Good morning,
We start the week in a big way today as Secretary of State Marco Rubio rings the NYSE Opening Bell and the UNGA creates massive gridlock in Manhattan. On Friday the S&P rose 0.2% with a big Quad Witching and index rebalances pushing volumes in the closing auction to over 3.5 billion shares, the 3
rd largest on record. After falling below the 50d ma earlier in the week and testing support at the 100d, the S&P managed to close the week above the 50d and get back into the 7600-7800 range. Breadth wasn’t as strong however as the equal-weight fell 0.5%. Tech was a leader as the NYSE 100 rallied 0.7% finished the week strong as the ICE Semis Index rose 2.7%.
Over the weekend the Houthis escalated attacks on Saudi Arabia and Ukraine launched a massive drone strike against Russia. However, President Trump called off attacks on the Houthi at the last minute according to the NYT and said he’s open to meeting Iran. Saudi oil loadings have increased according to reports and the US said Hormuz oil and gas shipments are at a six month high. This is helping push oil lower again and provide a tailwind for equities this morning. S&P futures are up a little under 1% and at their best overnight levels.
It’s a very quiet day on the economic calendar. Treasury yields are lower following oil’s decline, down about 3bp across the curve. The US Dollar Index is up modestly. On Friday the BOJ conducted a rate check on the heels of their decision earlier in the day to raise rates 25bp. The hike was expected but overall the meeting was less hawkish than it could have been and the yen weakened.
- US 2yr -2bps to 4.73%, 5yr -3bps to 4.82%, 10yr -3bps to 4.96%, 30yr -3bps to 5.30%
- USD index: +$0.05 to $99.98
Europe is seeing broad gains. Tech is leading the way along with Industrials and Financials. Pharma giant Novo stands out as a laggard, down 5% as it holds its Capital Markets Day. Germany’s ruling CDU party is dealing with another poor showing in local elections. Asian markets ended higher. Japan was closed for Respect-for-the-Aged Day, which my kids don’t celebrate. Softbank closed a $10B dollar-and-euro denominated bond sale to finance the company’s latest investment in OpenAI. In China the Hang Seng and Shanghai indexes rose 1% each. 1Y and 5Y LPRs were left unchanged, as expected. Treasury Secretary Bessent had a "very successful" meeting with China’s Vice Premier He Lifeng, setting the stage for the Trump-Xi meeting later this week. The two sides continue to work on a Board of Trade agreement and discussed lowering tariffs on non-sensitive products. The current trade truce expires on November 10. South Korea’s KOSPI rose 1.6%. Chip exports surged 259% in the first 20 days of September. Australian AI data center developer Firmus is moving closer to an IPO that could raise up to $5B on the ASX in October. IT would be one of Australia’s largest ever IPOs.
Crude is lower despite the weekend hostilities. President Trump said he’s open to meeting Iranian President Pezeshkian at the UN this week, but also that he could “blow the entire nation up.” Always keep ‘em guessing. Saudi oil loadings have increased according to reports and the US said Hormuz oil and gas shipments are at a six month high. The November ICE Brent contract has fallen four straight days and sits ~$101, down from $110 last week. US natural gas is down 2% and Europe down more than 5%. Precious metals are modestly lower but copper is up 2%. Crypto is higher with BTC and ETH up ~5%. Bitcoin blew through resistance at $82.5K and is above $85K for the first time since late January, with a big short squeeze triggering the rally.
Economic Data:
US:
- Chicago Fed Nat’l Activity Index: -0.04 vs prior -0.08
Global: