivers and catalysts
Equities: Global markets in cautious tone, with broad-based sell‑offs in equities amid bond‑market jitters, rising yields and tariff uncertainty
Volatility: VIX edges up • hedging active • SPX move ±43pts
Digital Assets: BTC stable • ETH consolidating • altcoins firm
Fixed Income: 30-year yields globally hitting new highs,with exception of the US
Currencies: USD firms across the board, sterling weakens
Commodities: Gold hovers near record after six-day rally
Macro events: US July JOLTS Job Openings and Fed’s Beige Book
Macro headlines
Australia Q2 GDP was out overnight at +0.6% QoQ and +1.8% YoY vs. +0.5%/1.6% expected, respectively. Australian yields at the front end of the curve jumped in response, ith the 2-year yield benchmark up some eight basis points after the data.
The August ISM US Manufacturing PMI increased to 48.7 from July's 48.0, missing the forecast of 49.0. It marked the sixth month of contraction, with sharp production drops partly offset by new order rebounds. Employment fell at a slower pace, while shrinking inventories and backlogs indicated weaker demand. Input price inflation eased slightly to 63.7, yet stayed high.
A federal appeals court deemed Trump's tariffs illegal, requiring suspension by October 14. Trump will appeal to the Supreme Court, possibly leading to a prolonged legal battle. Tariffs of 10% to 50% were imposed last month. A ruling against them may necessitate renegotiating recent trade deals, potentially disrupting global trade.
The US Logistics Manager's Index slightly increased for August to 59.3 from 59.2 in July, driven by rising inventory and warehousing costs. Warehousing capacity growth slowed, while transportation metrics declined, with prices and utilization down and capacity up.
U.S. construction spending decreased by 0.1% to $2,139.1 billion, marking the ninth monthly drop. Private spending fell 0.2%, with nonresidential down 0.5%, led by a 1% drop in amusement and recreation buildings. Residential construction rose 0.1%, as single-family increased but multi-family fell 0.4%. Public spending grew 0.3%, driven by residential and gains in conservation and power projects. Yearly spending fell 2.8%.
The search for the next Federal Reserve chair begins on Friday and will run into next week, when Treasury Secretary Scott Bessent starts interviewing 11 contenders before compiling a shortlist for President Trump. Among the candidates are Fed Governors Christopher Waller and Michelle Bowman, National Economic Council Director Kevin Hassett, and former Fed Governor Kevin Warsh.
Macro calendar highlights (times in GMT)
1315 – UK Bank of England MPC members before Parliament
1400 – US July JOLTS Job Openings
1400 – US July Factory and Durable Goods Orders
1430 – EIA's Weekly Crude and Fuel Stock Report
1600 – Fed Beige Book
Earnings events
Note: earnings announcement dates can change with little notice. Consult other sources to confirm earnings releases as they approach.
Earnings this week
Today: Salesforce, Figma, Hewlett Packard, Dollar Tree,
Thu: Broadcom, Copart, Lululemon
Fri: Kroger
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: U.S. stocks fell as long-dated yields climbed and tariff noise kept risk tight. The S&P 500 −0.7%, Nasdaq Composite −0.8%, and Dow −0.5%. PepsiCo rose 1.1% after Elliott disclosed a USD 4bn stake and pushed for portfolio moves, while Constellation Brands slid 6.6% after cutting FY26 guidance and flagging weaker beer sales. Biogen gained 5.6% after the FDA approved weekly subcutaneous maintenance dosing of Leqembi. After hours, Alphabet jumped 6.5% after a judge declined to force a Chrome divestiture, and Apple rose 3% as Google’s default-search payments remain intact. Focus turns to ISM services and Friday’s payrolls.
Europe: Europe equities declined with the STOXX 600 -1.5%, Euro Stoxx 50 −1.4%, DAX −2.3%, FTSE 100 −0.9%. Market sentiment was dampened by euro‑area inflation surprisingly ticking higher to 2.1% in august. Nestlé fell almost 1% after the board removed its CEO, adding uncertainty to staples. SSE dropped 3.7% as higher discount rates pressured defensives. Gold strength helped miners, with Fresnillo up 5.1%. Luxury outperformed on broker support, lifting Kering 3.8%. Investors now parse euro-area services PMIs and watch UK fiscal headlines as supply and term premium dominate pricing. Overall, the tone tilts cautious as bond stress, inflation, and macro uncertainty cloud the outlook.
