Fed's Williams hinting at possible bond purchases

EU mid-market update: Fed's Williams hinting at possible bond purchases; Russia ready to help Venezuela; Tesla approves Musk's $1T pay package; GTA 6 delayed again.

Notes/observations

- European indices opened mostly higher but turned lower, weighed on by valuation concerns. Recent volatility tied to US data, including Challenger job cuts, though Fed comments offered a mixed outlook.

- Russia has just confirmed it is ready to respond to Venezuela’s appeals for assistance amid rising U.S. naval activity near its coast, signaling potential deployment of advanced missile systems to support President Maduro.

- Germany’s trade surplus narrowed on stronger imports; German Chancellor Merz supports EU steel protections, while Bundesbank warns of rising debt risks.

- White House blocks Nvidia AI chip sales to China; USTR seeks feedback on shipbuilding tariffs. China signals renewed interest in EU trade talks.

- Mainstream press has finally started to point to concerns about AI ROI, but most uncomfortable fact about AI in 2025 is that large language models have plateaued into expensive, clever consumer tools rather than true steps toward AGI. As the U.S. pours roughly $40B a year into AI data centers despite a shortfall of almost half a million construction workers, analysts are beginning to question whether such capital intensity makes sense when China’s Alibaba and Tencent have demonstrated 82% hardware savings through software innovations like Aegaeon and CALM.

- Tesla shareholders approved Elon Musk’s potential $1 trillion pay package and a new equity plan with over 75% support at the November 6th annual meeting. The company targets vehicle production of 4 million units by end-2027 and 5 million by end-2028, supported by a new “TeraFab” chip-fabrication complex and 50% annual ramp through 2026, alongside mass production of Cyber Cab and Optimus robots by mid-2026. Tesla also unveiled next-generation AI chips (A5/A6), FSD v14.3 with unsupervised driving, energy expansion to 31 GWh, and plans for Roadster 2 and the Tesla Semi, positioning itself as a vertically integrated AI-energy-mobility platform.

- Sterling fell to $1.31 after BOE keeps rates unchanged but signals potential December cut. Ten-year gilt yields rise to 4.47%.

- Eurozone bond yields mostly rise, with Belgian OLOs under focus due to challenging budget talks.

- The Dutch government is reportedly ready to relinquish control of Nexperia if chip supplies resume, underscoring how critical the firm’s output is to the global auto industry. Note: Nexperia produces over 100 billion basic semiconductors annually—around 25% of global supply - with roughly 60% going into vehicles through Tier 1 suppliers like Bosch, Denso, and Valeo rather than directly to OEMs.

- Notable corporate news: Tesla shareholders approve up to $1T stock pay for Musk; analysts see potential $2T market cap early 2026 and $3T by year-end. Novo Nordisk expects low-single-digit 2026 sales impact from US GLP-1 deal; FDA fast-tracks Wegovy and competitor orforglipron. IAG Q3 hit by Middle East conflict, sterling volatility, US trade tensions; shares down 7.9% at £3.81. Monte dei Paschi beats earnings; new business plan due Q1 2026.

- Asia closed lower with KOSPI underperforming -1.8%. EU indices -0.5% to +0.1. US futures 0.0%. Gold +0.8%, DXY +0.1%; Commodity: Brent +1.4%, WTI +1.5%; Crypto: BTC -2.0%, ETH -2.9%.

Asia

- (CN) China Oct Trade Balance: $90.1 v $96.7Be; Exports Y/Y: -1.1% v 2.8%e; Imports Y/Y: 1.0% v 2.5%e.

- Japan Sept Household Spending Y/Y: 1.8% v 2.5%e.

- Japan MOF said to be considering introducing regular mid-year reviews of its government bond issuance plans.

- Japan govt reports that North Korea may have fired a ballistic missile.

Americas

- Senate Republicans said to anticipate a vote Friday on a new proposal to end the government shutdown.

- Federal judge ordered the Trump administration to fully fund November food-assistance benefits by Friday (**Note: being appealed).

- Mexico Central Bank (Banxico) cut its Overnight Rate by 25bps to 7.25% (as expected) for its 11th straight cut (12th overall) under the current phase of its easing cycle. The vote to cut by 25bps was 4-1 (Dep Gov Heath was the dissenter for steady rates). Statement noted that headline inflation was still expected to converge to the target in the third quarter of 2026.

Trade

- US govt reportedly to block Nvidia’s sales of ‘scaled-back’ chips to China (the B30A chip, developed specifically for China was mentioned).

