US Futures Rise On Columbus Day In Push For 46th Record High Of 2024

US bonds may be closed for the Columbus Day holiday, but stocks are open and merrily melting up on pace for their 46th record high of 2024. As of 8:00am, S&P futures are higher by around 0.2% and trading above Friday’s all time high while Nasdaq 100 futs rise 0.2% with NVDA, AAPL, and GOOG leading in MegaCap Tech as investors gear up for the latest round of corporate earnings and turn increasingly turn their focus toward the US election where a pro-market Trump victory looks more likely by the day. In China, the CSI 300 Index closer ~2% higher after a choppy session where markets pumped, then dumped, then rebounded once the National Team stepped in as traders digested the latest disappointing pledges from Beijing over the weekend to support the economy. Europe's Estoxx 50 is flat. US cash bond markets are closed today; the Bloomberg Dollar index is higher. Commodities are mixed: oil prices are -2.3% lower, base metals are higher, and precious metals show mixed movements. This week, we will have a busy earnings calendar, along with Retail Sales release on Thursday.

In premarket trading, cryptocurrency-linked stocks were lifted by gains in Bitcoin as traders bet Beijing’s latest stimulus efforts would keep speculators chasing crypto rather than Chinese stocks. MicroStrategy led gains in cryptocurrency-linked companies. Boeing fell again as the beleaguered planemaker plans to cut its global workforce by about 10% and announced $5 billion in charges. SentinelOne Inc. shares rose 4.2% as Piper Sandler upgraded the cybersecurity software company saying current estimates of its market share gains are too low. Meanwhile, US-listed casino stocks tumbled after the election of a new Macau leader, who has warned against the influence of the gambling industry in the city. Here are some other notable premarket movers:

• B. Riley rises 20% after the embattled broker-dealer and investment firm reached a deal with funds managed by Oaktree Capital Management LP for a partnership in Great American Holdings.
• Boeing slips 2% as the beleaguered planemaker plans to cut its global workforce by about 10% and announced $5 billion in charges across its commercial airplanes and defense businesses.
• Caterpillar drops 2% after being downgraded to underweight by Morgan Stanley as analysts view construction firms cautiously, flagging a disconnect between fundamentals and share price.
• FanDuel parent Flutter Entertainment rises 4% as analysts mostly played down the likelihood of heavy new taxes for the industry amid a report on Friday that the UK is considering a tax of up to £3 billion on the gambling sector.
• Longboard Pharmaceuticals gains 50% after agreeing to be acquired by Danish pharmaceutical company H. Lundbeck A/S in a deal with an equity value of $2.6 billion.

A newly accommodative Federal Reserve is providing fresh fodder for bulls — but they’re also fighting against lofty valuations. The S&P 500’s 20% gain through September has been its strongest performance for the first nine months of a year since 1997, according to National Bank of Canada economists including Stefane Marion. That’s pushed earnings-based valuations pushed to rich levels across industries.

“It remains uncertain whether the market will finish the year as strongly as it began and whether this easing cycle will provide substantial momentum for equities,” the economists wrote in a note to clients. “The current easing cycle is unfolding in an environment of unusually high valuations.”

Meanwhile, with just weeks to go until the election showdown between Kamala Harris and Donald Trump, odds are increasing shifting in favor of the latter but it’s “still too close to call,” according to Jefferies strategist Mohit Kumar. “A Trump victory would likely be positive for risk sentiment, though more for US assets at the expense of Europe and rest of the world,” Kumar said. “In our view, the environment remains broadly positive for risky assets.”

Corporate earnings are the next test. Results from Citi, Goldman and Bank of America are due Tuesday, where the banks will provide an early verdict on the impact of interest rate cuts on their bottom lines. JPMorgan, Wells Fargo and Bank of New York Mellon all topped estimates Friday. In Europe, profits are anticipated to come in lower due to anemic economic growth and a stunted recovery in China, which is likely to drag down luxury goods makers like LVMH.

“The season has set off on the right foot, with JPMorgan and Wells Fargo reporting better-than-expected earnings,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. “Consumer resilience is shining through and that’s set the bar high.”

