Last week, around the peak of the repo crisis we said that while the Treasury was soaking up most market liquidity via its Treasury General Account (which had ballooned to over $1TN), any sign of a govt reopening would send risk assets sharply higher (as this liquidity would then flood back into the market), and sure enough, futures are surging this morning as it now appear that the US government shutdown is finally over after Democrats folded on Sunday night and agreed to reopen the govt with no victory in hand, having kept the government shut for almost 40 days, a record, for no reason at all. As of 9:00am S&P 500 futures were up 0.9%, after the index closed just above its 50-day moving average on Friday — sharply bouncing back after a dip below the threshold; Nasdaq 100 futures jump 1.4% on optimism that the government shutdown may end soon, along with easing US-China tensions and Trump’s bid to appeal to cash-strapped Americans with a tariff “dividend.” European and Asian stocks are also sharply higher. Premarket, Mag7 and Semis are the notable outperformers with AMD, AVGO, GOOG, META, MU, NVDA all up at 2% - 3.5% pre-mkt. Cyclicals are also seeing a pre-mkt bid while parts of Defensives are in the red. Bond yields are +3-4bp with USD flat. In commodities, the story is the strength in Ags and Precious Metals with the former seeing +1% move across much of the Ag complex and gold and silver up 2% and 3.3%, respectively, outpacing Base Metals which are also bid up. With the gov’t reopening, the market appear to be shifting its view back to fundamentals which remain strong for earnings and macro, but likely not enough for the Fed to pause/skip in December, which should benefit risk-assets.

In premarket trading, all Mag 7 stocks are higher (Nvidia +3.1%, Tesla +2.1%, Alphabet +2%, Meta Platforms +1.4%, Amazon +1%, Microsoft +0.8%, Apple +0.5%).

In corporate news, Pfizer agreed to buy Metsera for up to $10 billion, prevailing over Novo Nordisk in a bidding war. Visa and Mastercard are said to be close to a new agreement to settle a two-decade legal spat with merchants. UPS and FedEx have grounded their McDonnell Douglas MD-11 aircraft fleet on Boeing’s recommendation after a crash in Louisville. 

In AI news, TSMC reported slowing growth in monthly revenue, highlighting uncertainty over the sustainability of the AI boom even as industry behemoths including Nvidia chase more chip orders. Robinhood plans to give amateur investors access to private AI companies whose valuations have increased significantly, CEO Vlad Tenev told the FT in an interview.

The risk-on mood spread across markets, lifting oil, metals and crypto. Europe’s Stoxx 600 was on track for its biggest gain since June. US Treasuries fell across the curve, pushing the 10-year yield up four basis points to 4.13%. Gold also advanced on prospects of a Federal Reserve rate cut next month. Bitcoin continued to move higher after flirting with the key $100k level early last week, while gold and oil rose. 

Monday’s optimistic tone offered relief after a volatile week, when worries over stretched valuations fueled a sharp selloff in the biggest winners of the artificial-intelligence boom. Ending the shutdown would give investors greater clarity on key economic data such as jobs and inflation, helping to lift the fog around the outlook for interest rates.  

The Senate voted 60-40 on a procedural measure to advance a bill to end the government shutdown, with a group of moderate Democrats breaking with their party leaders to support the deal. Assuming the government reopens in the coming weeks and statistics start moving again, Fed officials still face a data fog with information compiled via retroactive surveys and other methods — if the figures are published at all.

“Markets are taking very positively to the news of the potential resolution of the US shutdown,” said Marija Veitmane, head of equity research at State Street Global Markets. “We were very constructive on the market anyway and we saw last week’s selloff as a little bit of a buying opportunity.”

That said, how soon the shutdown will end remains uncertain. The Senate has yet to schedule a final vote, while the measure must also pass the House before reaching President Donald Trump for his signature. 

“It’s only the opening act in what could still be a drawn-out political drama, but investors are seizing on any sign of progress,” said Ipek Ozkardeskaya, a senior analyst at Swissquote. “They need to understand where the US economy stands, where inflation and jobs are headed and what the Fed should do next.”

As usually happens, we are now about to see a short squeeze, as discretionary and systematic investors cut exposure last week as simple momentum chasing strategies continued to stumble, according to Deutsche Bank strategists, aggregate equity positioning remains modestly overweight. A slowdown in tech and AI would be far more damaging to the US and emerging markets than to other developed regions. Since early 2024, tech and AI’s weight has risen from 39% to 50% in the US.

