Key Highlights

• Congressional leaders will talk with President Trump today in a bid to avoid a government shutdown.
• Oil prices are down as Iraqi oil pipeline restarts and OPEC+ plans another output hike in November.
• Amid fears of Russian interference, Moldova’s ruling pro-European party wins closely watched parliamentary elections.

Chart of the Day

Scored holdings in the global oil and gas, and metals and mining industries (GICS level 3)

^{Source: BNY}

Price action in commodities overnight underscored offsetting concerns of ongoing global demand weakness against the need for exposure to real assets to protect against ongoing loosening in global financial conditions. With another production increase by OPEC+ on the cards and without any corresponding improvement in demand, energy prices have softened again. However, gold prices have surged through the $3,800/oz mark amid renewed defensive positioning ahead of a potential government shutdown. Notwithstanding the short-term reaction to immediate event risk, we note that since this summer, global equities with exposure to commodities have been making steady gains. This is most evident in holdings of equities in the metals and mining industry, which are now over 30% above the rolling 1y average. This goes beyond gold – the prospect of consolidation across global mining and renewed public sector investment in critical minerals to secure supply chain independence have been crucial to pushing up valuations. This has been taking place even with the lack of improvement in spot prices for industrial commodities. Meanwhile, even though the issues surrounding the drag in energy prices are well-established, scored holdings in oil and gas sector equities have also been steadily improving. While these holdings have only reached 5% above the rolling 1y average, that still represents a 10% gain over the summer, and the entire industry is now at its best-positioned point year-to-date, underscoring the rise in the “real asset” factor in driving commodity equity valuations.

What's Changed?

Asia’s Golden Week holidays have begun, meaning a slower start to today, but one that still reflects end-Q3 rebalancing. The stocks up, bonds up, dollar down trends continue. Gold has hit new record highs, up 1.5% to over $3,800, while USD is 0.3% lower, with EM and commodity-linked currencies gaining. U.S. bonds are bid, along with their EU counterparts, as Spain is upgraded to A by Fitch and A3 by Moody’s; 10y Bonos are down 3bp, even as CPI rose to a 7-month high. The rebound in equities reflects ongoing China tech hopes, a reduction in EU/U.S. trade fears and improving consumer confidence. In the U.K., an IPSOS poll gives PM Keir Starmer the unpleasant news of being the most unpopular leader on record, but GBP is nevertheless up, like JPY, where the country faces the LDP’s decisions on its next leader and the new PM this weekend. U.S. equity futures are higher as the deadline for funding the government looms, with shutdown discussions taking place between President Trump and both Republican and Democrat Congressional leaders. The focus for the president is on a Gaza peace deal, his talk to the U.S. military leadership and the new tariffs starting Wednesday. For investors, today is about the wait for data, progress on preventing a shutdown and how more Fedspeakers could shift the thinking on policy easing as we head toward year-end. We are set to close Q3 with a golden week for returns, as most assets have made gains despite the worries about growth and inflation, which puts the upcoming economic data releases into the spotlight. For today, this means watching gold against oil; USD against EUR and JPY remains the barometer for volatility ahead. 

What You Need to Know

U.S. congressional leaders will meet President Trump at the White House on Monday in a last-minute effort to prevent a government shutdown, with both sides entrenched in their positions. Without a funding deal by Tuesday night, government offices will close and non-essential employees will be furloughed. Republicans are pushing for a short-term bill that extends funding for seven weeks, while Democrats are demanding legislation extending Affordable Care Act tax credits before they agree. Senate Majority Leader Chuck Schumer insists Democrats must hold firm, while Trump has said he expects a shutdown if Democrats do not yield. At least eight Democratic senators would need to support the bill to avoid a shutdown, but prospects remain uncertain. S&P Mini +0.396% to 6723, DXY -0.265% to 97.892, 10y UST -3.5bp to 4.141%.

OPEC+ is expected to approve another oil production increase of at least 137,000 barrels/day in November, sources said ahead of an October 5 online meeting of eight member states. The group, which supplies about half of global oil, reversed its earlier output cutting strategy since April, lifting quotas by more than 2.5 million barrels/day, or 2.4% of world demand, in a bid to boost market share and after coming under pressure to lower prices. Oil has mostly traded within the $60-70/barrel range since then, recently climbing above $70 amid disruptions in Russia. At their peak, OPEC+ cuts had previously totaled 5.85 million barrels/day, with phased unwinding ongoing through September and October, while a third group-wide cut of 2 million barrels/day remains in place until end-2026. Brent -0.87% to 69.52, WTI -1.081% to 65.01.