And speaking of Europe, stocks are flat with the Stoxx 600 little changed on the day with consumer products and travel & leisure shares the worst laggards, while technology and telecommunications stocks fared best ahead of the European Central Bank decision on Thursday, where another rate cut now seems likely. Here are the biggest movers Monday:

• UK gambling stocks slumped on Monday following a report that Chancellor Rachel Reeves may be weighing proposals to increase taxes on the industry by as much as £3 billion ($3.9 billion).
• Adidas advances as much as 2.3% after both TD Cowen and UBS raised their price targets on the sportswear company ahead of its third-quarter results on October 29
• Bunzl shares rise as much as 2.3% after the distributor was upgraded by analysts at JP Morgan, which have lifted their medium-term underlying margin forecasts to reflect greater confidence in the firm’s positive trajectory
• Ashmore gains as much as 13%, the most since Nov. 2022, after the emerging markets specialist fund house delivered a first-quarter performance that Morgan Stanley says shows an “improving path”
• TI Fluid Systems soars as much as 22%, reaching their highest level in more than two years, after management at the UK automotive components supplier said they would be “minded to recommend” the latest takeover offer from ABC Technologies if it is made firm
• BASF shares drop as much as 1.5% after UBS cuts its recommendation on the German chemicals firm to neutral from buy, saying that the next 12 months are likely to be challenging amid slowing global economic growth
• Munters shares fall as much as 8.5% after Carnegie downraded on the Swedish industrial air and ventilation firm to sell from hold, noting that the lack of large order announcements in the key data center segment in 3Q represents a downside risk to sales estimates
• Aker BP shares slip as much as 1.5% after the Norwegian oil company revealed a revenue miss, driven by production falling below the contracted volumes
• Ipsen shares drop as much as 2.4% after the pharmaceutical company was downgraded by analysts at Kepler Cheuvreux, citing a more cautious outlook
• Bossard shares drop as much as 9.2% after the Swiss industrial company’s outlook disappointed analysts who were expecting a recovery in the market. They see lower consensus estimates as a result
• Pagegroup shares drop as much as 0.9% after the recruitment company conceded market conditions remain challenging as it reported a sharp drop in profit during the latest quarter

Asian equities reversed early losses to eke out small gains after Chinese stocks rebounded on Beijing’s commitment to shore up the economy. The MSCI Asia Pacific excluding Japan index rose as much as 0.4%, erasing an earlier drop of as much as 0.8%. Financial and technology shares were among the top gainers. Stocks also rose in South Korea, Taiwan and Australia. Markets in Japan and Thailand were closed for a holiday.

Mainland Chinese stocks closed higher after a volatile session as investors await more details on fiscal measures. Gauges in Hong Kong pared declines. Despite promises of more support for the struggling property sector and hinting at greater government borrowing, a briefing by China’s Finance Minister Lan Fo’an on the weekend didn’t produce the headline dollar figure for fresh fiscal stimulus that the markets had sought. Still, after an initial swoon, China’s main CSI 300 Index finished 1.9% higher in volatile trading Monday, after capping its worst week since late July as Beijing’s latest efforts to jumpstart growth disappoint those seeking more details on incentives. That said, don't expect the bounce to last.

“While some investors may be disappointed, it seems to us that the policy pivot has occurred, we should see continued momentum in the coming weeks,” BofA Securities’ strategist Winnie Wu wrote in a note. “Be long-term greedy, short-term cautious” on China equities, she said.

In FX, the Bloomberg Dollar Spot Index rises 0.1%. The Norwegian krone is the weakest of the G-10 currencies, falling 0.4% against the greenback.

In rates, treasury futures are marginally lower on the day, following losses seen in core European rates led by long-end end gilts, where UK 30-year yields are cheaper by 3bp on the day. Cash Treasuries trading is closed Monday for the Columbus Day holiday, the session does include scheduled Fed speakers from both Kashkari and Waller. No US data is scheduled. Treasury 10-year note futures are lower by around 10 ticks on the day, trading on lows at 111-29+ and edging below Friday session lows but remaining inside last week’s trading range. German government bonds are also steady with little economic data to dictate otherwise The France-Germany 10-year yield spread has barely budged despite Fitch putting France on negative outlook on Friday just a day after the government presented its 2025 budget.

In crypto, bitcoin climbed to the highest level in two weeks as investors took disappointment over China as good news for cryptocurrencies which are seen as potential beneficiaries of China stock outflows.

