US govt shutdown may end tomorrow

EU Mid-Market Update: US govt shutdown may end tomorrow; Pandemic high UK unemployment essentially bakes in a rate cut for BOE in Dec but govt budget at end-Nov could transpose situation.

Notes/observations

- One main European data point for the session, UK jobs report. Unemployment hit 5%, highest since pandemic in late 2020. Wages were lower than consensus. The surprise tipped cable (GBP/USD) lower and gave tailwinds to FTSE100 at the open, as chances of a BOE rate cut in December increased (up to 80%). BOE’s Greene spoke after, typically a hawkish dissenter, called the numbers ‘not great', but put a caveat that survey has problems. Greene noted confusion as to why they are seeing precautionary household savings, saying 'at the limits of what we can explain'.

- Elsewhere, light for economic data and busy for ECB speakers. Heard from Elderson, Sleijpen, Kocher and Vujcic; Several reiterating inflation risks are balanced. Vujcic noted frontloading of tariffs is still unwinding.

- Bond yields muted, except UK 10-year which is down 5-6bps on the increase rate cut expectations as mentioned above

- SoftBank sold its entire Nvidia stake for $5.83B in October, boosting Q2 profit through OpenAI-related gains. Nvidia shares slipped premarket. During its call, SoftBank said it can’s answer whether AI is in a bubble and AI volatility is natural as this phase marks only the beginning, as it pivots the Ohio Stargate site toward AI hardware manufacturing and advances its Texas and $500B, 10-GW South Gate data-center projects backed by Japanese megabanks and JP Morgan. To fund its expanding OpenAI commitments, it also sold stakes in T-Mobile, Deutsche Telekom, and Arm, plans hybrid bond-equity financing, and stressed that power access is not a constraint - only supply-chain lead times may slow construction.

- Note: we still wait for jumbo ~$40B Oracle debt offering, which was speculated to be announced few weeks ago

- AMD’s analyst day will center on Lisa Su’s likely lift of the $500B AI data-center forecast and the 6-GW OpenAI deal that could yield up to $100B in revenue, backed by warrants on 160M shares tied to execution milestones. The challenge is proving AMD can manufacture and package that scale amid Nvidia’s next-gen rollout, while maintaining margins and funding growth without dilutive shocks - turning the event into a credibility test, not just an AI hype session.

- Notable Corp News: Vodafone shares rose as Q2 result showed renewed growth in Germany, expansion in Africa, and progress on the Three UK merger, though analysts urge caution until recovery trends hold. Munich Re’s Q3 results showed lower catastrophe losses but revenue softness; 9M net profit reached €5.18B with full-year guidance maintained at €6B amid top-line pressure.

- CoreWeave call highlighted that its first 10,000-plus Nvidia H100 lease - one of the largest GPU contracts in the AI cloud industry - was proactively renewed two quarters before expiration at pricing within 5% of the original deal. Management cut FY25 revenue to $5.05–5.15B and sharply reduced capex to $12–14B from $20–23B, explaining the shift as timing rather than weakness - construction-in-progress will roll into Q1 once delayed power-shell capacity is delivered.

- Asia closed mixed with KOSPI outperforming +0.8%. EU indices +0.1-0.9%. US futures -0.1% to -0.4%. Gold +0.6%, DXY +0.1%; Commodity: Brent +0.5%, WTI +0.5%; Crypto: BTC -0.9%, ETH -1.4%.

Asia

- China PBOC Q3 Monetary Policy Implementation Report: To maintain relatively loose financing conditions; (prior in Q2 'moderately loose monetary policy'); China has foundation to achieve full-year growth target; To give full play to guiding role of monetary policies.

- China to create 'validated end-user' system for fast-tracking US exports of rare earths for non-defense firms - WSJ.

- China State Planner NDRC: Private investment has slowed down this year, faces challenges - financial press.

- Reportedly Japan govt considering allowing use of public funds for nuclear projects - Nikkei.

- Philippine stock index hits lowest since late-late May, 2020.

- Bank of Korea (BOK): Oct 23rd Minutes: One member said close attention should be paid to housing market developments.

Europe

- BOE futures now price 80% chance of Dec rate cut following jobs and wages data v 70% d/d.

