Tesla's new product likely to be unveiled today

EU mid-market update: Quiet session as Israel-Hamas War hits 2 year mark; Japan political path more certain than France; Tesla's new product likely to be unveiled today.

Notes/observations

- Flat to mixed performance across Europe, follows a quiet Asian session as several markets were closed for holidays. French CAC-40 continues dipped in the red after PM Lecornu’s resignation amid budget disputes. Nikkei extended gains after LDP leadership result.

- German DAX is underperforming after a miss in German Factory Orders for Aug, down -0.8% MoM, showing weaker demand and delayed recovery. Bunds are steady, however. Focus on OAT-Bund 10-year spread approaching key level 90bps due to French political uncertainty.

- France faces its gravest political paralysis in Macron’s presidency, with the right and left refusing to collaborate. Signs of collapse within Macron’s camp: Gabriel Attal, former PM, declared he “no longer understands Macron’s decisions,” calling for an independent negotiator to form a new government. Édouard Philippe (former PM) openly urged Macron to call an early presidential election once the budget is passed, saying it would “honor” the president. He confirmed refusing the post of Defense Minister and criticized the “collapse of the State.”

- On US govt shutdown front, Axios reports that furloughed federal workers are not guaranteed back pay for their forced time off during the government shutdown, as we are nearing Oct 10th - US govt workers' official pay date.

- Trump said he has “sort of made a decision” on whether to supply Tomahawk missiles to Ukraine, noting he wants clarity on their intended use, after Putin warned that such a move would be dangerous and mark a new stage of escalation.

- Looking forward, a Tesla announced is expected after a video tease two days ago spurred some buy the rumor mentality. Tesla reportedly set to unveil a stripped-down, LFP-based Model Y as a cost-down response to the loss of the $7,500 EV credit, cutting features like light bars and glass roofs to stay competitive against mid-$30K rivals like the Equinox EV and Ioniq 5.

- Worth noting that today is the anniversary of Israel-Hamas conflict.

- Asia closed mixed with ASX200 underperforming -0.3%. EU indices -0.1% to +0.3%. US futures -0.2%. Gold -0.2%, DXY +0.3%; Commodity: Brent -0.5%, WTI -0.5%; Crypto: BTC 0.0%, ETH +2.2%.

Asia

- Various Far East holidays continue; China, Korea, HK all closed.

- China Sept Foreign Reserves $3.339T v $3.322T prior; Gold reserves: 74.06M v 74.02M troy oz prior (11th straight month of resumed purchases).

- Japan 30-year JGB auction itself came in at a healthy 3.41x bid-to-cover; Yield curve flattened.

- Some Komeito members (part of LDP coalition) said to be calling for an exit from the coalition after Takaichi was elected as new LDP leader.

- Takaichi adviser Honda suggested a "rate hike in October was probably too difficult.

Taiwan

- Taiwan Pres Lai expressed hope for continued Trump support to deter China.

Global conflict/tensions

- Hamas said to demand release of Oct 7 attackers in exchange for hostages.

- President Trump stated that had sort of made a decision on supplying Tomahawk missiles to Ukraine. Would want to know what the Tomahawks would be used for. Did not want to escalate Russia's war against Ukraine.

Europe

- French Pres Macron gave PM Lecornu a 48 hour deadline another chance to form government.

Americas

- Fed's Schmid (voter in 2025; non-voter in 2026) noted that monetary policy was appropriately calibrated and only slightly restrictive.

- US House Speaker Johnson saying it was doubtful the government shutdown would end this week.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.04% at 570.04, FTSE +0.09% at 9,487.80, DAX -0.07% at 24,379.15, CAC-40 -0.01% at 7,970.81, IBEX-35 +0.13% at 15,592.72, FTSE MIB +0.20% at 43,232.00, SMI -0.17% at 12,534.21, S&P 500 Futures -0.08%].

Market focal points/Key themes: European indices opened modestly lower but then swung to be a little positive later in the session; geopolitics seen weighing on risk appetite; Israel closed for holiday; among better performing sectors are consumer discretionary and industrials; underperforming sectors include materials and real estate; no major earnings expected in the upcoming US session.

Equities

- Consumer discretionary: HelloFresh [HFG.DE] -6.5% (US FSIS issued a public health alert for FSIS-inspected ready-to-eat meals produced by FreshRealm containing a Food and Drug Administration (FDA) regulated ingredient, specifically spinach, that may be contaminated with Listeria monocytogenes (Lm)).

- Consumer staples: Imperial Brands [IMB.UK] +2.5% (trading update).

- Energy: Shell [SHEL.UK] +1.5% (trading update).

- Healthcare: Bayer [BAYN.DE] -4.0% (trial update).