In commodities, oil prices declined, with Brent crude futures falling 2.1% to $77.40 a barrel, and as OPEC cut its global oil demand growth forecast for the third consecutive month. Spot gold rose $5 to $2,661/oz, trading at all time highs.

Looking at today's calendar, there are no US events scheduled due to the Columbus Day holiday. This week includes retail sales, industrial production and housing starts. Fed speakers scheduled include Kashkari (9am, 3pm) and Waller (3pm)

Market Snapshot

• S&P 500 futures up 0.2% at 5,870.00
• STOXX Europe 600 little changed at 521.61
• MXAP little changed at 192.57
• MXAPJ little changed at 614.03
• Nikkei up 0.6% to 39,605.80
• Topix down 0.2% to 2,706.20
• Hang Seng Index down 0.7% to 21,092.87
• Shanghai Composite up 2.1% to 3,284.32
• Sensex up 0.8% to 81,995.12
• Australia S&P/ASX 200 up 0.5% to 8,252.81
• Kospi up 1.0% to 2,623.29
• German 10Y yield little changed at 2.27%
• Euro little changed at $1.0929
• Brent Futures down 1.6% to $77.78/bbl
• Gold spot up 0.1% to $2,659.77
• US Dollar Index up 0.13% to 103.03

Top Overnight News

• China promises incremental stimulus actions, but finance minister’s press briefing lacks numerical specificity (the government could unveil precise figures later this month after the standing committee meets). WSJ
• China’s inflation undershoots the consensus in Sept, with PPI coming in -2.8% Y/Y (vs. -1.8% in Aug and vs. the Street -2.6%) while the CPI rose 0.4% (down from +0.6% in Aug and vs. the Street +0.6%). FT
• China’s trade numbers for Sept came in below expectations, with exports rising 2.4% Y/Y (vs. the Street +6%) and imports inching higher by +0.3% (vs. the Street +0.8%). China auto sales rise 4.5% Y/Y in Sept, reversing 5 months of declines, thanks to aggressive pricing and government stimulus initiatives. SCMP / WSJ
• The Eurozone’s weak economic growth and sluggish consumer price rises have raised concerns that the European Central Bank may be facing the threat of too little rather than too much inflation, economists have warned. Monetary policymakers will meet this Thursday and are widely expected to reduce rates. Having previously not anticipated a cut until December, investors now view a quarter-point reduction to 3.25 per cent as a given. FT
• US to send a THAAD missile defense system to Israel, along w/100 American troops to operate it, to help defend the country. NYT
• Harris and Trump are tied nationally at 48% according to a fresh NBC poll (this represents a sharp rebound for Trump, who was down 5 points in the last NBC reading). NBC
• A top economic adviser to Donald Trump dismissed concerns that the former president would weaken the dollar or cut trade if re-elected, insisting he wants the US to remain the world’s reserve currency and uses tariffs as a negotiating tactic. The comments from Scott Bessent, a 62-year-old hedge fund manager who made a windfall betting on the Japanese yen and British pound for George Soros, are relevant because he has emerged as a top Trump adviser on the economy and finance in recent years. FT
• Boeing after the Fri close preannounced a shortfall on Q3 EPS/revenue (op. cash flow wasn’t as bad as feared) and the company said it would cut its workforce by 10%. WSJ
• Apple developers aren’t building apps for the Vision Pro at a rapid rate, which is hurting the device’s utility and weighing on sales. WSJ
• US Energy Secretary Granholm said about 75% of power was restored across Florida and the vast majority of power in Florida is expected to be restored by the end of Tuesday.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were predominantly higher but with the upside capped amid the Japanese holiday closure, soft Chinese inflation and lack of China stimulus details, while participants await Chinese trade data. ASX 200 was underpinned amid strength in mining stocks despite a pullback in commodity prices. Hang Seng and Shanghai Comp traded mixed in which the former initially slipped back beneath the 21,000 level with notable weakness in tech and consumer stocks after the Chinese Ministry of Finance's press briefing omitted an actual stimulus size. Conversely, the mainland ultimately shrugged off the lack of stimulus details and softer inflation data, while other government departments also pledged support efforts, picking up further throughout the session.

