Trump cancels trade talks with Canada after "fake" video

EU mid-market update: France might be heading to new round of political turmoil next week after Moody’s rating update tonight; Trump cancels trade talks with Canada after "fake" video.

Notes/observations

- European indices are tipped in the red as gold still hovers near 4,000 and US dollar gains some momentum.

- Eurozone and German PMIs exceeded forecasts, boosting the euro to a three-week high versus sterling. UK PMIs were better as well, with manufacturing coming in above all estimates.

- France’s Socialist Party has reportedly threatened to bring down Macron’s government by Monday if their demands to raise taxes on billionaires are not met, warning they would file a no-confidence motion early next week. The standoff comes ahead of the November 4th vote on the income section of the 2026 budget, with the government’s survival hinging on whether the Socialists unite with both the far-left and far-right to defeat it.

- Trump/Xi meeting set for Oct 30th APEC summit, expected to yield limited progress; US preparing new tech export curbs and 100% tariffs from Nov 1st if no deal. Polymarket pricing only 10-15% tariffs to be implemented after Nov 1st, so huge room for surprise.

- Canadian dollar slips after Trump ends trade talks with Canada, reacting sensitively to an advertisement released in Canada about Reagan talking negatively on tariffs.

- US Sept CPI in focus after being delayed from Oct 15th; Cleveland Fed’s Inflation Nowcast still sees Sept CPI Y/Y to re-accelerate again to 3.0% from 2.9%, but below 3.1%e consensus; Sees Oct CPI Y/Y (to be out next month if US govt reopens) to stay unchanged at 3.0%.

- Note on why inflation specifically is being released during govt shutdown. BLS is recalling a limited number of essential staff to complete and publish the report. The primary reason is to enable the Social Security Administration (SSA) to meet its statutory deadline for calculating and announcing the annual cost-of-living adjustment (COLA) for Social Security and Supplemental Security Income (SSI) benefits, which takes effect in January 2026. The COLA is based on third-quarter CPI data (including September), and the SSA must finalize it by early November. Without this release, timely benefit adjustments for over 72 million recipients could be delayed or disrupted.

- Next blockbuster week preview: With the government shutdown still halting official releases, next week’s U.S. data flow will be thin, limited to the Dallas Fed survey on Monday, Richmond Fed on Tuesday, Chicago PMI on Friday, Case-Shiller home prices and Consumer Confidence on Tuesday. The macro spotlight instead shifts to the Fed meeting on Wednesday, where markets expect a rate cut and potential end of QT, setting up a volatile 72-hour stretch that also includes major tech earnings (GOOGL, META, MSFT, AAPL, AMZN, all potentially with formal FY26 Capex outlook), the BOJ decision, and the Trump-Xi summit in South Korea.

- Also, 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.

- Asia closed mixed with KOSPI outperforming +2.5%. EU indices -0.2% to -0.5%. US futures +0.1-0.4%. Gold -1.3%, DXY +0.1%; Commodity: Brent -0.2%, WTI -0.2%; Crypto: BTC +1.7%, ETH +1.9%.

Asia

- Japan Sept National CPI Y/Y: 2.9% v 2.9%e; CPI (ex-fresh food) Y/Y: 2.9% v 2.9%e; data keeping hopes of a December BOJ hike alive (**Note: BOJ meets next week and expected to keep policy steady).

- Japan Oct Preliminary PMI Manufacturing: 48.3e v 48.5 prior (4th month of contraction).

- Australia Oct Preliminary PMI Manufacturing: 49.7 v 51.4 prior (1st contraction in 10 months).

- China PBOC Advisor Huang Yiping says China 'has to do something major' for the economy. China needed a bolder spending package to mend the finances of households and companies.

Global conflict/tensions

- Russian Pres Putin stated that Russia wanted to continue the dialogue with US; Meeting was with US was proposed by Trump, the summit needed to be prepared. Dialogue was always better than war. New US sanctions were an attempt to put pressure on Russia.