- Worldpanel (former Kantar) announces 12 week grocery market share and sales: 4-weeks to Nov 2nd UK grocery inflation at 4.7% v 5.2% prior.

- Sweden Central Bank (Riksbank) Nov Minutes: Confident that rate path still holds up well.

- France EU Min Haddad: Govt priority is to cut public spending and deficit.

Americas

- Senate passes bill to reopen the federal government by vote of 60 to 40 (as expected); the bill provides funding until Jan 30th, 2026.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.64% at 576.48, FTSE +0.87% at 9,872.33, DAX +0.14% at 24,009.75, CAC-40 +0.71% at 8,112.71, IBEX-35 +0.47% at 16,251.50, FTSE MIB +0.78% at 44,236.00, SMI +0.85% at 12,571.08, S&P 500 Futures -0.22%].

Market Focal Points/Key Themes: European indices opened generally higher and advanced through the early part of the session; Poland closed for holiday; among sectors leading the way higher are energy and consumer discretionary; lagging sectors include industrials and financials; US public holiday, bond market closed but stock market open; notable events expected in the upcoming Americas session include AMD analyst meeting.

Equities

- Consumer discretionary: DCC [DCC.UK] +0.5% (earnings), 4imprint [FOUR.UK] +16.5% (trading update), 4imprint [FOUR.UK] +16.5% (trading update), Hilton Food [HFG.UK] -22.0% (trading update).

- Consumer staples: Tesco [TSCO.UK] -2.5% (Worldpanel and UK data).

- Financials: Munich Re [MUV2.DE] -1.0% (earnings).

- Technology: ASML {ASML.NL] +1.5% (CoreWeave guidance; Softbank sold NVDA stake and made cautious comments on AI bubble).

- Telecom: Vodafone [VOD.UK] +4.5% (earnings; raised dividend).

Speakers

- Japan Economic Revitalization Min Kiuchi: Aware that high inflation is weighing on private consumption; A weaker yen is pushing prices up through higher import costs.

- Japan Fin Min Katayama: Difficult to calculate Primary Balance outlook at this point - financial press.

- Malaysia Dep PM Facillah: Continue to evaluate nuclear energy as part of long-term energy transition plan for Malaysia - press.

- ECB's Elderson (Netherlands): Inflation risks are balanced; Current interest rate levels are appropriate; Do not target any specific FX rate.

- ECB's Sleijpen (Netherlands): Fiscal disparities can weaken ECB policy transmission.

- ECB’s Kocher (Austria): We are in a good position on rates; Expectations show not much will happen in next months; Important to be able to react but only when necessary.

- ECB’s Vujcic (Croatia): Reiterates council stance that inflation risks are balanced; Frontloading of tariffs is still unwinding.

- Japan LDP Policy Chief Kobayashi: Economic package proposal focuses on inflation and growth; See gap with fiscal authorities on package size; LDP proposed focusing on multi-year fiscal management.

- BOE’s Greene: Not convinced monetary policy is meaningfully restrictive in UK; May have precautionary saving (household savings).

Economic data

- (UK) Oct BRC Sales Like-For-Like Y/Y: 1.5% v 2.0% prior.

- (IE) Ireland Oct Construction PMI: 48.1 v 43.7 prior.- (JP) Japan Oct Eco Watchers Current Survey: 49.1 v 47.5e [highest since Dec 2024; Outlook Survey: 53.1 v 48.8e.

- (NL) Netherlands Oct CPI M/M: +0.3% v -0.1% prior; Y/Y (final): 3.1% v 3.1% prelim; Final CPI EU Harmonized M/M: 0.6% v 0.6% prelim; Y/Y: 3.0% v 3.0% prelim.

- (UK) SEPT AVERAGE WEEKLY EARNINGS 3M/Y: 4.8% V 5.0%E; Weekly Earnings (ex-Bonus) 3M/Y: 4.6% v 4.6%e; Private Earnings (ex-Bonus) 3M/Y: 4.2% v 4.2%e.

- (UK) SEPT ILO UNEMPLOYMENT RATE: 5.0% V 4.9%E (highest since late 2020); Employment Change 3M/3M: -22K v +5Ke.