Top Asian News

• Golden Credit (China state-owned rating agency) expects the incremental size of the lastest set of fiscal policy to be no less than CNY 4tln in size, which will lift Q4 GDP growth above 5.0%.
• China’s Finance Minister Lan Foan said local governments have CNY 2.3tln in local funds to spend in the last three months of the year which includes debt quotas and unused funds. Lan stated that the central government has relatively large room to issue debt and increase the budget deficit, while they will better use policy measures to support the economy. Furthermore, they will implement fiscal and tax reforms in a step-by-step way and will roll out some reforms over 2024 and 2025 but did not announce the size of the stimulus.
• China’s Vice Finance Minister said they will take measures to promote stability in the property market, while they will expand the scope of usage for local government debt and will complete the issuance of CNY 1tln in special treasury bonds in 2024. Furthermore, the official said it is necessary to support large state banks to increase first-tier core capital and will support large banks’ operations and profitability to support the economy.
• China's MIIT said China will launch another batch of specific initiatives in Q4 to promote consumption and expand domestic demand and noted there are currently about 36,000 projects under construction in the industrial field which started during the year and are expected to pull investment of more than CNY 11tln in the next three years. It was also reported that China's Industrial Ministry official said China will roll out supportive measures for equipment upgrades and consumer trade-ins in Q4, while China's financial regulator official said they will lower financing costs of small and mid-sized enterprises.
• China's upcoming local government hidden debt swap could be over CNY 2.2tln, according to Xinhua citing a state think tank.
• China’s MOFCOM said there are still major differences between both sides in China-EU tariff negotiations and a mutually acceptable solution has not been reached so far, while the Chinese side officially invited the European side to send a technical team to China ASAP to continue face-to-face negotiations. Furthermore, MOFCOM said Chinese companies have authorised the China Chamber of Commerce for Machinery and Electronics to propose a price commitment plan that represents the overall position of the industry, and it warned against the European side conducting separate price commitment negotiations with some companies.
• China’s MOFCOM said Taiwan’s Democratic Progressive Party has not taken any practical measures to lift trade restrictions on the mainland, while it added relevant departments are studying further measures based on the conclusions of the ministry’s investigation into trade barriers by Taiwan against the mainland.
• Monetary Authority of Singapore maintained the width, centre and slope of the SGD NEER policy band, as expected. MAS said Singapore's economy is currently forecast to expand at close to its potential rate and it expects GDP growth to come in around the upper end of the 2–3% forecast range for the year. MAS said core inflation has stepped down and is anticipated to decline further to around 2% by the end of 2024, while based on its outlook, the MAS assesses that the monetary policy settings are for now still consistent with medium-term price stability.
• Golden Credit (China state-owned rating agency) expects the incremental size of the lastest set of fiscal policy to be no less than CNY 4tln in size, which will lift Q4 GDP growth above 5.0%.

European bourses, Stoxx 600 (U/C) began the session on a modestly firmer footing, but now display a more mixed picture. Indices dipped off best levels following softer-than-expected trade data from China, with particular weakness in Chinese exports. European sectors are mixed. Travel & Leisure underperforms amid news that the UK is considering a tax raid on gambling firms, whilst Consumer Products is weighed on by Luxury names after China reported weak inflation metrics. US Equity Futures (ES +0.1% NQ +0.1% RTY +0.2%) are modestly mixed, taking a breather from the strong session seen on Friday.

Top European News

• UK PM Starmer is to ask the competition watchdog to soften its approach as he vows to rip out bureaucracy to make the UK more attractive for investments, according to FT.
• UK Business and Trade Secretary Reynolds added to speculation that the government is planning to increase payroll taxes for businesses by raising their national insurance contributions as he insisted that the Labour government’s manifesto had only promised not to hike the contributions for employees, according to an interview with Sky News cited by Bloomberg.
• Fitch Ratings has downgraded France’s outlook to negative from stable, while maintaining France's credit rating at "AA-", citing increased fiscal deficits and political risks; the agency expects government debt to rise to 118.5% of GDP by 2028, following the announcement of the 2025 budget.
• German Economy Ministry in monthly report says current economic indicators point to continued weakness in the German economy in the past quarter.