The Swiss National Bank has announced it will lower the threshold factor for the remuneration of sight deposits subject to minimum reserve requirements from 18 to 16.5, effective November 1, 2025. The calculation method remains unchanged: for reserve-liable account holders, the threshold equals the three-year moving average of reserve requirements multiplied by the factor, while other account holders continue to have a fixed threshold. Deposits up to the threshold earn the SNB policy rate, while balances above that figure earn the rate less a discount, and deposits held to meet reserve requirements are not remunerated. The adjustment offsets higher thresholds caused by the July 2024 increase in the reserve requirement, aimed at preserving effective monetary policy implementation and an active money market without altering the SNB’s policy stance. SMI +0.49% to 11988.25, EURCHF -0.1% to 0.93288, 10y Swiss GB -1.8bp to 0.18%.

Bank of Japan dove Asahi Noguchi has said that Japan’s steady progress toward its 2% inflation target is increasing the need for an interest rate hike, signaling growing support for policy adjustment. Speaking in Hokkaido, Noguchi highlighted upside risks from domestic conditions but warned of “significant” downside risks from U.S. tariffs, urging careful monitoring of underlying inflation. His remarks follow dissenting votes by Naoki Tamura and Hajime Takata at the September 19 policy meeting, which raised market bets on an October hike to about 60%. Japan’s inflation has held above 2% for over three years, Q2 growth exceeded forecasts, and the upcoming Tankan survey is expected to show improvement. Nikkei -0.686% to 45043.75, USDJPY -0.643% to 148.53, 10y JGB -1.1bp to 1.643%.

China’s Politburo met overnight to discuss major issues in drafting the 15th Five-Year Plan for national economic and social development, with General Secretary Xi Jinping presiding. The meeting decided that the Fourth Plenary Session of the 20th Central Committee will be held in Beijing from October 20 to 23. The Politburo reviewed feedback on the draft recommendations for the plan, which will be revised and submitted to the plenum. It emphasized that the plan accurately reflects China’s development stage, addresses complex challenges and provides a strategic blueprint for advancing Chinese modernization. The meeting underlined adherence to Party leadership, high-quality growth, reform and opening, balancing development with security and strengthening Party governance as essential to achieving long-term stability and modernization goals. CSI 300 +1.539% to 4620.05, USDCNY -0.23% to 7.1181, 10y CGB +0.2bp to 1.89%.

What We're Watching

The Bank of Israel is expected to keep rates on hold at 4.50%, and current fiscal impulses means a serious conversation regarding rate cuts is unlikely for the rest of the year.

U.S. August pending home sales forecast at 0% m/m vs. -0.4% in July.

Central bank speakers: Fed Governor Christopher Waller speaks on payments at Sibos 2025 Conference, Dallas’s Fed Beth M. Hammack, David E. J. Ramsden (Bank of England) and Philip R. Lane (ECB) participate in a policy panel at the ECB and Cleveland Fed conference in Frankfurt. St. Louis Fed President Alberto Musalem speaks on a panel with Jim Bullard and Thomas Melzer at Washington University.

U.S. Treasury sells $82bn in 13-week bills and $73bn in 26-week bills.

What iFlow is Showing Us

Mood: iFlow Mood is positive, with net outflows in core sovereign bonds vs. buying interest in equities.

FX: Mixed flows. G10 and LatAm currencies were biased to outflows, against inflows in EMEA. APAC flows were mixed. Within the G10, USD, DKK and NOK posted light inflows against outflows in the rest, led by EUR and AUD. CZK, HUF and INR posted the most inflows.

FI: Good buying of U.K. gilts, U.S. Treasurys and Eurozone, Canadian and Chilean government bonds. South Korean government bonds were most sold.

Equities: Mixed flows, with the DM America and EM APAC regions most sold, against buying interest in DM APAC, EM America and the EMEA region. Individually, Canadian, Swiss, Norwegian, Czech and Taiwanese equities were significantly sold, against strong buying in Colombia. 

