Tesla meets with shareholders on Musk pay plan

EU mid-market update: US Supreme Court seemed to air skepticism on tariffs; Maersk sees US demand picking up in last few weeks; Tesla meets with shareholders on Musk pay plan.

Notes/observations

- European indices opened mostly lower, with Denmark, Finland and Spain bucking the trend. Attention is on central banks: Norges Bank held policy steady, while the BoE decision at 07:00 ET (1200 GMT) is finely balanced. Markets are watching for hints of a possible December rate cut, which could weigh on sterling.

- Polymarket now prices a 75% chance (v 50% d/d) that the Supreme Court will strike down Trump’s IEEPA tariffs, after oral arguments suggested skepticism toward the law’s use for broad “reciprocal” duties. Analysts see three possible outcomes: a total invalidation of IEEPA tariffs, full deference to presidential power, or a narrow ruling allowing only security-linked measures, with votes by judges Roberts and Barrett viewed as pivotal. A reversal could force refunds of roughly ~$90B, weaken tariff-derived revenue, boost U.S. yields while pressuring the dollar, and complicate trade relations as Washington pivots to slower, more contestable Section 301 and 232 authorities. TTN Reminder: IEEPA accounted for 45% of customs duties, fees and taxes collected in FY25.

- Nvidia's CEO Huang says China will win AI race with US, while China’s CXMT is reportedly preparing to mass-produce HBM3 memory in 2026 using MR-MUF bonding technology, the same process adopted by SK hynix. The Chinese firm is currently producing samples and aims to begin full-scale production in the first half of 2026, signaling China’s entry into the high-end memory packaging race. However, industry sources note that CXMT’s yields still remain low.

- This Huang's comment and press report followed other Chinese software innovation stories in last weeks, including Tencent introducing Continuous Autoregressive Language Models (CALM), which may enable large AI models to run with significantly fewer FLOPs on China's domestic accelerators.

- German industrial production rose 1.3% MoM in September, rebounding from August’s decline, but still down 1.0% YoY. Automotive production surged 12.3% after a 16.7% fall in August.

- Maersk CEO said U.S. seasonal demand has strengthened in recent weeks, signaling surprisingly resilient consumer spending. The shipping giant expects solid U.S. import demand over the next six months, despite broader global trade softness.

- Euro seen as undervalued against the dollar, gold rebounded above $4,000 as US labor data eased recession fears, oil prices rose modestly despite weak demand signals, while bitcoin recovered to ~$103K after recent dips.

- Update on Govt Shutdown: Into day 36, FAA cuts flights 10% at 40 airports (e.g., JFK, LAX) due to furloughs, delaying millions. Trump urges Senate GOP to nuke filibuster for unilateral fixes; blames Dems, ignores bipartisan talks. Partial SNAP payments for 42M, but full withheld; Courts in RI/MA order emergency funds.

- Notable EU corp news: Smith & Nephew Q3 revenue slightly below expectations; Air France-KLM Q3 operating profit €1.20B, 5% below consensus; Sainsbury’s H1 pretax profit £271M, revenue £17.58B; Engie raised guidance to top of €5B range; Commerzbank delivered mixed results with a €600M buyback; Zalando Q3 revenue €3.02B, GMV €4.21B ; Diageo lowered FY26 organic growth outlook; Rheinmetall and Leonardo reaffirmed 2025 targets.

- Asia closed higher with Nikkei225 outperforming +1.2%. EU indices -0.5% to +0.3%. US futures -0.1%. Gold +0.7%, DXY -0.2%; Commodity: Brent +0.7%, WTI +0.9%; Crypto: BTC +1.5%, ETH +3.2%.

Asia

- South Korea Sept Current Account Balance: $13.5B v $9.1B prior.

- Japan Sept Labor Cash Earnings Y/Y: -1.4% v -1.5%e; Real Cash Earnings Y/Y: 1.9% v 1.9%e.

- Japan Oct Final PMI Services: 53.1 v 52.4 prelim.

- Australia Sept Trade Balance (A$): 3.9B v 4.0Be; Exports M/M: +7.9% v -8.7% prior; Imports M/M: 1.1% v 3.3% prior.