Elsewhere, Bessent said Trump’s suggestion, in a Sunday social media post, that Americans may receive a tariff “dividend” of at least $2,000 could come via the tax cuts passed in his signature economic policy bill earlier this year. US and China suspended port fees on each other’s ships for one year and paused probes into maritime practices. 

Third-quarter earnings are just about over, and the conclusion is corporate America is performing very well as earnings rise at the fastest pace in four years. Companies in the S&P 500 Index that have reported earnings for the third quarter — about 80% of the index by market cap — have grown the bottom line by 14.6%, effectively doubling what analysts were expecting. Looking ahead, strategists are bullish on the outlook.  Strategists at UBS Group AG expect the S&P 500 to climb to 7,500 next year on the back of solid earnings growth, implying an 11% gain from current levels. Their peers at Morgan Stanley, meanwhile, see clear signs of a recovery in corporate profits.

In Europe, the Stoxx 600 rises 1.4% as hopes for a deal to end the US government shutdown boost risk sentiment. Diageo shares surge after the company names former Tesco boss Dave Lewis as CEO. The technology and mining sectors lead gains — with ASML up as much as 2.9% — while personal care products shares lag. Technology stocks led gains in Europe, as they did in Asia after Nvidia CEO Huang said he had asked TSMC for more chip supplies as AI demand remained strong. Here are some of the biggest movers on Monday: 

Earlier, Asian stocks rose, supported by a rebound in technology shares following a selloff last week on concerns over lofty valuations. Hopes of a possible end to the longest US government shutdown also lifted sentiment.  The MSCI Asia Pacific Index rose as much as 1%, with Tencent, TSMC and SK Hynix among the top contributors to the advance. South Korea’s Kospi gauge led gains in the region after reports on a potential dividend tax cut and likely increase in domestic equity allocation by a pension fund boosted optimism. The MSCI Asia benchmark has climbed more than 25% in 2025 — on track to outperform the S&P 500 by the widest margin in 16 years. Shares in mainland China reversed earlier losses to close 0.4% higher after the world’s two largest economies suspended port fees on each other’s ships for one year and paused probes into maritime practices. Equities also rose in Hong Kong. Here Are the Most Notable Movers 

In FX, the yen is the weakest of the G-10 currencies, falling 0.5% against the greenback and taking USD/JPY back above 154. The Norwegian krone is among the outperformers, rising 0.5% after CPI surprised to the upside.

In rates, Treasury fall as haven demand wanes, pushing US 10-year yield up 3 bps to 4.13%. German government bonds also edge lower.

hold modest losses in early US trading after gapping lower at the Asia open as signs lawmakers may end the government shutdown stoked risk appetite. US yields are 3bp to 4bp higher with curve spreads little changed; 10-year, higher by more than 3bp near 4.125%, is ~2bp cheaper vs bunds and gilts in the sector.  $58 billion 3-year note auction at 1pm New York time has WI yield near 3.60%, about 2bp cheaper than last month’s, which stopped through by 0.8b.  IG dollar issuance slate empty so far but expected to build ahead of the holiday Tuesday; around $40 billion of supply is projected this week, following a combined $136 billion over the past two weeks.

In commodities, Spot gold climbs $80 to ~$4,080/oz. WTI crude futures add 0.2% to around $60 a barrel. Bitcoin rises 1.5% to around $106,000.

The US economic calendar empty for the session. Fed speaker slate includes Daly (8:30am) and Musalem (9:45am)

Market Snapshot

Top Overnight News

Trade/Tariffs

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded higher amid the improving US-China trade environment and with hopes of ending the US government shutdown as several Democrats supported Republicans to pass a measure through the procedural vote in a rare Senate session on Sunday. ASX 200 gained with the upside led by the mining and tech sectors, while financials also showed resilience despite  ANZ positing a decline in fiscal 2025 cash profit. Nikkei 225 rallied amid a weaker currency and as participants digested earnings, while it was also reported that Japan's GPIF posted a July-September quarterly investment return of JPY 14.45tln. Hang Seng and Shanghai Comp ultimately conformed to the upbeat mood amid the improving US-China trade environment, as both the US and China relaxed trade restrictions on each other, while there was also inflation data over the weekend which printed above forecasts, although factory gate prices remained in deflation.

