Risk on given the green light as US shutdown on track to end today or tomorrow

EU mid-market update: Risk on given the green light as US shutdown on track to end today or tomorrow; Traders to keep watching surge in CoreWeave’s and Oracle’s CDSs, despite AMD targets raise.

Notes/observations

- Stocks and bond yields rise as hopes of a US government reopening encourage rotation into riskier assets, reducing demand for safe assets, although gold holds firm above $4,100.

- With little data to bite on due to the shutdown, rhetoric runs with yesterday’s weekly ADP job data that hinted at a soft market, reinforcing expectations for more Fed rate cuts.

- When the US govt reopens, the September jobs report should drop within days since it was already compiled pre-shutdown, offering markets a quick labor snapshot before chaos resumes. But with October data never collected - likely meaning no payrolls or CPI ahead of the Fed’s December 10 meeting - and a compressed flood of delayed releases to follow, policymakers will be flying blind, relying on patchy, lower-quality data and facing months of distorted signals and statistical gaps.

- Japanese yen is in focus, seeing weakness taking it to 154.7 against USD, at 9-month highs, and record low against Swiss franc. Overnight, Japan finance ministry cautions on weak yen disadvantages.

- Yesterday’s Barclays’ downgrade of Oracle to “sell” again signaled that the company’s massive AI buildout is outpacing its ability to fund it, with cash potentially running dry by late 2026 and debt metrics maybe edging toward junk. The simultaneous surge in CoreWeave’s and Oracle’s CDS spreads shows markets are pricing the same AI-financing bubble from opposite ends - a system strained by GPU shortages, soaring leverage, and an ROI curve that may not arrive in time.

- White House is reportedly weighing an executive order to curb the power of major shareholder advisory firms like ISS, Glass Lewis, and even index giants such as BlackRock, in a move that could upend how proxy votes are cast. The effort comes as regulators also face pressure from the Long-Term Stock Exchange to scrap quarterly earnings reporting - together signaling a broader push to loosen short-term market discipline and reshape corporate governance at its core.

- Notable Corp News: BAE Systems’ YTD order intake +8% y/y; EPS estimates slightly above guidance despite FX headwinds. Taylor Wimpey positioned for rising demand but buyer activity subdued due to affordability and UK budget concerns. E.ON posts results in line with expectations; Retail unit affected by timing of non-periodic results but full-year targets on track. Porsche SE plans a substantial 2025 dividend, contingent on payouts from Volkswagen and Porsche AG; reiterates full-year guidance. LVMH faces a challenging Q4, with fashion and leather division down 2% in Q3; Analysts expect a 3% Q4 decline but see possible trend acceleration in early 2026, notably for Dior. Infineon Q4 sales show weak demand in automotive (-2% YoY to €1.92B) and industrial power (-8% to €463M), with momentum remaining modest.

-Asia closed mixed with KOSPI outperforming +1.1%. EU indices -0.1% to +1.2%. US futures +0.2-0.7%. Gold -0.1%, DXY +0.1%; Commodity: Brent -0.9%, WTI -1.0%; Crypto: BTC -0.5%, ETH -1.8%.

Asia

- Japan Fin Min Katayama: Will not deny disadvantages of weak Yen outweighing advantages; Watching FX levels with a high sense of urgency incl moves that are 'speculative'.

- Japan PM Takaichi may have to 'pay the price' for 'spewing shit' - China state media.

- China to enhance competitiveness of energy market; Studying usage of special bonds to support new projects - statement on New Energy industry development.

Europe

- Norway Central Bank (Norges) Financial Stability Report: Maintains counter-cyclical capital buffer (CCyB) at 2.5% amid continued heightened risk to financial stability.

- Dutch Econ Min Karremans: Spoke with EU's Sefcovic about Nexperia; We are determined to restore semiconductor supply chains ASAP.

- UK Health Min Streeting: Rules out any challenge against PM Starmer.

- UK Foreign Sec Cooper: UK will seek to tighten restrictions on Russian gas exports over the next year, alongside other EU nations.

- France Central Bank: Expect slight growth in Q4 after 0.5% in Q3.

- Spain Treasury Official Miralles: Biggest challenge for debt issuance is that there is no clear path for Eurozone rates in 2026.

Americas

- White House said to consider Exec Order relating to restricting the influence of shareholder advisory firms - WSJ.

- US FDA reportedly plans to name oncology expert Richard Pazdur for next Director of Center for Drug Evaluation and Research, since Dr. George Tidmarsh resigned after being placed on leave Oct 31.

- Transportation Sec Duffy: More air traffic controllers are coming in today and its a better day for air travel.

- Colombia Pres Petro issues order to suspend intel sharing with US security agencies due to US aerial strikes on supposed drug boats in the Caribbean.

- US said to be planning to send border patrol to Charlotte, NC and New Orleans, LA; Plans are not yet final - NYT.

- WSJ's Timiraos: The Fed Is Increasingly Torn Over a December Rate Cut; Fed's inflation hawks pushed to pause rate cuts at a contentious October meeting. The divide might not end soon.

Trade

- Pres Trump: Plans to lower some tariffs on coffee - Fox News interview.

- Reportedly Taiwan is close to a trade deal with US; Taiwan expects to announce US tariff rate decision by the end of Nov.

- Treasury Sec Bessent: Met Saudi Public Investment Fund (PIF) Gov on Mon, discussed opportunities for Saudi investment in the U.

- Australia PM Albanese: Concludes bilateral treaty security negotiations with Indonesia.

Conflict/tensions

- US military considers building base for ~10K military personnel near Gaza.

-Yemen Houthis have signaled they will stop attacking ships in the Red Sea, potentially placing downward pressure on global shipping prices - FT.

- Israel Defense Min plans to shut down army radio.

- Russia is ready to resume talks with Ukraine in Istanbul.

Energy

- Saudi Arabia Dec crude oil supply to China expected to decline to 36M barrels v 40M m/m - US financial press.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.54% at 583.28, FTSE -0.14% at 9,886.15, DAX +1.14% at 24,371.50, CAC-40 +0.92% at 8,231.15, IBEX-35 +0.93% at 16,551.27, FTSE MIB +1.01% at 44,886.00, SMI +0.37% at 12,766.64, S&P 500 Futures +0.39%].

Market focal points/key themes: European indices opened higher across the board, but some started to lag as the session progressed; optimism around trade seen supporting risk appetite; among sectors leading the way higher are industrials and financials; lagging sectors include communication services and consumer discretionary; ABN Amro acquires NIBC from Blackstone; LVMH takes minority stake in La Joux-Perret; earnings expected in the upcoming US session include Cisco, Patrizia and Chevron’s investor day presentation.

Equities

- Healthcare: Bayer [BAYN.DE] +3.5% (earnings).

- Industrials: Experian [EXPN.UK] -1.5% (earnings), BAE Systems [BA.UK] +1.5% (trading update), Taylor Wimpey [TW.UK] -3.0% (trading update).

- Technology: Infineon [IFX.DE] +1.0% (earnings; guidance).

- Utilities: E.ON [EOAN.DE] -1.5% (earnings), SSE [SSE.UK] +11.5% (trading update; strategy; offering).

Speakers

- ECB’s Kocher (Austria): Rates could go into any direction; Would be not too surprising if there is no ECB rate hike in 2026 - media interview.

- ECB’s Villeroy (France): French economy is resilient despite political uncertainty.

- Sweden Fin Min Svantesson: Q3 GDP indicator suggests stronger growth; No worried about inflation.

- Japan PM Takaichi: Reiterates cannot say whether Japan has emerged from deflation.

- RBA Asst Gov (Financial) Jones: Surprised by benign market pricing globally; Notes markets' difficulty in pricing risks such as macroeconomic concerns.

- RBA Deputy Gov Hauser: If it turns out we are no longer mildly restrictive, that has important implications for future policy.

- Fed's Barr (voter): No comments on monetary policy - participation at Singapore FinTech Festival.

- Indonesia Central Bank (BI) Gov Warjiyo: Sees 2026 Avg Headline CPI at 2.62%, 2026 GDP growth at 5.33% or up to 5.4% if fiscal spending accelerated.

- Bank of Korea (BOK) Gov Rhee: Reiterates the data dependence of the central bank.

Economic data

- (SE) Sweden Oct PES Unemployment Rate: 3.7 v 3.8% prior.