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.29% at 566.24, FTSE -0.45% at 9,691.49, DAX -0.34% at 23,664.28, CAC-40 -0.10% at 7,957.02, IBEX-35 -0.58% at 16,026.79, FTSE MIB -0.03% at 43,056.00, SMI -0.13% at 12,278.31, S&P 500 Futures +0.06%].

Market Focal Points/Key Themes: European indices opened mostly higher, but lost momentum in the early part of the session; concerns over stretched valuations seen weighing on risk appetite; among sectors trending higher are consumer discretionary and industrials; underperforming sectors include utilities and real estate; earnings expected in the upcoming US session include KKR, Duke Energy and Brookfield.

Equities

- Consumer discretionary: IAG [IAG.UK] -9.0% (earnings).

- Industrials: Volkswagen [VOW3.DE] +2.5% (Dutch govt ready to drop control of Nexperia; Honda results), Airbus [AIR.FR] -0.5% (deliveries; Wizz Air contract amendment), Daimler Truck [DTG.DE] +0.5% (earnings), Pirelli [PIRC.IT] +1.0% (earnings).

- Technology: SAP [SAP.DE] -0.5% (to offer EU concessions).

Speakers

- BOE's Saporta stated that asset selling will still see bumps in the road.

- Turkey Central Bank (CBRT) Gov Karahan stated that disinflation had slowed in the past few months.

- Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) maintained end-2025 inflation at 24.0%; and maintained end-2026 inflation forecast between 13.0%-19% range.

- Poland Central Bank (NBP) updated its economic outlook which saw 2025 CPI at 3.7% and saw 2026 CPI at 2.9%. Poland saw 2025 GDP growth at 3.4% and saw 2026 GDP growth at 3.7%.

- Netherlands Govt said to drop control of Nexperia if chip supply resumes- Fed’s Williams noted that Fed might have to rebuild liquidity soon.

- Japan Trade Min Akazawa: Trying to diversify rare earth procurement sources and secure stable supply.

- China reportedly begins work on rules easing rare earth export curbs.

- China Finance Ministry (MOF) reiterated stance to fully use more proactive fiscal policy and support steady employment and foreign trade.

Currencies/fixed income

- USD on slightly softer tone into week end.

- EUR/USD continued to hold above the 1.15 level as ECB speakers continue to note that current level of rates were at an appropriate level.

- GBP/USD at 1.3100 and holding onto most post BOE decision gains.

- USD/JPY moved higher in late Asia on reports that Japan’s MOF was considering introducing regular mid-year reviews of its government bond issuance plans.

- 10-year German Bund yield at 2.67%, France 10-year Oat at 3.46% and 10-year Gilt yield at 4.47% 10-year Treasury yield: 4.11%.

Economic data

- (SE) Sweden Sept Maklarstatistik Housing Prices: -0.2% v -0.2% prior.

- (NL) Netherlands Sept Consumer Spending Y/Y: 0.8% v 1.2% prior.

- (ZA) South Africa Oct Net Reserves: $69.4B v $67.9B prior; Gross Reserves: $71.6B v $69.7B prior.

- (DE) Germany Sept Trade Balance: €15.3B v €16.7Be; Exports M/M:+ 1.4% v +0.5%e; Imports M/M: +3.1% v +0.5%e.

- (UK) Oct Halifax House Price Index M/M: +0.6% v -0.3% prior; Y/Y: 1.8% v 1.3% prior.

- (SE) Sweden Oct Budget Balance (SEK): -17.4B v +2.1B prior.

- (NO) Norway Sept Industrial Production M/M: 3.4% v 1.3% prior; Y/Y: 20.6% v 1.7% prior.

- (NO) Norway Sept Manufacturing Production M/M: -1.7% v 0.7% prior; Y/Y: 2.6% v 5.0% prior.

- (NO) Norway Q3 Average Monthly Earnings Y/Y: % v 5.3% prior.

- (DK) Denmark Sept Industrial Production M/M: +8.0% v -3.0% prior.

- (MY) Malaysia end-Oct Foreign Reserves: $123.8B v $123.4B prior.

- (TH) Thailand May Foreign Reserves w/e Oct 31st: $272.0B v $273.7B prior.

- (FR) France Sept Trade Balance: -€6.6B v -€5.2B prior; Current Account: -€1.6B v +€1.4B prior.

- (FR) France Q3 Preliminary Wages Q/Q: 0.3% v 0.5% prior.

- (CH) Swiss Oct SECO Consumer Confidence: —35.5 v 35.0e.

- (CH) Swiss Oct Foreign Currency Reserves (CHF):724.8B v 726.8B prior.

- (CZ) Czech Sept Retail Sales (ex-auto) Y/Y: 2.6% v 4.1%e.