Asia: Tone turned mixed following Wall Street’s slide and Japanese political noise. Nikkei 225 −0.6% as higher JGB yields and uncertainty cooled cyclicals; Hang Seng −0.5% as Monday’s sharp tech rally faded; Shanghai Composite −0.4% as liquidity support met profit-taking. Alibaba slipped 0.5% after Monday’s 18.5% surge on cloud-AI optimism, while Tencent firmed 1.2% as mega-cap platforms stabilized ahead of upcoming data and policy events.
Digital Assets
Bitcoin is holding steady around $110.8k, while ether trades near $4.31k. ETF flows continue to support Bitcoin, with IBIT seeing $72.9 million in new inflows yesterday. ETH flows were flat, showing consolidation after a strong August. Altcoins like Solana ($208) and XRP ($2.82) remain firm. Broader sentiment in crypto is calm, with investors cautious but engaged. Regulatory updates in the U.S. and Japan are helping bring more structure to the market, while the focus now shifts to Friday’s U.S. jobs report and its potential impact on rate expectations.
Volatility
Volatility ticked higher on Tuesday as equity markets fell. The VIX rose to 17.17, a modest move that still keeps it well within the historical “calm” zone, but higher than last week’s levels. This suggests investors are getting more cautious, though there’s no sign of panic. Hedging activity picked up, with call options making up over 65% of VIX trades. If the VIX rises above 18 or 19, it could signal broader market stress, so that’s a level to watch. Based on options pricing, the expected move for the S&P 500 today is ±43 points.
Fixed Income
The long end of sovereign yield curves is a focus globally, as the UK, Germany, France and Japan all set new multi year highs for 30-year benchmarks. For the UK it was another new high yield for the 30-year Gilt since 1998 at 5.69%, while for Japan it was a new record high for the 30-year benchmark JGB since its introduction in 2000 at 3.28%.
The US benchmark 30-year treasury yield rose yesterday with global counterparts, but only hit 4.99%, which is still some way from the 5.18% cycle high since 2007 posted in late 2023.
US high yield credit spreads rose sharply yesterday from very low levels on broad weakness in risk sentiment, with the Bloomberg measure of the high yield spread to US treasuries widening to 281 basis points , up 10 basis points from the previous session, but still only 25 basis points higher from the modern low posted over the summer since 2007.
Commodities
Oil notched its biggest gain since late July as funds covered short positions amid focus on geopolitical risks, including a potential escalation of US sanctions on Russia, at a time where Ukrainian strikes on two Russian refineries have curbed flows, pushing Russia’s crude runs to the lowest since May 2022 and adding to an unexpected squeeze despite rising OPEC+ supply. Focus on EIA’s stock report and OPEC+ meeting next weekend.
Gold reached a fresh record overnight near USD 3,550 continuing a six‑day rally, buoyed by US rate‑cut hopes, Fed independence risks, a general level of political and economic turmoil around the world and risk‑off flows after equity and bonds sold off.
Currencies
- The US dollar stayed firm yesterday after a choppy session, with EURUSD trading 1.1632 this morning after a low of 1.1613 yesterday, while USDJPY bobbed back above 148.50 overnight after failing to sustain above its 200-day moving average near 148.85.
Sterling is weak, perhaps impacted by fiscal stability concerns as long UK Gilt yields spiral higher, with EURGBP testing above 0.8700 at times before settling near that level this morning and GBPUSD pushing down to more than three-week lows below 1.3350 yesterday before finding support, trading 1.3370 this morning in Europe.
While still falling slightly overnight versus the strong US dollar, the Aussie posted a new cycle high versus the kiwi (NZD) overnight on the strong Australia GDP figure as Australia’s short rates jumped higher.
For a global look at markets – go to Inspiration.
