Trump boosts Canada tariffs as US-China trade deal nears

EU mid-market update: Trump boosts Canada tariffs as US-China trade deal nears; Global markets rally ahead of APEC and Fed meeting; Oracle debt offering and hyperscalers' capex guidance this week.

Notes/observations

- Markets surged on easing trade tensions: S&P futures nearly up 1%, Nikkei +2% above 50K, Kospi and Shanghai at records, crypto and Bitcoin up to $116K as gold slipped. Europe itself is mixed.

- Fed expected to cut rates 25 bps Wednesday, possibly ending QT; BOJ and ECB decisions due later in the week.

- Trump raised Canada tariffs by 10% after Ontario’s “fraudulent” Reagan ad but focus shifts to Trump-Xi talks at APEC in South Korea (Oct 30th-Nov 1st). Negotiators announced a framework deal likely to avert 100% tariffs and delay China’s rare earth restrictions, with soybean purchases set to resume.

- Trump meets Japan PM Takaichi in Tokyo (Oct 27-29th) ahead of APEC; Automakers may announce new US imports. South Korea talks remain deadlocked over $350B investment. Brazil’s Lula touted a near-term US-Brazil trade deal.

- In politics, France faces political strain as Moody’s cut its outlook to negative; Socialists' Faure warned that rejecting the “Zucman tax” on high wealth would be a “casus belli”, suggesting it could trigger a political crisis or even parliamentary dissolution by the end of the week, if the government refuses concessions on tax justice. Elsewhere, Argentina’s Milei won midterms, bolstering his reform mandate and securing a potential $20B US FX swap.

- A blockbuster week of events and news coming up with the Fed’s FOMC meeting on Wednesday, where markets expect another rate cut and potential end of QT, kicking off a three-day stretch that includes five Mag 7 earnings (GOOGL, META, MSFT, AAPL, AMZN, all potentially with formal FY26 Capex outlook), the BOJ and ECB decisions, and the Trump-Xi meeting in South Korea.

- On US govt shutdown: ACA Open Enrollment is set to begin on Nov 1 without clarity on the fate of expiring federal subsidies, as the government shutdown drags on with little sign of resolution while Trump remains overseas most of the week. ~13,000 air traffic controllers and 40,000 TSA workers are also expected to miss paychecks on Oct 28, following the first round of delayed federal payments last week. With the government shutdown still halting official releases, this week’s U.S. data flow will be thin, limited to the Dallas Fed survey on Monday, Richmond Fed , Case-Shiller home prices and Consumer Confidence on Tuesday and Chicago PMI on Friday.

- Reminder: Oracle’s reported $38 billion debt launch as soon as Monday will be the first large-scale test of whether AI data center cash flows are truly securitizable. If the book builds quickly and pricing stays near the initial +250 bps talk, it may validate the AI financing model for now.

- Asia closed higher with KOSPI outperforming +2.6%. EU indices -0.5% to +0.5%. US futures +0.5-1.1%. Gold -1.8%, DXY -0.1%; Commodity: Brent -0.8%, WTI -0.8%; Crypto: BTC +2.4%, ETH +4.6%.

Asia

- Japan Sept PPI Services Y/Y: 3.0% v 2.7%e.

- China Sept Industrial Profits Y/Y: 3.2% v 20.4% prior; YTD Y/Y: No est v 0.9% prior.

Europe

- ECB Escriva (Spain) reiterates the current interest level wass appropriate.

- ECB's Villeroy (France) stressed that was absolutely necessary for French budget deficit to get within 3% between now and 2029. The 3% is not just a European rule — it’s above all the threshold to finally stabilize public debt.

- France vote on wealth tax delayed.

- Moody's cut France sovereign credit outlook to Negative from Stable; affirmed Aa3 sovereign rating.

Americas

- European Rating agency Scope cut United States of America sovereign rating to AA-; Raises outlook from Negative to stable.

- Treasury Sec Bessent: Reiterates down to 5 candidates for Fed search; Hope to present good slate to Trump after Thanksgiving.

- Argentina President Javier Milei’s Freedom Advances party secured nearly 41% of the national vote, more than doubling its congressional representation.

Trade

- Pres Trump confirmed nothing has been agreed to yet on China, but felt good- Treasury Sec Bessent stated that had a good meeting with China and

discussed a wide range of things including tariffs and trade and rare earths.

- President Trump announced that was immediately raising tariffs on Canada by another 10% because of 'fraudulent' ad.

- President Trump signed deals with Thailand, Malaysia, Cambodia and Vietnam.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.01% at 575.76, FTSE -0.09% at 9,637.00, DAX +0.06% at 24,259.01, CAC-40 -0.24% at 8,206.13, IBEX-35 +0.28% at 15,901.50, FTSE MIB +0.47% at 42,688.00, SMI -0.45% at 12,498.57, S&P 500 Futures +0.76%].

Market Focal Points/Key Themes: European indices opened mixed and failed to gain direction in the early part of the session; ongoing political tensions in France prevent risk appetite from taking off amid optimism on US-China trade; outperforming sectors include technology and banks; among underperforming sectors are utilities and real estate; earnings expected in the upcoming US session include Welltower.

Equities

- Consumer discretionary: Ocado Group [OCDO.UK] -2.0% (Barclays note saying Autostore's FlexBins might be a sign of more competition for Ocado).

- Energy: Galp Energia [GALP.PT] +3.0% (earnings)- Financials: Sydbank [SYDB.DK] +6.0% (merger), HSBC [HSBA.UK] -1.5% (provision).

- Healthcare: Novartis [NOVN.CH] -1.5% (acquires Avidity).

- Industrials: Porsche [P911.DE] +1.0% (earnings).