Quotes of the Day

“The golden age is before us, not behind us.” – Simon the Zealot

“Silence is golden. Words are vibrations. Thoughts are magic.” – Joseph Fink

Economic Details

U.K. net mortgage borrowing by individuals eased to £4.3bn in August, down £0.2bn from July, with the number of mortgage approvals for house purchases slipping to 64,700 and remortgaging approvals falling to 37,900. Net borrowing of consumer credit remained steady at £1.7bn, as credit card borrowing edged down to £0.7bn while other forms rose to £1.0 bn. Net corporate borrowing strengthened, with large business growth accelerating to 8.6% and SME borrowing rising to 1.2%, its highest level since August 2021. Private non-financial corporations borrowed a net £5.9bn, up sharply from £0.4bn in July. Net sterling money (M4ex) flows expanded to £10.9bn, while net lending to households and companies (M4Lex) rose to £10.0bn. FTSE 100 +0.579% to 9338.61, GBPUSD +0.336% to 1.3447, 10y gilt -3.6bp to 4.71%.

The EU’s September Economic Sentiment Indicator (ESI) rose to 95.5 in both the EU and euro area, up 0.6 and 0.2 points, respectively, though still below the long-term average of 100. The increase was supported by improved confidence in industry (+0.3), services (+0.4) and consumers (+0.5), while retail trade fell (-1.0) and construction remained flat (+0.1). Among major economies, sentiment improved in Spain (+3.0) and Italy (+0.7), but declined in the Netherlands (-0.7) and Germany (-0.4). The Employment Expectations Indicator (EEI) declined to 97.1 in the EU and 96.4 in the euro area, with weaker hiring plans in services, retail trade and construction, though industry edged higher. Consumer unemployment expectations worsened slightly. Euro Stoxx 50 +0.185% to 5509.87, EURUSD +0.188% to 1.1725, BBG AGG Euro Government High Grade EUR +1.1bp to 2.927%.

Spain’s September flash CPI was estimated at 2.9% y/y, rising from 2.7% in August, according to the National Statistics Institute. Core CPI eased slightly to 2.3% from 2.4%. The harmonized index of consumer prices (HICP) increased 3.0% y/y, compared with 2.7% the previous month, while the core HICP stood at 2.4%. On a monthly basis, CPI fell 0.4% whereas HICP rose 0.1%. The increase in the annual headline rate mainly reflected fuel and electricity prices, which fell less sharply than in September 2024. IBEX 35 -0.187% to 15342, EURUSD +0.188% to 1.1725, 10y Bono -2.9bp to 3.284%.

Spain’s August retail trade index at constant prices rose 4.5% y/y on a seasonally and calendar-adjusted basis, slightly below July’s 4.7%. On an unadjusted basis, sales increased 3.0% y/y, down from 4.3% in July. Month on month, retail sales grew 0.4%, led by small chains (+1.9%), while food rose by 0.1% and other goods by 0.8%; sales at service stations fell 0.2%. By region, sales increased in 15 communities, with the strongest gains in Illes Balears (+6.6%), Ceuta (+6.2%) and Melilla (+6.2%), while Castilla y León (-1.5%) and Navarra (-1.2%) recorded declines. Retail employment rose 2.0% y/y, with notable growth in large chains (+4.0%).

Switzerland’s Q2 GDP grew 0.2% q/q after a revised 0.8% expansion in Q1, according to SECO’s benchmark revision. Industry weighed on growth, with manufacturing contracting by 1.0% and the chemical and pharmaceutical sector down 2.0%. Exports fell 3.4%, and imports dropped 4.0%. Domestic demand was steadier: private consumption rose 0.4%, government spending grew 0.8% and services advanced, with trade up 1.3%, accommodation and food services up 1.4% and transport up1.9%. Public administration spending also increased 1.0%. Investment shrank by 0.8%, limiting overall domestic final demand growth to 0.1%. On a y/y basis, GDP expanded by 1.5% adjusted for sporting events, with strong contributions from trade (+5.0%) and finance (+2.7%), partly offset by a 0.4% contraction in manufacturing. SMI +0.49% to 11988.25, EURCHF -0.1% to 0.93288, 10y Swiss GB -1.8bp to 0.18%.

Minutes released from the Riksbank’s September 22 meeting showed Governor Erik Thedéen supported cutting the policy rate by 25bp to 1.75%, citing subdued demand, high household savings, spare capacity and temporary inflation pressures. He judged that additional stimulus was needed but noted this was likely the last cut in the cycle. First Deputy Governor Anna Breman also backed the cut, highlighting weak growth, high unemployment and balanced risks that justified more support to avoid inflation undershooting. Deputy Governor Aino Bunge supported easing as well, arguing that inflation drivers were temporary and VAT effects short-lived, and that forward-looking policy was required to reinforce a sluggish recovery. By contrast, Deputy Governor Anna Seim opposed a cut, preferring to hold at 2.0%, warning that expansionary fiscal policy and supply-side risks could drive inflation above target and make the policy mix overly loose. Deputy Governor Per Jansson weighed arguments on both sides but ultimately judged inflation to be transitory and the economy still fragile, siding with a cut. OMX +0.351% to 2653.91, EURSEK -0.06% to 11.0039, 10y Swedish GB -3.3bp to 2.72%.