- (RU) Russia Narrow Money Supply w/e Oct 31st (RUB): 18.99T v 19.01T prior.

- (TW) Taiwan Oct Trade Balance:$22.6B v $11.0Be; Exports Y/Y: 49.7% v 31.6%e; Imports Y/Y: 14.6% v 25.2%e.

- (CN) Weekly Shanghai copper inventories (SHFE): 115.0K v 116.1K tons prior.

- (CN) China Oct Foreign Reserves: $3.343T v $3.330Ter.

- (HK) Hong Kong Oct Foreign Reserves: $426.0B v $419.2B prior.

- (IS) Iceland Oct Preliminary Trade Balance (ISK): -24.2B v -45.4B prior.

- (CZ) Czech Oct International Reserves: $170.6B v $170.8B prior.

- (SG) Singapore Oct Foreign Reserves: $392.2B v $393.1B prior.

- (UN) Oct FAO World Food Price Index: 126.4 v 128.5 prior.

Fixed income issuance

- (ZA) South Africa sold total ZAR1.0B vs. ZAR1.0B indicated in I/L 2033, 2043 and 2050 Bonds.

- (IN) India sold INR320B vs. INR320B indicated in 6.48% 2035 bonds; Avg Yield: 6.4817%.

Looking ahead

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

- 06:00 (CL) Chile Oct CPI M/M: 0.3%e v 0.4% prior; Y/Y: 3.7%e v 4.4% prior.

- 06:00 (BR) Brazil Oct FGV Inflation IGP-DI M/M: -0.2%e v 0.4% prior; Y/Y: 0.6%e v 2.3% prior.

- 06:00 (IE) Ireland Oct Live Register Monthly Change: No est v +0.1K prior; Live Register Level: No est v 169.3K prior.

- 06:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills (£1.0B, £2.0B and £3.0B respectively).

- 06:00 (BE) Belgium Debt Agency (BDA) to sell Bonds through Ori Auction.

- 06:30 (CL) Chile Oct Trade Balance: $1.1Be v $0.9B prior; Exports: No est v $8.4B prior; Imports: No est v $7.5B prior; Copper Exports: No est v $4.4B prior.

- 06:30 (CL) Chile Oct International Reserves: No est v $47.4B prior.

- 06:30 (IN) India Forex Reserve w/e Oct 31st: No est v $B prior.

- 07:00 (MX) Mexico Oct CPI M/M: 0.4%e v 0.2% prior; Y/Y: 3.6%e v 3.8% prior.

- 07:00 (MX) Mexico Oct CPI Core M/M: 0.3%e v 0.3% prior; Y/Y: 4.3%e v 4.3% prior.

- 07:00 (MX) Mexico Oct Vehicle Production: No est v 355.5K prior; Vehicle Exports: No est v 314.7K prior.

- 07:00 (DE) ECB’s Nagel (Germany).

- 07:15 (UK) BOE’s Pill (chief economist).

- 08:00 (PL) Poland Oct Official Reserves: No est v $262.5B prior.

- 08:00 (PL) Poland Central Bank (NBP) Sept Minutes (2 decisions ago).

- 08:00 (RU) Russia Gold and Forex Reserve w/e Oct 31st: $B v $731.2B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index- 08:00 (IN) India announces upcoming bill issuance (held on Wed).

- 08:30 (US) Oct Nonfarm Payrolls, Unemployment Rate, Hourly Earnings not expected due US Govt Shutdown.

- 08:30 (CA) Canada Oct Net Change in Employment: -5.0Ke v +60.4K prior; Unemployment Rate: 7.1%e v 7.1% prior; Full Time Employment Change: No est v +106.1K prior; Part Time Employment Change: No est v -45.6K prior; Participation Rate: 65.2%e v 65.2% prior; Hourly Wage Rate Permanent Employees Y/Y: No est v 3.6% prior.

- 08:30 (NL) ECB’s Elderson.

- 09:30 (TR) Turkey Oct Cash Budget Balance (TRY): No est v -359.9B prior.

- 10:00 (US) Nov Preliminary University of Michigan Confidence: 53.0e v 53.6 prior.

- 11:00 (US) Oct NY Fed 1-Yr Inflation Expectations: No est v 3.4% prior.

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 13:00 (EU) Potential sovereign ratings after European close (Moody’s on Germany; Fitch on Ireland).

- 14:00 (AR) Argentina Sept Industrial Production Y/Y: -4.5%e v -4.4% prior; Construction Activity Y/Y: No est v 0.4% prior.

- 15:00 (US) Sept Consumer Credit: $10.0B v $0.4B prior.

- 15:00 (US) Fed’s Miran.