- Industrials: Rheinmetall [RHM.DE] -1.5% (pre-close call with analysts; Trump comment on Tomahawk), Volvo AB [VOLVA.SE] -3.0% (Trump: Beginning November 1st, 2025, all Medium and Heavy Duty Trucks coming into the United States from other countries will be tariffed at the rate of 25%), Renault [RNO.FR] +2.0% (potential job cuts).

Speakers

- Austria WIFO Quarterly Economic Forecasts raised 2025 GDP growth from 0.1% to 0.3% and raised 2026 GDP growth forecast from 1.0% to 1.1%. WIFO also raised 2025 CPI from 2.9% to 3.5% and raised 2026 CPI from 2.2% to 2.4%.

- World Bank raised China 2025 GDP growth forecast from 4.2% to 4.8% and raised 2026 GDP growth forecast from 4.0% to 4.2%.

- Japan PM-elect Takaichi noted that discussed three points, shared agreements on two during meeting with Komeito Party (currently part of govt coalition).

- Japan ruling party member Ken Saito noted that PM-elect Takaichi explained her stance on our concerns; Yet to make agreement on coalition with LDP
Taiwan Central Bank (CBC) stated that the US had not asked us to appreciate Taiwan Dollar (NT$).

- Russia Dep PM Novak noted OPEC+ members did not discuss increasing quotas higher than 137K bpd in Nov.

Currencies/fixed income

- USD/JPY was edging towards the 151 area as markets were still waiting for Japan PM-elect Takaichi’s crucial pick for Finance Minister. Takaichi adviser Etsuro Honda suggested a "rate hike in October was probably too difficult. Takaichi’s elevation of position raised policy uncertainty particularly to the timing on a BOJ rate hike. Speculation of a Oct BOJ rate remained around 20%. Dealers noted that based on hard financial and economic data, an October interest rate hike was almost entirely justified. The biggest obstacle to an October hike is politics.

- EUR/USD again moved back below the 1.17 as French politics continued to be in focus. French President Macron gave his PM 48 hours to put together another govt

- Spot Gold unable to bust above the $4,000/oz as the US govt shutdown continued into the 2nd week.

- 10-year German Bund yield at 2.73%, France 10-year Oat at 3.59% and 10-year Gilt yield at 4.75% 10-year Treasury yield: 4.17%.

Economic data

- (SE) Sweden Sept Maklarstatistik Housing Prices: -0.2% v -0.5% prior.

- (NL) Netherlands Sept CPI M/M: -0.1% v +0.2% prior; Y/Y (final): 3.3% v 3.3% prelim.

- (NL) Netherlands Sept; CPI EU Harmonized M/M: 0.3% v -0.3% prelim; Y/Y: 3.0% v 3.0% prelim.

- (DE) Germany Aug Factory Orders M/M:-0.8 % v 1.2%e; Y/Y: 1.5% v 3.1%e.

- (UK) Sept Halifax House Price Index M/M: -0.3% v +0.3% prior; Y/Y: 1.3% V 2.2% prior.

- (SE) Sweden Sept Budget Balance (SEK): 2.1B v 42.9B prior.

- (FI) Finland Aug Preliminary Trade Balance: -€0.7B v +€1.4B prior.

- (NO) Norway Aug Industrial Production M/M: 1.3% v 0.4% prior; Y/Y: +1.7% v -3.4% prior;

- (NO) Norway Aug Manufacturing Production M/M: 0.7% v 0.4% prior; Y/Y: 5.0% v 1.6% prior.

- (ZA) South Africa Sept Net Reserves: $67.9B v $65.9B prior; Gross Reserves: $69.7B v $70.4B prior.

- (HU) Hungary Aug Industrial Production M/M: -2.3% v -1.2%e ; Y/Y: -4.6% v -2.8%e.

- (FR) France Aug Trade Balance: -€5.5B v -€5.7B prior; Current Account Balance: +€1.5B v -€1.9B prior.

- (CZ) Czech Aug Industrial Output Y/Y: -4.2% v +0.6%e; Construction Output Y/Y: 17.1% v 10.2% prior.

- (CZ) Czech Aug Trade Balance (CZK): 5.6B v 4.2Be.

- (MY) Malaysia end-Sept Foreign Reserves: $123.6B v $122.8B prior.

- (CH) Swiss Sept Foreign Currency Reserves (CHF): 726.7B v 715.2B prior.

- (AT) Austria Sept Wholesale Price Index M/M: 0.3% v -0.6% prior; Y/Y: 1.2% v 0.2% prior.

- (TW) Taiwan Sept Foreign Reserves: $602.9B v $597.4B prior.