Norway’s August wholesale and retail trade volume index showed mixed patterns. Overall trade in motor vehicles and motorcycles fell 1.0% m/m but rose 2.6% q/q and 6.6% y/y. Within this headline figure, wholesale and retail trade and repair of motor vehicles dropped 2.7% m/m but increased 6.8% y/y, while wholesale trade excluding vehicles declined 1.0% m/m but climbed 7.2% y/y. Retail trade rose 0.2% m/m, 0.8% q/q and 5.0% y/y. Food and beverage sales slipped 0.2% m/m but rose 2.3% y/y, automotive fuel fell 0.6% m/m and 3.2% y/y, and ICT equipment dropped 1.9% m/m but surged 14.9% y/y. Sales of cultural goods grew 2.8% m/m and 9.4% y/y, while non-store retail rose 1.8% m/m and 10.9% y/y. OSE +0.078% to 1663.73, EURNOK +0.105% to 11.6841, 10y NGB -2.5bp to 4.062%.

Norway’s August credit and monetary statistics showed steady growth. General public debt grew 4.0% y/y, with household debt up 4.2%, non-financial corporations up 2.0% and municipal government debt 8.3% higher. The M3 monetary aggregate expanded by 7.4% y/y, driven by growth rates of 9.1% for households, 15.9% for municipal government and 17.2% for other financial corporations, while the rate for non-financial corporations slowed to 2.4%. Bank lending to households increased to NOK 1.680tn from NOK 1.674tn in July, while loans to manufacturing fell to NOK 116.5bn from NOK 119.5bn. Household deposits rose to NOK 1.880tn, with housing savings for young people at NOK 43.9bn. Mortgage companies’ loans to households reached NOK 2.333tn, with manufacturing loans broadly steady at NOK 2.6bn.

Türkiye’s September economic confidence index stood at 98.0, rising 0.1% from 97.9 in August. Consumer confidence weakened, falling 0.4% to 83.9, while the real sector (manufacturing industry) index edged up 0.2% to 100.8. The services index declined slightly by 0.1% to 111.0, whereas retail trade confidence increased 0.4% to 109.2. The construction sector showed the strongest improvement, climbing 3.6% to 88.3. Despite the small overall gain, the composite index remained below the neutral 100 threshold, signaling continued pessimism about the general economic outlook. The release noted that consumer sentiment is lagging, but pockets of resilience were visible in industry, trade and construction. BI 100 +0.326% to 11187.56, USDTRY +0.23% to 41.5773, 10y TGB -1bp to 31.68%.

Japan’s July composite indexes showed a mixed trend. The leading index was revised up to 106.1 from the preliminary 105.9, while the coincident index was lifted to 114.1 from 113.3 and the lagging index was revised down to 113.6 from 114.2. On a three-month moving average basis, the leading index rose 0.57 points, the coincident index fell 0.57 points and the lagging index gained 0.27 points. On a seven-month moving average basis, the leading index declined 0.26 points, the coincident index fell 0.33 points and the lagging index rose 0.53 points. The Cabinet Office’s Economic and Social Research Institute assessed that the coincident index indicates the economy is bottoming out. Nikkei -0.686% to 45043.75, USDJPY -0.643% to 148.53, 10y JGB -1.1bp to 1.643%.

New Zealand August filled jobs across all industries rose 0.2% m/m vs. a downwardly revised 0% in July. This is the strongest monthly jobs gains since January 2024. Jobs in primary industries rose 0.2%, while they were up 0.6% in goods-producing industries and 0.1% in service industry jobs. By industry, construction (-5.1% m/m), professional, scientific and technical services (-2.7%) and accommodation and food services (-2.5%) were down the most, against gains of +1.7% m/m in health care and social assistance and also in education and training. The turnaround to -0.70% y/y from -1.97% in April 2025 suggests a potential reversal in the upward unemployment trend. NZX 50 +0.159% to 13132.56, NZDUSD +0.399% to 0.5795, 10y NZGB -1.9bp to 4.208%.