- Japan PM Takaichi reportedly considering a lower than expected extra budget amount of ~¥10T (early October estimates saw numbers ~¥13.9T).

- Ishin no Kai [Japan Innovation party; JIP] Co-Leader Fujita noted that early BOJ rate hike might give mixed signal to businesses.

Europe

- UK CBI said to have warned Chancellor Reeves against inflicting economic “death by a thousand taxes.

Americas

- Senate Maj Leader Thune noted that Votes to end filibuster still not there. A mini-package should be nearing completion, and that will be the vehicle” for the stopgap spending bill to reopen the government.

- Brazil Central Bank (BCB) left Selic Target Rate unchanged at 15.00% (as expected) for its 3rd straight pause current easing cycle. Decision to keep policy steady was unanimous. Noted that a very prolonged period at current levels is enough to bring inflation to target.
Trade:

- President Trump commented that heard the Supreme Court case [on tariffs] went 'well' today, it would be 'devastating' if we lost that case.

- US Treasury Sec Bessent commented that came away from tariff hearings today very optimistic.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.14% at 571.10, FTSE -0.35% at 9,742.80, DAX -0.23% at 23,992.79, CAC-40 -0.46% at 8,036.97, IBEX-35 +0.17% at 16,116.34, FTSE MIB -0.24% at 43,334.00, SMI -0.51% at 12,298.24, S&P 500 Futures +0.03%].

Market Focal Points/Key Themes: European indices opened lower across the board and remained under pressure through the early part of the session; lack of risk appetite attributed to concern over macroeconomic situation in Europe; among sectors managing gains are materials and telecom; sectors leading the way lower include energy and financials; telecom sector supported following BT earnings; oil & gas subsector under pressure after US inventories rose; focus on BOE rate decision later in the day; earnings expected in the upcoming Americas session include Altice, SupOng, Ralph Luaren and Tesla.

Equities

- Consumer discretionary: Deutsche Post [DPW.DE] +6.5% (earnings), Diageo [DGE.UK] -3.0% (trading update), Zalando [ZAL.DE] +9.5% (earnings).

- Consumer staples: J Sainsbury [SBRY.UK] +1.5% (earnings).

- Financials: Commerzbank [CBK.DE] -3.0% (earnings; buyback).

- Healthcare: Astrazeneca [AZN.UK] +0.5% (earnings).

- Industrials: Maersk [MAERSKB.DK] -5.5% (earnings), Volvo Cars [VOLCARB.SE] +1.5% (strategy).

- Technology: Wise [WISE.UK] -1.5% (earnings).

Speakers

- ECB’s De Guindos (Spain) noted that was comfortable with current level of interest rates; convergence to the 2% inflation target was now the baseline scenario. News was positive on inflation and services inflation was behaving much better. Slightly more optimistic on growth in the region.

- ECB's Schnabel (Germany): Quantitative normalization is proceeding smoothly.

- German Bundesbank Financial Stability Report noted that equity and bond valuations were significantly elevated.

- Norway Central Bank Statement noted at a restrictive policy was still needed. Reiterated stance that key rate would be cut further in coming year but not in a hurry to do so. Job of tackling inflation was not fully completed.

- Malaysia Central Bank Policy Statement noted that monetary policy stance remained appropriate. Headline inflation to remain moderate in 2026 while the growth outlook was subject to uncertainties. Budget measures for 2026 to support growth.

Currencies/fixed income

- USD was consolidating some of its recent strength.

- EUR/USD hovering around the 1.15 area. ECB members continue to tout that they were comfortable with current level of interest rates and that convergence to the 2% inflation target was now the baseline scenario.

- GBP/USD at 1.3065 with focus on upcoming BOE rate decision.
BOE was expected to keep policy steady although the decision was thought to be finely balanced and might be a closer call than expected. Dealers noted that rationale for a hold on view that inflation still almost double the BoE's target at 3.8% and MPC might decide it is more prudent to wait for confirmation that the UK was past the peak of the inflation cycle.
USD/JPY at 154.70. Some yen strength attributed on reports that Japan PM Takaichi was considering a lower than expected extra budget amount of ~¥10T (early October estimates saw numbers ~¥13.9T).