FX

• DXY is flat and trading within a very tight 102.96-103.10 range; the high for today is a little shy of its 100 DMA at 103.23. The docket for today is fairly thin, with only Fed’s Kashkari and Waller due to speak.
• EUR is modestly lower and sits in a 1.0916-34 range, in what has been a catalyst-thin session thus far; markets digest Fitch’s recent outlook change on France, moving it to negative from stable, whilst maintaining its AA- rating.
• GBP is flat vs the Dollar given the lack of UK-specific newsflow, but as traders remain very mindful of the looming UK Budget on October 30th.
• JPY is slightly softer and trading within a 149.09-46 range. Price action overnight was fairly rangebound, but USD/JPY did edge higher into the European morning, but with no clear catalyst.
• The Antipodeans are the worst G10 performers thus far, largely attributed to the weak Chinese inflation metrics and after the lack of stimulus details from China’s MoF on Saturday.
• PBoC set USD/CNY mid-point at 7.0723 vs exp. 7.0722 (prev. 7.0731).

Fixed Income

• USTs are holding above 112-00, in familiar and very tight ranges, given the lack of cash trade on account of Columbus Day. The main update thus far was the weekend unveiling of China stimulus; however, the somewhat limited details meant the market reaction was fairly muted initially
• Bunds are firmer but with European specifics light so far and action somewhat thinner than normal owing to the lack of Japanese trade and no US cash trade due to Columbus Day. Bunds at the mid-point of a relatively slim 133.17-41 band, which is entirely within Friday’s 132.92-133.57 range.
• OATs are in focus but trading broadly in-line with Bunds after Fitch cut its outlook on France following the draft unveiling of the 2025 budget. Despite this, the OAT-Bund 10yr yield spread remains steady around 76 bps, in familiar ranges.
• Gilts are flat but with specifics light as we await the commencement of the UK’s investment summit ahead of the end-October budget.

Commodities

• Crude is in the red after coming under pressure in APAC trade from the disappointing Chinese inflation data and lack of specifics from the MOF update. Into the European morning, the complex picked up off worst levels but has since slipped back towards session lows. Brent'Dec currently sits around USD 77.20/bbl.
• Spot gold is incrementally firmer, benefitting from the initially somewhat muted reaction to China’s latest stimulus efforts. XAU came off best levels of USD 2667/oz as mainland China reacted more strongly to the efforts.
• Base metals are under pressure, despite the latest China stimulus efforts and subsequent upgrades to China’s GDP view by some desks. Efforts which have been overshadowed by the lack of detail from the MOF on the weekend and since by disappointing inflation and trade data from the region.
• OPEC MOMR to be released at 12:25BST/07:25ET.

Geopolitics - Middle East

• US President Biden said he is sending THAAD missile defence to defend Israel, according to WSJ.
• US Secretary of Defence Austin expressed deep concern over reports that Israeli forces fired on UN peacekeeping positions in Lebanon and called for the safety and security of UNIFIL forces and Lebanese armed forces during a call with Israel’s Defence Minister Gallant.
• Israeli PM Netanyahu urged UN Secretary-General Guterres to remove UNIFIL forces from combat areas in Lebanon, while it was also reported that Israel’s Foreign Minister declared UN chief Guterres persona non grata over his Iran stance, according to Reuters.
• Israel’s military said an IDF tank that was trying to evacuate injured soldiers backed several meters into a UNIFIL post in southern Lebanon and once enemy fire had stopped and following the evacuation of injured soldiers, the tank left the post. Furthermore, the Israeli military said no danger was posed to UNIFIL soldiers by IDF activity throughout the entire incident, according to Reuters.
• UN spokesperson said UNIFIL peacekeepers in Lebanon remain in all positions and UNIFIL is taking all possible measures to ensure the protection of its peacekeepers, while the spokesperson added that the UN Secretary-General called on all parties including the Israeli military to refrain from any actions that put peacekeepers at risk, according to Reuters.
• Israel’s military ordered the residents of 22 villages in southern Lebanon to evacuate north of the Awali River, while the Israeli military declared areas around a number of towns in northern Israel as closed to the public, according to Reuters. Furthermore, the Israeli army said Hezbollah fired 25 rockets from nearby positions of UNIFIL forces towards IDF positions and Israeli towns.
• Lebanon’s Hezbollah said it attacked a Golani Brigade camp in northern Israel with a swarm of drones which was reported to have injured more than 60 people and it warned Israeli settlers against staying near army bases in northern Israel until further notice, according to Reuters. It was separately reported that Hezbollah said it shelled with rockets enemy forces in the settlement of Al-Manara for a fifth time.
• Hezbollah promises Israel that what it witnessed in southern Haifa is nothing compared to what awaits it if it decides to continue its aggression against their people, according to AFP News Agency.
• Iran’s Foreign Minister commented on X that they have no red lines in defending their people and interests.
• Iran’s Revolutionary Guards aerospace commander Hajizadeh said Tehran is ready to respond to any misstep by Israel, according to Tasnim.
• French President Macron urged Iranian President Pezeshkian to support a general de-escalation in the Middle East during a conversation, while Macron stressed in another discussion with Lebanon’s caretaker PM Mikati the ‘absolute necessity’ to obtain a ceasefire without further delay, according to the Presidential Office.
• Turkish President Erdogan said Israel is a concrete threat to regional and global peace, while he said it is essential for Russia, Iran and Syria to take effective measures when asked about Israel’s strike on Damascus.
• Pentagon said US forces conducted a series of strikes against multiple Islamic State camps in Syria.

