- Risk appetite continued to be aided by optimism on two fronts – US-China Trade talks and Brexit negotiations

- US/China might be headed for 'mini' trade deal

- UK Brexit Sec Barclay arrived at EU for Brexit talks with Barnier

- Iran tanker said to be hit by missiles; Iranian official walk by talk that attack came from direction of Saudi Arabia


- Japan ruling LDP announced it would delay the new Ministry of Finance (MOF) rules related to foreign investors (Note: rules would require certain foreign investors to give advance notice when they plan to acquire shares in companies related to national security)


- Ireland PM Varadkar stated after meeting UK PM Johnson that sill see a pathway to a deal, agreed a deal was in everyone's interest; had detailed discussions

- Reports circulated of "significant movement" from the UK side in Brexit talks after Irish PM said there was a "pathway" toward an agreement in the coming weeks, and PM now suggests it was possible to reach a new agreement before the end of the month

- UK set to propose 'pared-down' free trade agreement to end Brexit stalemate by end of Oct. PM Johnson offered Ireland PM Varadkar to switch away from a fully formed withdrawal agreement and focus on a limited FTA


- US Chamber of Commerce official: there's potential currency agreement in the works in US-China trade talks in exchange for a postponement of tariff hikes. Trump and his administration understand the negative consequences of an escalation in the US-China trade deal (Reminder:

- Tariffs on $250B of Chinese goods are scheduled to rise from 25% to 30% on Tuesday (Oct 15th). Trump previously announced he would delay the tariff increase to Oct 15th from Oct 1st)

- President Trump: China talks went very well on Thursday. Had a 'very, very good' negotiations; confirmed talks would continue on Friday (Oct 11th)

- White House Official: Trade talks between US and China are 'going very well', 'probably better than expected'

- Pres Trump to meet with China Vice Premier Liu He on Friday (Oct 11th) at 14:45 ET

- Fed's Kashkari (dove; non-voter): Another25bps rate cut was warranted if data continued its trend but did not see major financial stability risks now

- Fed's Mester (hawk, non-voter): expected the US economy to avoid a more serious turndown; recent readings on inflation expectations were mixed




Indices [Stoxx600 +1.08% at 386.88, FTSE -0.07% at 7,181.40, DAX +1.63% at 12,362.58, CAC-40 +1.02% at 5,626.00, IBEX-35 +0.54% at 9,154.00, FTSE MIB +0.66% at 21,903.50, SMI +0.72% at 9,974.00, S&P 500 Futures +0.79%]

Market Focal Points/Key Themes: European Indices trade higher following a positive session in Asia and higher US futures. US/China trade talks continue to be at the forefront as talks resume today. On the corporate front shares of German traded SAP trades sharply higher as the company reported strong preliminary Q3 results and announced a leadership change; Hugo Boss declines to a 9 year low after a miss on the top and bottom line and lowered full year outlook, with Publicis also declining sharply following a cut to full year organic growth outlook falling to a 7 year low. Elsewhere Euronext trades lower as the company announced its 3 year strategic plan. TP Icap gains following Tullet Prebon's settlement with the FCA. Looking ahead notable earners include Fastenal and Infosys.



- Consumer discretionary: Publicis [PUB.FR] -12%, WPP [WPP.UK] -4% (Publicis earnings), Hugo Boss [BOSS.DE] -12% (prelim earnings), Dart Group [DTG.UK] +13% (trading update)

- Financials: Euronext [ENX.FR] -7% (3-year strategic plan)

- Technology: SAP [SAP.DE] +8% (earnings; CEO to step down), Xaar [XAR.UK] +5% (new CEO)



- EU's Tusk: Told PM Johnson that if there was no such proposal by today (Friday, Oct 11th), I would announce there was no more chance for deal at the upcoming EU Leader summit. Added that there was no guarantee and time was practically up; even the slightest chance must be used. PM Johnson had promised Brexit solution that works for all. Received promising signals from Irish PM that a deal was still possible

- Ireland Fin Min Donohoe: Govt was aware of a variety of views in Northern Ireland; detail and technical work to begin in Brussels

- Turkey Central Bank (CBRT) said to have repatriated majority of gold reserves to Turkey

- BOJ Gov Kuroda reiterated view that had various easing options and had 'ample' room for further action

- China CSRC (securities regulator) to scrap foreign ownership limits for various types of companies. For futures companies as of January 1st, Mutual Fund companies from Apr 2020 and Securities companies from Dec 2020

- China Foreign Ministry Spokesman Geng Shuang: asked about Iran tanker explosion, says hoped relevant parties worked together to uphold peace and stability in region

- Iran tanker said to be on fire near Saudi port of Jeddah; oil is spilling into Red Sea; investigators reported it might have been caused by a terrorist attack. Later report added that the tanker explosion was caused by missiles

- Iran National Oil company confirmed oil leak from tanker has been halted; refutes speculation that missiles caused the damage


Currencies/Fixed Income

- GBP price action saw some volatility mid-morning as EU Tusk commented on the Brexit situation. GBP/USD plunged 100bps to probe the lower end of 1.24 as Tusk's tone seemed to attest that UK had not come up with a realistic Brexit proposal but the pair recovered some composure that he kept the door open for a potential deal to be reviewed in time for the upcoming leader Summit next week. GBP/USD back in 1.2520 area just ahead of the US morning. Focus turned to any remarks from Brexit Sec Barclay and EU's chief negotiator Barnier meeting taking place today. Optimism had been building that headway was being made following Johnson/Varadkar meeting on Thursday.