- (IS) Iceland Sept Preliminary Trade Balance (ISK): -45.6B v -33.6B prior.

- (SG) Singapore Sept Foreign Reserves: $393.1B v $391.3B prior.

Fixed Income Issuance:

- (EU) European Union opened its book to sell EUR-denominated 7-year and 15-year NGEU bonds via syndicate.

- (ES) Spain Debt Agency (Tesoro) sold total €5.63B vs. €5.0-6.0B indicated range in 6-month and 12-month bills.

- (UK) DMO sold £1.25B in 0.125% 2028 Gilt via tender; Avg Yield: 3.783%; bid-to-cover: 3.84x, Tail: 0.4bps.

- (AT) Austria Debt Agency (AFFA) sold €1.15B vs. €1.15B indicated in 2035 and 2053 RAGB bonds.

Looking ahead

- (MX) Mexico Citi Survey of Economists.

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

- 05:15 (CH) Switzerland to sell 3-month Bills.

- 05:30 (DE) Germany to sell €4.5B in 2.2% Oct 2030 BOBL.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €2.4B in 3-month, 6-month and 12-month bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2038, 2039 and 2042 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

- 06:15 (NO) Norway Central bank (Norges) Gov Bache.

- 06:30 (EU) ESM to sell €1.1B in 3-month Bills.

- 07:00 (BR) Brazil Sept FGV Inflation IGP-DI M/M: 0.4%e v 0.2% prior; Y/Y: 2.4%e v 3.0% prior.

- 07:30 (CL) Chile Sept Trade Balance: $0.9Be v $0.9B prior; Exports: No est v $7.9B prior; Imports: No est v $7.0B prior; Copper Exports: No est v $4.2B prior.

- 07:30 (CL) Chile Sept International Reserves: No est v $46.8B prior.

- 08:00 (PL) Poland Sept Official Reserves: No est v 260.9B prior.

- 08:00 (CL) Chile Aug Nominal Wage Y/Y: No est v 6.4% prior.

- 08:00 (MX) Mexico Sept Vehicle Production: No est v 349.9K prior; Vehicle Exports: No est v 296.8K prior.

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

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:30 (US) Aug Trade Balance: -$61.0Be v -$78.3B prior; Exports M/M: No est v 0.3% prior; Imports M/M: No est v 5.9% prior.

- 08:30 (CA) Canada Aug Int'l Merchandise Trade (CAD): -5.6Be v -4.9B prior.

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

- 09:00 (RU) Russia Sept Official Reserve Assets: No est v $689.5B prior.

- 10:00 (CA) Canada Sept Ivey Purchasing Managers Index: No est v 50.1 prior.

- 10:00 (US) Fed’s Bostic.

- 10:30 (TR) Turkey Sept Cash Budget Balance (TRY): No est v 84.2B prior.

- 10:30 (US) Fed’s Miran.

- 11:00 (US) Sept NY Fed 1-year Inflation Expectations: No est v 3.2% prior.

- 11:30 (US) Fed’s Kashkari.

- 11:30 (US) Treasury to sell 6-week bills.

- 12:00 (DE) ECB’s Nagel (Germany).

- 12:10 (EU) ECB Chief Lagarde.

- 13:00 (US) Treasury to sell 3-Year Notes.

- 15:00 (US) Aug Consumer Credit: $14.0Be v $16.0B prior.

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

- 19:00 (CO) Colombia Sept CPI M/M: 0.3%e v 0.2% prior; Y/Y: 5.1%e v 5.1% prior.

- 19:00 (CO) Colombia Sept CPI Core M/M: 0.3%e v 0.1% prior; Y/Y: 4.8%e v 4.9% prior.

- 19:30 (JP) Japan Aug Labor Cash Earnings Y/Y: 2.6%e v 3.4% prior (revised from 4.1%); Real Cash Earnings Y/Y: -0.5%e v -0.2% prior (revised from 0.5%); Cash Earnings - Same Sample Base Y/Y: 2.7%e v 3.1% prior (revised from 2.9%); Scheduled Full-Time Pay - Same Base Y/Y: 2.5%e v 2.4% prior.

- 19:50 (JP) Japan Aug Current Account Balance: ¥3.513Te v ¥2.684T prior; Adjusted Current Account Balance: ¥2.443Tet v ¥1.882T prior; Trade Balance (BoP Basis): -¥111.5Be v -¥189.4B prior.

- 21:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to cut Official Cash Rate (OCR) by 25bps to 2.75%.

- 21:00 (PH) Philippines Aug Unemployment Rate: No est v 5.3% prior.

- 23:00 (ID) Indonesia Sept Consumer Confidence: No est v 117.2 prior.