Geopolitics - Other

• Ukrainian President Zelensky said Russian forces tried to push back Ukrainian troops in Russia’s Kursk region, while he added that Ukraine is holding out positions.
• Ukraine’s air force said on Sunday morning that Russia launched 68 drones and four missiles that targeted Ukraine.
• Russian and Chinese warships conducted joint drills to repel a missile attack in the Pacific.
• Taiwan’s Defence Ministry said a Chinese aircraft carrier group entered the Bashi channel on Sunday and will probably be operating in the western Pacific, while it was later reported that China's military announced the PLA Eastern Theatre Command will dispatch its troops from the army, navy, air force, and rocket force to conduct joint military drills code-named “Joint Sword-2024B” in the Taiwan Strait and areas around Taiwan.
• Taiwan’s Defence Ministry said it strongly condemns China’s irrational and provocative act, as well as announced that it has dispatched forces to respond to China's drills. It later updated that aircraft and ships have been responding to the hostile situation in accordance with the rules of engagement and will not escalate conflict in their response.
• US President Biden's administration official said they are monitoring the PLA exercise and urge the PRC to avoid any further actions that may jeopardize peace and stability across the Taiwan Strait and in the broader region, while it added there is no justification for military exercises and pressure campaigns in response to a routine annual speech.
• North Korea said it ordered artillery corps near the border to fully prepare to shoot after it threatened a "horrible disaster" over the alleged flight of drones over its capital, according to Yonhap.

US Event Calendar

• Nothing scheduled

DB's Jim Reid concludes the overnight wrap

This week kicks off with a partial US holiday (Columbus Day) today where bond markets will be closed but with equity markets remaining open. The main news over the weekend has been from China where the highly anticipated Ministry of Finance press conference on Saturday was light on specifics of immediate stimulus measures but provided strong forward commitment and the announcement of a large-scale local government debt swap that exceeded our economists' expectations, with them suggesting it could mark a multi-year turning point in China's fiscal policy framework. They have raised their 2024 GDP forecast to 4.9% (from 4.7%), based on already announced measures and are expecting more concrete measures to now appear at the upcoming NPCSC in late October.

Overnight Chinese markets opened firm, fell back just below zero, but are now back close to their opening highs. Currently, the Shanghai Composite is up by +1.66%. Oil is -1.2% lower after the China briefing but that could be as much due to taking out some weekend geopolitical risk premium with no Israeli retaliation seen as yet. Elsewhere, the KOSPI has gained +1.02% and the S&P/ASX 200 is up by +0.42%. However, the Hang Seng is -0.42% lower. S&P 500 (-0.06%) and NASDAQ (-0.21%) futures are also on the softer side. Japanese markets are closed for a holiday.

Also over the weekend, data revealed that China’s September CPI rose by +0.4% year-on-year, the slowest in three months, compared to a +0.6% rise in August and below market expectations of a +0.6% increase. PPI fell by -2.8% year-on-year, the fastest decline in six months, compared to a -1.8% drop in the previous month and below the expected -2.6% decline. So weaker prices than expected all round, but with the subsequent stimulus announcement markets should be comfortable excusing recent data for now.

In terms of this week, the key events will likely be on Thursday with US retail sales and jobless claims, alongside the latest ECB meeting. Outside of this, US earnings season starts to accelerate after last Friday's unofficial start and there are plenty of central bank speakers to digest as well. Before we dig into these, the other main global highlights this week are the NY Fed 1yr inflation expectations (today), UK employment, German/European ZEW survey, ECB bank lending survey, Eurozone IP and Canadian CPI (tomorrow), UK inflation (Wednesday), US IP and NAHB housing index (Thursday) and US housing starts/building permits, China's monthly data dump (including Q3 GDP, retail sales, IP, and property data), alongside Japanese CPI to round out the week on Friday.

Digging a bit more into that week ahead now, of all the Fedspeak, Waller today may be the most interesting given he's traditionally a hawk and is a voter. In his last outing, Waller suggested that another 50bp reduction in an upcoming meeting was a possibility if the labour market weakened further or if inflation continued to come in softer than expected. Since then the opposite has seemingly occurred so will he revert back to more hawkish form?

Skipping to Thursday, September US retail sales will be a swing factor in putting together final Q3 GDP forecasts but jobless claims could spike a significant amount higher (DB forecast 270k vs. 258k last week) and to 3-year highs due to the latest storm. We were surprised that the market zoned in on the spike last week as much as it did as you have to assume for now that most, if not all, of the increase was storm related. The impact of the storm will also feed into this month's payroll data so there will be a lot of difficulty in assessing employment trends in the next several weeks. Even retail sales might spike up a little this week as storm preparation in Florida may have boosted sales at the end of September.

The highlight of the week in Europe will be the ECB decision on Thursday. Our European economists expect a 25bps rate cut following recent lower-than-expected inflation prints as well as weaker growth (see their full preview here). The central bank will also release its bank lending survey on Tuesday and the survey of professional forecasters on Friday. The lending survey is a good guage to see whether we're past the peak impact of the monetary transmission mechanism. In recent quarterly surveys, lending has improved with future expectations improving too so things have been looking up. Elsewhere in Europe keep an eye for the budget in Italy tomorrow, ahead of the EU deadline. Fitch and S&P are likely to opine on Italy's rating after the close on Friday. The former could influence the latter to some degree. Indeed, late on Friday Fitch placed France on negative outlook after its budget announcement last week saying that "Fiscal policy risks have increased since our last review." Over in Asia, the focus outside of China will be on the Japanese national CPI due on Friday.

In terms of earnings, we'll start to see some momentum with the highlights including key semiconductor firms TSMC (Thursday) and ASML (Wednesday). Otherwise, US bank results will continue to come in with Bank of America, Citigroup and Goldman Sachs (all tomorrow) the highlights, alongside large cap healthcare names including UnitedHealth, Johnson & Johnson (both tomorrow) and Abbott (Wednesday). Other notable names include Netflix and Blackstone on Thursday and Procter & Gamble on Friday.

Looking back at last week now, risk assets put in a decent performance and looked through ambiguous data. The S&P 500 ended up advancing +1.11% (+0.61% Friday) and posted a 5th consecutive weekly gain, with Friday seeing its 45th record high of 2024 so far. Banks saw a particularly strong performance after the start of earnings season, with the KBW Bank Index ending the week up +3.98% (+3.04% Friday) at its highest level since April 2022. Europe also saw gains, with the STOXX 600 up +0.66% (+0.55% Friday), but in China the Shanghai Comp fell -3.56% (-2.55% Friday) amidst disappointment at the lack of detail around China’s stimulus.

Whilst equities were mostly advancing, sovereign bonds lost ground in general following on from the post payrolls trend the previous Friday. Inflation risk was also back in the spotlight though, particularly after the US CPI reading was stronger than expected last week. Indeed, the US 2yr inflation swap picked up another +13.9bps last week to 2.48%, its highest level in over three months. In turn, that meant investors slightly dialled back their expectations for rate cuts, with the rate priced in by the Fed’s December 2025 meeting up +4.9bps over the week to 3.34%. So when it came to sovereign bonds themselves, yields on 10yr Treasuries were up +13.3bps (+3.8bps Friday) to 4.10%, and those on 10yr bunds were up +5.6bps (+0.9bps Friday) to 2.26%.

Finally, oil prices ended the week modestly higher, although only after paring back their strong gains from earlier in the week. Indeed at one point, Brent crude reached an intraday peak above $81/bbl, but by the close on Friday, it was only up +1.27% (-0.45% Friday) to $79.04/bbl. That came alongside a modest increase in gold prices, which ended up posting a weekly gain of +0.11% thanks to stronger gains towards the end of the week (+1.42% Friday) as inflation risks came back into focus.