- (UK) OCT JOBLESS CLAIMS CHANGE: +29.0K V +25.8K PRIOR; CLAIMANT COUNT RATE: 4.4% V 4.3% PRIOR; Payrolled Employees Monthly Change: -32K v -32K prior.

- (HU) Hungary Oct CPI M/M: 0.0% v 0.2%e; Y/Y: 4.3% v 4.5%e; Core CPI Y/Y: 4.2% v 4.1%e.

- (CZ) Czech Sept Import Price Index Y/Y: -3.3% v -3.3% prior; Export Price Index Y/Y: -2.7% v -2.9% prior.

- (CZ) Czech Oct Final CPI M/M: 0.5% v 0.5%e; Y/Y: 2.5% v 2.5%e.

- (ZA) South Africa Q3 Unemployment Rate: 31.9% v 33.2%e (1st improvement this year).

- (EU) Euro Zone Nov ZEW Expectations Survey: 25.0 v 22.7 prior.

- (DE) Germany Nov ZEW Current Situation Survey: -78.7 V -78.2e; Expectations Survey: 35.8 v 41.0e.

Fixed income issuance

- (PH) Philippines sells PHP22.0B v PHP22.0B indicated 3-month, 6-month and 12-month bill auction results.

- (JP) Japan sells ¥700B vs. ¥700B indicated in 30-year JGB bonds; Avg Yield: 3.1660% v 3.248% prior; Bid-to-cover: 3.12x V 3.41x prior (lower than 12-month AVG 3.38x).

- (ZA) South Africa sells total ZAR3.75B vs. ZAR3.75B indicated in 2042, 2044 and 2048 bonds.

- (NL) Netherlands Debt Agency (DSTA) sells €2.41B vs. €2.0–2.5b indicated range in 2.5% July 2035 DSL bonds; Avg Yield: 2.810% v 2.749% prior.

- (ES) Spain Debt Agency (Tesoro) sells total €2.316B vs. €2.0-3.0B indicated range in 3-month and 9-month bills.

Looking ahead

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills; Avg Yield: % v 6.21% prior; bid-to-cover: x v 1.63x prior (Nov 4th 2025).

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 12-month Bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €10.554 with 49 bids recd).

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

- 06:00 (US) Oct NFIB Small Business Optimism: No est v 98.8 prior.

- 06:00 (BR) Brazil Central Bank (BCB) Oct Minutes.

- 06:00 (FI) Finland to sell combined €2.0B in 6-month and 9-month Bills.

- 06:00 (ZA) South Africa Sept Manufacturing Production M/M: No est v 0.4% prior; Y/Y: No est v -1.5% prior.

- 06:30 (CL) Chile Central Bank Economist Survey.

- 06:30 (EU) ESM to sell €B in 3-month Bills; Avg Yield: % v 1.956% prior; Bid-to-cover: x v 3.0x prior (Oct 7th 2025).

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 07:00 (BR) Brazil Oct IBGE Inflation IPCA M/M: No est v 0.5% prior; Y/Y: No est v 5.2% prior.

- 07:00 (MX) Mexico Sept Industrial Production M/M: No est v -0.3% prior; Y/Y: No est v -3.6% prior; Manufacturing Production Y/Y: No est v -3.1% prior.

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

- (US) ADP Preliminary Employment Change for 4-weeks ending Oct 18th: K v +14.3K prior.

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

- 18:00 (KR) South Korea Oct Unemployment rate : No est v 2.5% prior.

- 18:50 (JP) Japan Oct M3 Money Supply Y/Y: No est v 1.0% prior; M2 Money Supply Y/Y: No est v 1.6% prior.

- 19:30 (AU) Australia Q3 Home Loans Value Q/Q: No est v 2.0% prior; Owner-Occupier Loan Value Q/Q: No est v 2.4% prior; Investor Loan Value Q/Q: No est v 1.4% prior.

- 22:00 (KR) South Korea Sept M2 Money Supply M/M: No est v 1.3% prior; L Money Supply M/M: No est v 0.6% prior.

-21:30 (HK) Hong Kong to sell HK$1.5B in 1-year Bonds.