Speakers

- UK Chancellor Reeves noted that was looking at both taxes and spending to keep fiscal rules; Taking Trump seriously was key to US trade deal-

Poland Central Bank (NBP) Kotecki noted that talk about rate cuts should return early 2026.

- South Africa Pres Ramaphosa stated that was seeking to diversify markets due to tariffs l -

- RBA Gov Bullock stated that she believed policy remained a little bit restrictive; Board was cautious on monetary policy; Think we’re in ‘pretty good’ position on jobs and CPI.

- China Foreign Ministry Official Gua confirmed US and China reached basic consensus.

- China PBOC Gov Pan Gongsheng reiterated stance to implement properly loose monetary policy; keep social financing condition relatively loose.

- Canada PM Carney stated that had not had contact with Trump since Thursday; Ready to sit down when US is ready was sit down.

Currencies/fixed income

- USD was steady in quiet trade ahead of a busy week on the economic data front, key central bank rate decisions and corporate earnings. Overall sentiment unfazed by the thawing of US-China trade tensions ahead of an expected Trump-Xi meeting this week. Fed was also expected to continue its easing and deliver another 25bps rate cut on Wed.

- EUR/USD staying above the 1.16 level as the ECB was expected to keep policy steady on Thurs. ECB rhetoric has been quite subdued on the need to adjust rates anytime soon.

- USD/JPY continued to probe around the 153 area. BOJ meets on Thurs and was expected to keep policy steady. Markets are looking for a potential rate hike in Dec.

- 10-year German Bund yield at 2.63%, France 10-year Oat at 3.43% and 10-year Gilt yield at 4.44% 10-year Treasury yield: 4.03%.

Economic data

- (FI) Finland Oct Consumer Confidence: -7.6 v -6.6 prior; Business Confidence: -4 v +3 prior.

- (SE) Sweden Sept Household Lending Y/Y: 2.8% v 2.7% prior.

- (NO) Norway Sept Credit Indicator Growth Y/Y: 3.8% v 4.0% prior.

- (DK) Denmark Sept Retail Sales M/M: 0.0% v 0.3% prior; Y/Y: 3.5% v 2.6% prior.

- (TR) Turkey Oct Real Sector Confidence: 102.0 v 100.8 prior; Real Sector Confidence (unadj): 1000.8 v 100.2 prior; Capacity Utilization: 74.2% v 74.0% prior.

- (TR) Turkey Sept Unemployment Rate: 8.6% v 8.6% prior.

- (TW) Taiwan Sept Unemployment Rate 3.4% v 3.4%e.

- (HK) Hong Kong Sept Trade Balance (HKD): -50.2B -49.5Be; Exports Y/Y: 16.1% v 15.4%e; Imports Y/Y: 13.6% v 13.5%e.

- (DE) Germany Oct IFO Business Climate: 88.4 v 88.0e; Current Assessment: 85.3 v 86.0e; Expectations Survey: 91.6 v 90.0e.

- (EU) Euro Zone Sept M3 Money Supply Y/Y: 2.8% v 2.7%e.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 471.5B v 473.9B prior; Domestic Sight Deposits: 48.7B v 451.1B prior.

Fixed income issuance

- None seen.

Looking ahead

- 06:00 (EU) Daily Euribor Fixing.

- 06:25 (EU) Daily ECB Liquidity Stats.

- 07:00 (UK) Oct CBI Retailing Reported Sales: No est v -29 prior; Total Distribution Reported Sales: No est v -35 prior.

- 07:00 (FR) France Q3 Total Jobseekers: No est v 2.999M prior.

- 07:00 (IL) Israel Sept Trade Balance: No est v -$3.5B prior.

- 07:00 (IL) Israel Sept Unemployment Rate: No est v 2.9% prior; Broad Unemployment Rate: No est v 4.1% prior.

- 07:00 (BR) Brazil Oct FGV Consumer Confidence: No est v 87.5 prior.

- 07:00 (BE) Belgium Debt Agency (BDA) to sell €2.5-3.0B in 2030, 2033 and 2035 OLO Bonds.

- 07:00 (IL) Israel to sell combined ILS2.5B in 2028, 2029, 2033, 2035, 2042 and 2052 bonds.

- 07:00 (RO) Romania to sell combined RON1.1B in 2029 and 2033 bonds.

- 07:00 (NO) Norway announcement on upcoming bond issuance (held on Wed).

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (MX) Mexico Sept Trade Balance: No est v -$1.9B prior- 09:00 (UK) Daily Baltic Dry Bulk Index.

- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 10:00 (FR) France Debt Agency (AFT) to sell €B in 3-month, 6-month and 12-month bills.

- 10:30 (US) Oct Dallas Fed Manufacturing Activity: -7.8e v -8.7 prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills- 13:00 (US) Treasury to sell 2-year and 5-year Notes.

- 16:00 (US) Weekly Crop Progress Report.

- 17:00 (KR) South Korea Oct Consumer Confidence: No est v 110.1 prior.

- 17:45 (NZ) New Zealand Sept Filled Jobs M/M: No est v 0.2% prior.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 84.0 prior.

- 19:00 (KR) South Korea Q3 Advance GDP Q/Q: 1.0%e v 0.7% prior; Y/Y: 1.5%e v 0.6% prior.

- 20:01 (UK) Oct BRC Shop Price Index Y/Y: 1.6%e v 1.4% prior.

- 22:00 (KR) South Korea to sell KRW500B in 20-year Bonds; Avg Yield: % v 2.803% prior; bid-to-cover: x v 2.81x prior (Sept 8th 2025).

- 23:00 (TH) Thailand Central Bank to sell THB65B in 3-month bills.