- Two Russian jets said to have violated Lithuanian airspace for 18 seconds. Eurofighter Typhoon jets, operating under Nato’s Baltic air policing mission, were scrambled to intercept the aircraft as they flew from Kaliningrad.

Europe

- UK Oct GfK Consumer Confidence: -17 v -20e.

- UK Labour suffers seismic by-election defeat to Plaid Cymru in Caerphilly.

Trade

- President Trump terminates all trade negotiations with Canada citing use of fraudulent advertising on tariffs.

Speakers/fixed income/FX/commodities/erratum.

Equities

Indices [Stoxx600 -0.16% at 573.48, FTSE -0.15% at 9,563, DAX -0.12% at 24,143, CAC-40 -0.48% at 8,181, IBEX-35 -0.49% at 15,734, FTSE MIB -0.32% at 42,600, SMI -0.10% at 12,546, S&P 500 Futures +0.22%].

Market focal points/key themes: European indices opened generally higher but turned around quickly to trade in the red; outperforming sectors include industrials and financials; among underperforming sectors are real estate and utilites; focus on US CPI later in the day; earnings expected in the upcoming US session include Procter & Gamble and General Dynamics.

Equities

- Consumer discretionary: Kering [KER.FR] -3.5% (analyst downgrade), Accor [AC.FR] +5.0% (earnings).

- Energy: Eni [ENI.IT] +2.5% (earnings; buyback).

- Financials: Natwest [NWG.UK] +4.0% (earnings).

- Healthcare: Sanofi [SAN.FR] +2.0% (earnings), GSK [GSK.UK] -1.5% (FDA approval).

- Industrials: Signify [LIGHT.NL] -5.5% (earnings; outlook cut).

- Technology: ASML [ASML.NL] +1.5% (Intel results and 14A/18A update).

- Materials: Norsk Hydro [NHY.NO] -3.0% (earnings).

Speakers

- French Socialists said to have threatened to topple the govt by Mon, Oct 27th if budget demands are not met.

- Japan PM Takaichi: Principle of "economy first, then fiscal policy" would be foundation of our approach. Govt finances were dependent on economy.

- US and Japan said to agree on cooperation in area that include AI and 6G.

- China Pres Xi confirmed he would attend APEC summit Oct 30-Nov 1st (**Note: White House Pres Sec stated that Trump would meet with China Pres Xi during the visit).

Currencies/fixed income

- USD kept a steady hand during a quiet EU session. Focus turned to trade talks with a potential Trump-Xi meeting taking place in Malaysia. Despite the govt shutdown Sept US CPI data to be released today ahead of next week FOMC rate decision.

- EUR/USD stayed above the 1.16 level as better German, French and EU PMI data helped to put a floor in.

- GBP/USD saw some initial gains following better UK Sept Retail Sales data as the pair tested 1.3333 but could not muster any more momentum even with better PMI data.

- USD/JPY tested above the 153 level as Japan PM Takaichi told her parliament she would pursue expansive fiscal policy that was strategic.

- USD/CAD at 1.4020 after President Trump sparked a selloff in the Canadian dollar by posting that all trade negotiations with Canada “are hereby terminated.

- 10-year German Bund yield at 2.60%, France 10-year Oat at 3.40% and 10-year Gilt yield at 4.41% 10-year Treasury yield: 4.00%.

Economic data

- (FI) Finland Sept PPI M/M: -0.4% v +0.8% prior; Y/y:-0.3% v +0.1% prior.

- (JP) Japan Sept Nationwide Dept Sales Y/Y: 1.4% v 2.6% prior; Tokyo Dept Store Sales Y/Y: +2.5% v -2.3% prior.

- (UK) Sept Retail Sales (ex-auto/fuel) M/M: +0.6% v -0.6%e; Y/Y: 2.3% v 0.6%e.

- (UK) Sept Retail Sales M/M: +0.5% v -0.4%e; Y/Y: 1.5% v 0.4%e.

