- US stocks predominantly closed in the green with outperformance in small caps, while the Nasdaq gave up its early gains as tech sold off. Most industries gained with financials leading the advances although Tech and Energy lagged and were the only sectors to close lower with the latter weighed on by tumbling crude prices in the aftermath of Israel's response to Iran which was seen as 'moderate' as it only focused on military targets and avoided oil or nuclear facilities.
- USD was marginally softer amid a relatively quiet session for newsflow ahead of this week's slew of key data releases stateside including JOLTS, GDP, Core PCE & NFP, while the US election and the latest Fed meeting are scheduled for the following week.
- Looking ahead, highlights include Japan & Singapore Unemployment Rate, Supply from Japan.
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LOOKING AHEAD
- Highlights include Japan & Singapore Unemployment Rate, Supply from Japan.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks predominantly closed in the green with outperformance in small caps, while the Nasdaq gave up its early gains as tech sold off. Most industries gained with financials leading the advances although Tech and Energy lagged and were the only sectors to close lower with the latter weighed on by tumbling crude prices in the aftermath of Israel's response to Iran which was seen as 'moderate' as it only focused on military targets and avoided oil or nuclear facilities.
- SPX +0.27% at 5,824, NDX unch. at 20,351, DJIA +0.65% at 42,388, RUT +1.63% at 2,244.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Treasury Financing Estimates showed US Treasury expects to borrow USD 546bln (prev. 740bln Q/Q) in Q4, assuming end of December cash balance of USD 700bln (prev. USD 850bln Q/Q), while the borrowing estimate is USD 19bln lower than the Q4 estimate announced in July 2024. Furthermore, it expects to borrow USD 823bln in Q1 2025, assuming an end-March cash balance of USD 850bln (Goldman Sachs expected USD 753bln, assuming a quarter-end cash balance of USD 750bln).
FX
- USD was marginally softer amid a relatively quiet session for newsflow ahead of this week's slew of key data releases stateside including JOLTS, GDP, Core PCE & NFP, while the US election and the latest Fed meeting are scheduled for the following week.
- EUR eked mild gains following an early reclaim of the 1.0800 status but with little catalysts for a further upward boost.
- GBP kept afloat albeit with the upside limited after GBP/USD was stalled by resistance at the 1.3000 level.
- JPY was the underperformer owing to the political uncertainty with price action in USD/JPY choppy on both sides of 153.00.
FIXED INCOME
- T-notes were choppy in reaction to Israeli response and heading into the 2yr and 5yr auctions which proved to be soft, while the attention then turned to the financing estimates with Treasury expecting to borrow USD 546bln in Q4 which is down from the initial estimate of USD 565bln but above the USD 490bln forecast from Goldman Sachs.
COMMODITIES
- Oil prices remained heavily pressured and settled with heavy losses after Israel's strike on Iran was deemed to be moderate as it refrained from targeting petroleum and nuclear facilities.
- US DoE announced a new solicitation for up to 3mln bbls of oil for delivery to the Strategic Petroleum Reserve from April 2025 through to May 2025.
GEOPOLITICAL
MIDDLE EAST
- Iran's Foreign Ministry spokesperson said Tehran will use all available tools to respond to Israel's attack and the nature of the response to the Israeli attack is related to the form of aggression to which Iran was subjected, according to Sky News Arabia.
- Israel’s Channel 13 reported that following the UAV strike on PM Netanyahu's residence last week, the Cabinet decided that there could be another response against Iran soon and noted that two days after their repentance operation and the IDF attack on Iran, the working assumption in the security establishment is that there will be an Iranian response. However, the report added that it seems Tehran has not yet decided whether and how to attack, while the security establishment assessment is that Iran is not interested in acting immediately. - Israel PM Netanyahu said the Mossad head returned from Doha meetings on Gaza and mediators will continue talks in the coming days with Hamas to see if it is possible to advance the deal.
- Israeli PM Netanyahu said if the proposal for the deal was a two-day ceasefire in exchange for 4 prisoners, he would accept it immediately, according to Al Arabiya.
- Israeli PM Netanyahu is reportedly waiting to see who will succeed President Biden before committing to a diplomatic path, according to NYT.
- It was initially reported that Israel seeks a deal with Lebanon in exchange for measures to prevent the rearmament of Hezbollah and to cancel the expansion of the ground operation in exchange for a sea, land and air embargo on Lebanon, while it aims for a 60-day ceasefire during which the details of a full agreement will be reached, according to Al Jazeera citing Israel Channel 12. However, Israel PM Netanyahu's office denied holding consultations with Washington to prevent expanding fighting in Lebanon for 60 days and said there is no retreat from fighting in Lebanon before ensuring Hezbollah's exit from the south, according to Al Arabiya.
- Israel’s parliament passed a bill to ban the UNRWA from operating inside of Israel.
- US administration is exerting pressure on the parties to reach an agreement to end the Gaza war, according to Asharq News citing sources.
- Senior member of the Gaza abductees' deal negotiating team resigned due to a lack of progress on the deal, according to Israel Broadcasting Corporation cited by Sky News Arabia.
- UK MTO received a report of a second explosion in close proximity to a vessel related to an earlier incident 25NM south of Yemen's Mokha, while the vessel and crew were reported safe.
ASIA-PAC
NOTABLE HEADLINES
- China's State Council introduced measures to strengthen childbirth and childcare services, according to Xinhua.
- China’s government is to increase the purchase of EVs to support industry, according to Xinhua.
- Auto and tech industry groups asked the US Commerce Department for more time before implementing Chinese software and hardware restrictions, while it was also reported that the Mexican government noted the Biden administration's proposed connected car rules could disrupt the auto supply chain from China.
- Japan's government and ruling bloc are to arrange to convene a special parliamentary session to vote on the PM on November 11th, according to Kyodo.
EU/UK
NOTABLE HEADLINES
- UK PM Starmer said he is determined to invest in jobs and infrastructure to rebuild the country and commented on the borrowing-fuelled investment plan that he does not accept the proposition it will have an impact on interest rates, according to FT. Furthermore, he cannot give a cast iron guarantee that there won't be any future tax-raising budgets as they don't know what's around the corner.
- ECB's de Guindos said the price outlook is surrounded by substantial risks and inflation is to decline to the target next year. De Guindos reiterated official ECB rate guidance and noted that domestic inflation remains high through moderating, while he added that risks to the growth outlook are elevated and tilted to the downside.