- 10-year German Bund yield at 2.66%, France 10-year Oat at 3.45% and 10-year Gilt yield at 4.46% 10-year Treasury yield: 4.13%.

Economic data

- Russia Oct Services PMI: 51.7 v 47.0 prior (moves back into expansion).

- (DE) Germany Sept Industrial Production M/M: 1.3% v 3.0%e; Y/Y: -1.0% v +0.1%e.

- (SE) Sweden Oct Preliminary CPI M/M: 0.3% v 0.1%e; Y/Y: 0.9% v 0.8%e.

- (SE) Sweden Oct CPIF M/M: 0.4% v 0.2%; Y/Y: 3.1% v 2.9%e.

- (SE) Sweden Oct; CPIF (ex-energy) M/M: 0.3% v 0.1%e; Y/Y: 2.8% v 2.6%e.

- (MY) Malaysia Central Bank (BNM) left Overnight Rate unchanged at 2.75% (as expected).

- (HU) Hungary Sept Industrial Production M/M:1.3 % v 1.2%e; Y/Y: -1.5% v -2.8%e.

- (HU) Hungary Sept Retail Sales Y/Y: 3.0% v 3.5%e.

- (FR) France Q3 Preliminary Private Sector Payrolls Q/Q: -0.3% v +0.2% prior.

- (CH) Swiss Oct Unemployment Rate: 2.9% v 2.9%e; Unemployment Rate (seasonally adj): 3.0% v 3.0%e.

- (ES) Spain Sept Industrial Production M/M: 0.4% v 0.2%e; Y/Y: 1.7% v 1.7%e; Industrial Output NSA (unadj)Y/Y: 4.5% v 0.2% prior.

- (AT) Austria Oct Wholesale Price Index M/M: -0.3% v +0.3% prior; Y/Y: 0.2% v 1.2% prior.

- (CZ) Czech Sept Industrial Output Y/Y: 3.6% v 1.0%e; Construction Output Y/Y: 12.8% v 17.0% prior.

- (CZ) Czech Sept National Trade Balance (CZK): 29.7B v 24.8Be.

- (TW) Taiwan Oct CPI Y/Y: 1.5% v 1.4%e; CPI Core Y/Y: 1.8% v 1.6%e; PPI Y/Y: -3.5% v -3.7% prior.

- (DE) Germany Oct Construction PMI: 42.8 v 46.2 prior.

- (US) Oct Challenger Job Cuts: +153.1K v 54.1 prior;; Y/Y: +175.3% v -25.8% prior - early release.

- (NO) Norway Central Bank (Norges)left the Deposit Rate unchanged at 4.00% (as expected) to resume its pause under the current easing cycle.

- (UK) Oct Construction PMI: 44.1 v 46.9e (10th month of contraction).

- (EU) Euro Zone Sept Retail Sales M/M: % v 0.2%e ; Y/Y:% v 0.9%e.

- (CY) Cyprus Oct CPI M/M: 0.5% v 0.6% prior; Y/Y: -0.3% v -0.7% prior.

Fixed income issuance

- (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills.

- (ES) Spain Debt Agency (Tesoro) sold total €4.503B vs. €4.0-5.0B indicated range in 2033, 2035 and 2041 SPGB bonds.

- Sold €1.815B in new 3.00% Jan 2033 SPGB bonds; Avg Yield: 2.848% v 2.922% prior; bid-to-cover: 2.06x v 1.63x prior.

- Sold €1.208B in 1.85% July 2035 SPGB bonds; Avg Yield: 3.111% v 3.416% prior, bid-to-cover: 2.63x v 2.18x prior.

- Sold €1.480B in 3.50% Jan 2041 SPGB bonds; Avg Yield: 3.616% v 3.671% prior; bid-to-cover: 2.05x v 1.68x prior.