Top Asian News

European bourses (+1.3%) are stronger across the board, with sentiment boosted amidst progress related to the US Government shutdown. Price action saw indices open on a strong footing and continue to rise as the morning progressed. European sectors are almost entirely in the green, with a clear cyclical bias. Tech and Basic Resources leads whilst Optimised Personal Care lags. For Basic Resources specifically, the sector has been lifted by upside across underlying metals prices - upside facilitated by the risk sentiment and better-than-expected Chinese inflation figures over the weekend. US equity futures (ES +1%, NQ +1.4%, RTY +1.2%) are entirely in the green, with clear outperformance in the tech-heavy NQ. Overall, sentiment boosted by the shutdown-related progress; on that, eight democrats voted with Republicans to advance a deal which would reopen the government and keep it funded until the end of January. Separately, NVIDIA (+3.5%) benefits from the risk tone and after CEO Huang said that the Co. has very strong demand for Blackwell chips and asked TSMC (2330 TT) for more wafers to meet strong AI demand.

Top European News

FX

Fixed Income

Commodities

US Event Calendar

Geopolitics: Middle East

Geopolitics: Ukraine

Geopolitics: Other

DB's Jim Reid concludes the overnight wrap

It looks like white smoke is finally emerging from Capitol Hill as late on Sunday night in the Senate there was a 60-40 procedural vote to advance a bill that would end the shutdown. Just about enough moderate Democrats have broken ranks with party leadership to progress a bill that would fund Agriculture, Veterans Affairs and the operations of Congress for the full-year, even if other agencies would only be funded through to January 30th. It seems to persuade the moderate Democrats to support the bill, a vote has been promised in December in extending the Affordable Care Act (ACA) subsidies that run out at year-end. The timetable from here is slightly less clear but we could get a full vote today or tomorrow assuming no procedural delays.

Probability markets are starting to price in the end game with a 98% expectation that the shutdown will be over by November 30th on Polymarket, a contract high. Interestingly we hit a contract low of 35% around midnight Saturday for a reopening by November 15th (this Saturday). However yesterday this spiked up and is now at 94% as I type. S&P 500 futures are currently +0.71% with the Nasdaq equivalent up +1.23%. 10yr USTs are +3.9bps at just under 4.14%. Asia equity markets are also positive with the KOSPI (+3.13%) leading the way, followed by the Nikkei (+1.28%), with both indexes benefiting primarily from a rebound in technology shares after significant losses last week. The Hang Seng is +1.22% but mainland Chinese markets are flat, perhaps after better inflation numbers over the weekend (see below) may reduce the need for larger stimulus. DAX futures are +1.44% higher as European markets closed at the US lows before the end of the shutdown speculation started to mount late on Friday.   

Once the government reopens, markets will face a surge of delayed data releases. Historical precedent from the 2013 shutdown suggests that September’s employment report could be among the first to hit the wires, potentially within three business days of reopening. We expect payrolls to rebound sharply, with headline and private payrolls both forecast at +75k, leaving the unemployment rate steady at 4.3%. So we could get this Thursday or Friday.

Expanding upon this week, on the policy front, the Federal Reserve calendar is busy but unlikely to deliver major surprises. Today brings remarks from St. Louis Fed’s Musalem, who has maintained a hawkish tone. Wednesday is the most crowded day, featuring speeches from Williams, Waller, Bostic, Miran and Collins across conferences on Treasury markets, fintech and community banking. Later in the week, Musalem and Hammack will join fireside chats, while Schmid and Bostic close out Friday with discussions on energy and economic trends. Beyond Capitol Hill and the Fed, investors will monitor the Supreme Court following last week’s oral arguments in the IEEPA tariff case. Judging by the tone of questioning, the Court appears sceptical of the Administration’s position, suggesting a likely affirmation of lower court rulings. A decision could potentially come quickly, but history points to a longer timeline— with the average time line around 15 weeks - but it could stretch out to the end of the term in June.

While US politics and data dominate, global developments will also shape sentiment. In Europe, the UK releases third-quarter GDP on Thursday and labour market data on Tuesday, alongside inflation prints in Denmark and Norway (today) and Germany’s ZEW survey (tomorrow). In Asia, China has its monthly economic activity data dump on Friday. Japan will publish the Economy Watchers Survey tomorrow and producer price inflation on Wednesday.