- (JP) Japan Oct Preliminary Machine Tool Orders Y/Y: 16.8% v 11.0% prior.

- (FI) Finland Sept Current Account: €0.1B v €0.1B prior.

- (DE) Germany Oct Wholesale Price Index M/M: +0.3% v +0.2% prior; Y/Y: 1.1% v 1.2% prior.

- (DE) Germany Oct Final CPI M/M: 0.3% v 0.3%e; Y/Y: 2.3% v 2.3%e; CPI EU Harmonized M/M: 0.3%e v 0.3% prelim; Y/Y: 2.3%e v 2.3% prelim.

- (TR) Turkey Sept Current Account Balance: $1.1B v $5.5B prior.

- (RO) Romania Sept CPI M/M: 0.5% v 0.4% prior; Y/Y: 9.8% v 9.9% prior.

- (IT) Italy Sept Industrial Production M/M: 2.8% v 1.5%e; Y/Y: +1.5% v -0.5%e; Industrial Production NSA (unadj) Y/Y: +4.6% v -6.0% prior.

Fixed income issuance

- Norway sells total NOK3.0B vs. NOK3.0B indicated in 2029 and 2035 bonds.

- Sweden sells total SEK13.785B vs. SEK17.5B indicated in 3-month and 4-month bills.

- Italy Debt Agency (Tesoro) sells €8.5B vs. €8.5B indicated in 12-month bills; Avg Yield: 2.06% v 2.05% prior; Bid-to-cover: 1.41x v 1.46x prior.

- India sells total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills.

- Australia sells A$1.2B v A$1.2B indicated in 4.25% Dec 2035 bonds: Avg Yield: 4.3643% v 4.2436% prior; bid-to-cover: 3.49x v 3.38x prior.

Looking ahead

- 05:30 (DE) Germany to sell combined €2.5B in 2046 and 2056 bunds- 05:30 (IN) India Oct CPI Y/Y: 0.4%e v 1.5% prior.

- 06:00 (PT) Portugal Oct Final CPI M/M: No est v 0.0% prelim; Y/Y: No est v 2.3% prelim; CPI EU Harmonized M/M: No est v -0.3% prelim; Y/Y: No est v 2.0% prelim.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 07:00 (CZ) Czech Republic to sell up to CZK6.0B combined in 2034, 2036 and 2038 bonds.

- 07:00 (US) MBA Mortgage Applications w/e Nov 7th: No est v -1.9% prior.

- 07:00 (BR) Brazil Sept IBGE Services Volume M/M: No est v 0.1% prior; Y/Y: No est v 2.5% prior.

- 07:00 (ZA) South Africa Mid-Term Budget Announcement.

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

- 08:30 (CA) Canada Sept Building Permits M/M: No est v -1.2% prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 11:30 (US) Treasury to sell 17-week bills.

- 13:00 (US) Treasury to sell 10-Year Notes.

- 13:30 (CA) Bank of Canada (BOC) Summary of Deliberations (Oct Minutes).

- 14:00 (AR) Argentina Sept Wages M/M: No est v 3.2% prior.

- 14:00 (AR) Argentina Oct National CPI M/M: No est v 2.1% prior; Y/Y: No est v 31.8% prior.

- 16:30 (US) Weekly API Crude Oil Inventories.

- 16:45 (NZ) New Zealand Oct Total Card Spending M/M: No est v -0.4% prior; Retail Card Spending M/M: No est v -0.5% prior.

- 16:45 (NZ) New Zealand Sept Net Migration: No est v 460 prior.

- 18:50 (JP) Japan Oct PPI M/M: 0.3%e v 0.3% prior; Y/Y: 2.5%e v 2.7% prior.

- 19:00 (AU) Australia Nov Consumer Inflation Expectation: No est v 4.8% prior.

- 19:01 (UK) Oct RICS House Price Balance: No est v -15.0% prior.

- 19:30 (AU) Australia Oct Employment Change: +19.0Ke v +14.9K prior; Unemployment Rate: 4.4%e v 4.5% prior; Full Time Employment Change: No est v +8.7K prior; Part Time Employment Change: No est v +6.3K prior; Participation Rate: 67.0%e v 67.0% prior.