- (ES) Spain Debt Agency (Tesoro) sold €534M vs. €250-750MB indicated range in sell 1.15% Nov 2036 inflation-linked bonds (SPGBei); Real Yield: 1.392% v 1.490% prior; bid-to-cover: 2.38x v 2.16x prior.

- (FR) France Debt Agency (AFT) sold total €10.983B vs. €9.5-11.0B indicated range in 2035, 2042 and 2049 Bonds.

- Sold €7.200B in 3.5% Nov 2035 Oat; Avg Yield: 3.43% v 3.51% prior; Bid-to-cover: 2.15x v 2,53x prior.

- Sold €2.257B in 3.6% May 2042 Oat; Avg Yield: 3.92% v 4.04% prior; Bid-to-cover: 2.92x v 2.73x prior.

- Sold €1.526B in 3.00% Jun 2049 Green Oat; Avg Yield: 4.12% v 3.42% prior; Bid-to-cover: 3.20x v 2.89x prior.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (ZA) South Africa Sept Electricity Production Y/Y: No est v -3.1% prior; Electricity Consumption Y/Y: No est v -4.9% prior.

- 07:00 (UK) Bank of England (BOE) Interest Rate Decision: Expected to cut Bank Rate by 25bps to 3.75%.

- 07:00 (UK) BOE Oct Minutes.

- 07:00 (UK) BOE Monetary Policy Report.

- 07:00 (CL) Chile Sept Nominal Wage Y/Y: No est v 6.1% prior.

- 07:00 (RO) Romania to sell combined RON1.0B in 2028 and 2034 bonds.

- 07:30 (UK) BOE Gov Bailey post rate decision press conference.

- 07:30 (DE) ECB’s Nagel (Germany).

- 08:00 (RU) Russia Gold and Forex Reserve w/e Oct 31st: No est v $731.2B prior- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Q3 Preliminary Nonfarm Productivity: 3.3%e v 3.3% prior; Unit Labor Costs: 0.9%e v 1.0% prior.

- 08:30 (US) Initial Jobless Claims: 225Ke v K prior; Continuing Claims: No est v M prior.

- 08:30 (CZ) Czech Central Bank (CNB) Interest Rate Decision: Expected to leave 2-Week Repurchase Rate unchanged at 3.50%.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (UK) Bank of England (BOE) Decision Maker Panel (DMP) Oct Survey.

- 09:00 (PL) Poland Central Bank (NBP) Gov Glapinski hold post rate decision press conference.

- 09:00 (CZ) Czech Central Bank (CNB) Gov Michel to hold post rate decision press conference.

- 09:00 (DE) ECB’s Nagel (Germany).

- 10:00 (CA) Canada Oct Ivey Purchasing Managers Index (PMI): No est v 59.8 prior.

- 10:00 (US) Sept Wholesale Inventories M/M: No est v % prior; Wholesale Trade Sales M/M: No est v % prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Fed’s Williams.

- 11:00 (US) Fed’s Barr.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CA) Canada to sell 10 Year Bonds.

- 12:00 (US) Fed’s Hammack.

- 13:00 (BR) Brazil Oct Monthly Trade Balance: $6.2Be v $3.0B prior; Exports: $31.9Be v $30.5B prior; Imports: $25.8Be v $27.5B prior.

- 13:30 (IE) ECB’s Lane (Ireland, chief economist).

- 14:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to cut Overnight Rate by 25bps to 7.25%.

- 15:30 (US) Fed’s Waller.

- 16:30 (US) Fed’s Paulson.

- 17:00 (CO) Colombia Central Bank Oct Minutes.

- 17:30 (US) Fed’s Musalem.

- 18:30 (JP) Japan Sept Household Spending Y/Y: 2.5%e v 2.3% prior.

- 21:00 (PH) Philippines Q3 GDP Q/Q: 0.8%e v 1.5% prior; Y/Y: 5.2%e v 5.5% prior.

- 22:00 (ID) Indonesia Oct Foreign Reserves: No est v $148.7B prior.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 23:00 (MY) Malaysia Sept Industrial Production Y/Y: 5.4%e v 4.9% prior; Manufacturing Sales Y/Y: No est v 2.7% prior.