Corporate earnings remain in focus globally. In the United States, results from Cisco, Walt Disney and Applied Materials will be closely watched. European heavyweights reporting include Siemens, Deutsche Telekom and Enel, while Asia sees Tencent, JD.com, SoftBank and Sony. With nearly 90% of S&P 500 companies having reported, the bulk of earnings season is behind us, but these names will still provide important signals on sectoral health and global demand.

Overnight, the minutes from the BOJ’s October meeting indicated that the nine-member board appears more inclined towards a near-term rate hike, aligning with the expectations of numerous market participants and consistent with Governor Kazuo Ueda’s recent indications that such a move could occur in the upcoming months.  

Yesterday we discovered that Chinese inflation surprised to the upside in October rising +0.2% mom against expectations of -0.1% mom and a -0.3% mom decline in September. YoY PPI edged a tenth stronger than expected at -2.1%, up a couple of tenths from September. The anti-involution campaign that has been aimed at reducing prices wars across the economy seems to be having some impact but much of this month's increase can be attributed to seasonals, some of it around Golden Week spending. So we'll have to see if it gets repeated next month to see if a trend is in.

Last week, markets turned risk-averse as negative sentiment around technology and some disappointing private jobs data triggered a global equity sell-off. In the United States, the S&P 500 fell by -1.63% over the week, although it managed a modest +0.13% gain on Friday and rebounded from being down -1.32% as Europe went home for the week. The Nasdaq fared worse, dropping -3.04% (-0.21% Friday, but off the -2.13% lows for the day), marking its weakest performance since Liberation Day week.

Treasuries had a volatile but ultimately muted week. The 2-year yield slipped -1.2bps (+0.7bps Friday), while the 10-year rose +2.0bps to 4.10% (+1.4bps Friday). Across Europe, the STOXX 600 declined -1.24% (-0.55% Friday), even as the 10-year Bund yield climbed +3.3bps over the week.

The week could have been worse were it not for a late burst of optimism on Friday afternoon surrounding US government shutdown negotiations. That helped volatility ease, with the VIX falling -0.42pts on Friday to 19.08, though it was still up +1.64pts on the week after trading above 22 earlier in the day. Despite this reprieve, risk assets broadly struggled, led by Big Tech as lofty valuations weighed on sentiment. Palantir dropped -7.94% on Thursday and -11.24% for the week after failing to provide clear visibility for 2026. Concerns spread to the Mag-7 cohort, which fell -3.21% over the week (-0.96% Friday), with Nvidia (-7.08%, +0.04% Friday), Tesla (-5.92%, -3.68% Friday), and Meta (-4.11%, +0.45% Friday) among the laggards. Credit markets also came under pressure, with US IG spreads widening by +4bps and HY by +15bps.

Signs of disruption from the looming US government shutdown dented sentiment for most of the week, while a sparse data calendar offered little relief. On Friday, the University of Michigan’s consumer sentiment index fell -3.3pts to 50.3, its lowest level in three years, while confidence in government economic policy dropped to the lowest point in the series’ 50-year history. Other data included a weak ISM manufacturing print and higher Challenger layoffs, marking the worst October for job cuts since 2003. These negatives offset a solid ADP employment report and stronger ISM services data earlier in the week. The US-centric risk-off tone undermined the dollar, with the index down -0.20% over the week.

Europe also delivered a heavy data flow with a mixed impact. The Bank of England held rates at 4%, but the vote split was more dovish than expected at 5-4. Our UK economist maintains a call for a 25bps cut in December, followed by quarterly reductions in March and June, taking Bank Rate to 3.25%. Elsewhere, investors digested weaker-than-expected Euro Area retail sales for September, German industrial production, and UK construction PMI. These disappointments contributed to declines in major indices: STOXX 600 (-1.24%, -0.55% Friday), DAX (-1.62%, -0.69% Friday), and CAC 40 (-2.10%, -0.18% Friday). European credit spreads widened too, with IG up +7bps and HY up +9bps. Europe went home near the lows for the day for the US on Friday though.

Finally, Bitcoin’s retreat continued, falling -5.11% over the week despite a +2.73% gain on Friday. Brent crude also slipped -2.21% to $63.63/bbl, though it edged +0.39% higher on Friday as concerns about an emerging oil market surplus resurfaced.

Loading recommendations...