- (SE) Sweden Sept PPI M/M: -0.7% v +0.5% prior; Y/Y: +0.5% v -0.7% prior.

- (FR) France Oct Consumer Confidence: 90 v 86e.

- (ES) Spain Sept PPI M/M: -0.4% v -0.6% prior; Y/Y: +0.3% v -1.6% prior.

- (ES) Spain Q3 Unemployment Rate: 10.5% v 10.1%e.

- (CZ) Czech Oct Consumer Confidence: 107.4 v 103.3e; Business Confidence: 103.4 v 101.4e.

- (FR) France Oct Preliminary Manufacturing PMI: 48.3 v 48.2e (2nd month of contraction); Services PMI: 47.1 v 48.7e; Composite PMI: 46.8 v 48.4e.

- (DE) Germany Oct Preliminary Manufacturing PMI: 49.6 v 49.5e (40th month of contraction); Services PMI: 54.5 v 51.0e; Composite PMI: 53.8 v 51.5e.

- (CN) Weekly Shanghai Copper Inventories (SHFE): K v 110.2K tons prior.

- (TH) Thailand May Foreign Reserves w/e Oct 17th: $275.2B v $272.2B prior.

- (EU) Euro Zone Oct Preliminary Manufacturing PMI: 50.0 v 49.8e (avoids a 2nd month of contraction); Services PMI: 52.6 v 51.2e; Composite PMI: 52.2 v 51.1e- (RU) Russia Narrow Money Supply w/e Oct 17th (RUB): 19.08T v 19.02T prior.

- (UK) Oct Preliminary Manufacturing PMI: 49.6 v 46.6e (13th month of contraction); Services PMI: 51.1 v 51.0e; Composite PMI: 51.1 v 50.5e.

Fixed income issuance

- None seen.

Looking ahead

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

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2033, 2046 and 2050 Bonds.

- 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).

- 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to cut Key Rate by 100bps to 16.00%.

- 07:30 (BR) Brazil Sept Current Account Balance: -$7.7Be v -$4.7B prior; Foreign Direct Investment (FDI): $6.3Be v $8.0B prior.

- 07:30 (IN) India Forex Reserve w/e Oct 17th: No est v $697.8B prior.

- 08:00 (CL) Chile Sept PPI M/M: No est v 0.3% prior.

- 08:00 (BR) Brazil Oct IBGE Inflation IPCA-15 M/M: 0.2%e v 0.5% prior; Y/Y: 5.0%e v 5.3% prior.

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

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

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

- 08:30 (US) Sept CPI M/M: 0.4%e v 0.4% prior; Y/Y: 3.1%e v 2.9% prior.

- 08:30 (US) Sept CPI (ex-food/energy) M/M: 0.3%e v 0.3% prior; Y/Y: 3.1%e v 3.1% prior.

- 08:30 (US) Sept CPI Index NSA: 325.010e v 323.976 prior; CPI Core Index : 330.781e v 329.793 prior.

- 08:30 (US) Aug Real Avg Hourly Earning Y/Y: No est v 0.7% prior; Avg Weekly Earnings Y/Y: No est v 0.4 prior.

- 09:00 (BE) Belgium Oct Business Confidence: No est v -1 prior.

- 09:45 (US) Oct Preliminary S&P Manufacturing PMI: 51.9e v 52.0 prior; Services PMI: 53.5e v 54.2 prior; Composite PMI: 53.1e v 53.9 prior.

- 10:00 (US) Sept New Home Sales: 708Ke v 800K prior.

- 10:00 (US) Oct Final University of Michigan Confidence: 54.6e v 55.0 prelim.

- 11:00 (US) Oct Kansas City Fed Services Activity: No est v -9 prior.

- 11:00 (EU) Potential sovereign ratings after European close (S&P on Belgium, Slovenia; Moody’s on France; Fitch on Lithuania.

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