Economic Data

- (NL) Netherlands Aug Trade Balance: 3.9B v €4.1B prior

- (DE) Germany Sept Final CPI M/M: 0.0% v 0.0%e; Y/Y: 1.2% v 1.2%e

- (DE) Germany Sept Final CPI EU Harmonized M/M: % v -0.1%e; Y/Y: 0.9% v 0.9%e

- (RO) Romania Sept CPI M/M: 0.1% v 0.2%e; Y/Y: 3.5% v 3.7%e

- (ES) Spain Sept Final CPI M/M: 0.0% v 0.0%e; Y/Y: 0.1% v 0.1%e

- (ES) Spain Sept Final EU Harmonized CPI M/M: 0.4% v 0.4%e; Y/Y: 0.2% v 0.2%e

- (ES) Spain Sept CPI Core M/M: 0.1% v 0.0%e; Y/Y: 1.0% v 0.9%e

- (TR) Turkey Aug Current Account Balance: $2.6B v $2.9Be

- (CN) Weekly Shanghai copper inventories (SHFE): 134.5K v 117.5K tons prior

- (RU) Russia Narrow Money Supply w/e Oct 4th (RUB): 10.58T v 10.56T prior

- (IS) Iceland Sept International Reserves (ISK): 826B v 838B prior

**Fixed Income Issuance**

-(IT) Italy Debt Agency (Tesoro) sells total €1.5B vs. €1.0-1.5B indicated range 20-year and 30-year BTP Bonds


Looking Ahead

- (IE) Ireland PM Varadkar meeting with EU's Barnier

- (IT) Italy Debt Agency (Tesoro) to sell combined €4.0-5.0B in 3-year, 7-year BTP Bonds

- 05:30 (IN) India to sell combined INR160B in 2024, 2033, 2043 and 2049 bonds

- 06:00 (UK) DMO to sell €6.5B in 1-month, 3-month and 6-month bills (£1.0B, £3.0B and £2.5B respectively)

- 06:30 (ES) ECB's de Cos (Spain)

- 07:00 (MX) Mexico Aug Industrial Production M/M: +0.3%e v -0.4% prior; Y/Y: -2.0%e v -1.7% prior; Manufacturing Production Y/Y: 1.1%e v 3.0% prior

- 07:30 (IN) India Weekly Forex Reserve w/e Oct 4th: No est v $433.6B prior

- 07:30 (IS) Iceland to sell 2021 Bonds

- 08:00 (IN) India Aug Industrial Production Y/Y: 1.8%e v 4.3% prior

- 08:00 (BR) Brazil Aug IBGE Services Sector Volume Y/Y: -0.8%e v 1.8% prior

- 08:00 (UK) Daily Baltic Dry Bulk Index

- 08:00 (US) Fed's Fed's Kashkari (dove, non-voter)

- 08:00 (IN) India announces upcoming bill issuance (held on Wed)

- 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance

- 08:30 (US) Sept Import Price Index M/M: 0.0%e v -0.5% prior; Y/Y: -2.1%e v -2.0% prior; Import Price Index (ex-petroleum) M/M: -0.1%e v 0.0% prior

- 08:30 (US) Sept Export Price Index M/M: -0.1%e v -0.6% prior; Y/Y: No est v -1.4% prior

- 08:30 (CA) Canada Sept Net Change in Employment: +7.5Ke v +81.1K prior; Unemployment Rate: 5.7%e v 5.7% prior; Full Time Employment Change: +20.8Ke v +23.8K prior; Part Time Employment Change: -7.7Ke v +57.2K prior; Participation Rate: 65.7%e v 65.8% prior; Hourly Wage Rate Y/Y: 3.8%e v 3.8% prior

- 09:00 (RU) Russia Aug Trade Balance: $11.0Be v $11.2B prior; Exports: $33.4Be v $33.4B prior; Imports: $22.1Be v $22.2B prior

- 10:00 (US) Oct Preliminary University of Michigan Confidence: 92.0e v 93.2 prior

- 11:00 (EU) Potential sovereign ratings after European close (Moody's on Belgium, Poland; S&P on Germany and Poland; Fitch on latvia and Cyprus)

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

- 13:15 (US) Fed's Rosengren at event in Madison, Wisconsin - 15:00 (US) Fed's Kaplan at event in San Francisco

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