Trump suggests that the war will end immediately after the election; EUR awaits the ECB - Newsquawk EU Market Open

• US President Trump said he thinks war with Iran will end immediately after the election and will do much more than a nuclear deal.
• US President Trump said he will give a 'Trump dividend' to every adult in the US of USD 5,000 if Republicans win the Midterm elections, while he added that the dividend must be spent in the US.
• Crude futures took a breather after extending their gains yesterday alongside the current backdrop of escalating US/Iran and Saudi/Yemen tensions, which lifted Brent crude north of the USD 100/bbl level.
• 10yr UST futures remained subdued after yields rose alongside higher oil prices and following the Treasury's long-end buyback announcement of a maximum of USD 6bln of 10yr-20yr nominal coupons on Thursday.
• APAC stocks were mostly lower following the losses stateside; European equity futures indicate a flat/firmer cash market open.
• Looking ahead, highlights include German Final CPI (Aug), Norwegian CPI (Aug), Swedish GDP (Jul), US PPI (Aug), Jobless Claims (Sep/05), Existing Home Sales (Aug), Atlanta Fed GDP (Q3), ECB Announcement, CBRT Announcement, OPEC MOMR. Speakers include US President Trump and ECB President Lagarde. Supply from the UK, Italy, and the US. Earnings from Oracle & Adobe.

SNAPSHOT

Newsquawk in 3 steps:

1. Subscribe to the free premarket movers reports

2. Listen to this report in the market open podcast (available on Apple and Spotify)

3. Trial Newsquawk’s premium real-time audio news squawk box for 7 days

LOOKING AHEAD

• Highlights include German Final CPI (Aug), Norwegian CPI (Aug), Swedish GDP (Jul), US PPI (Aug), Jobless Claims (Sep/05), Existing Home Sales (Aug), Atlanta Fed GDP (Q3), ECB Announcement, CBRT Announcement, OPEC MOMR. Speakers include US President Trump and ECB President Lagarde. Supply from the UK, Italy, and the US. Earnings from Oracle & Adobe.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump said he thinks war with Iran will end immediately after the election and doing much more than a nuclear deal, while he stated there is going to be a lot more on the table that was not on the table 3 months ago. Trump stated that he is not looking for negotiations to restart; it could happen, but it is not something they are looking at, and they are not seeking a deal.
• US President Trump said they will win the war with Iran and that oil prices will go down as soon as they win, while he suggested calling the Hormuz Strait the Trump Strait. Trump said 'may have to give them a shot at Pickaxe Mountain' and advised Iran not to get cute as the US would have to hit them very hard.
• Several explosions were heard in Iran's Qeshm and Sirik, with the sounds reportedly originating from the sea, according to Fars News Agency. Furthermore, IRNA cited official sources that stated areas in Sirik were hit by projectiles, although SNN reported that no points in Sirik have been targeted.
• An explosion was heard from the sea south of Jask, and it was reported that an oil tanker was being targeted in the Strait of Hormuz. However, a US official told NewsNation that there were no attacks being carried out by US forces in Iran near the Strait of Hormuz at that time.
• Iran official said they are ready for a more intense war if required and will escalate strikes in response to US attacks.
• IAEA's 35-nation Board of Governors passed a resolution reporting Iran to the UN Security Council for breaching its non-proliferation obligations.
• Israeli army artillery bombarded the northern parts of the village of Taranja near the outskirts of Quneitra.
• Israeli artillery and tank fire was reported in eastern Gaza City, according to Al-Mayadeen.
• Pakistani Ambassador said they believe that a better understanding will soon be achieved between the US and Iran, according to ISNA.
• Pakistan has warned Iran to restrain Yemen’s Houthi militants after a rise in Houthi attacks on Saudi Arabia, conveying the message on behalf of Riyadh, according to Reuters citing sources.
• Saudi-led coalition in Yemen said Houthis attacked the Saudi cities of Khamis Mushait, Abha and Jazan with ballistic missiles and drones, while explosions were also reported at the King Fahd Airbase.
• Saudi Arabia reportedly conducted airstrikes near the Al-Nari mountains in Yemen.
• Saudi-affiliated militias were reported to withdraw from Yemen's Hodeidah province, according to IRNA citing sources.

US TRADE

EQUITIES

• US stocks were lower again as higher oil prices and Treasury yields weighed on sentiment, with the Russell 2000 the laggard and the equal-weight S&P declined by around 1%. Nearly all sectors declined, with Industrials, Consumer Discretionary and Real Estate the underperformers, while Energy was the only industry to close higher amid a roughly USD 3/bbl rise in WTI as prices were buoyed by geopolitical escalation following the recent tit-for-tat strikes between the US and Iran, which helped Brent reclaim USD 100/bbl.
• SPX -0.45% at 7,639, NDX -0.29% at 29,422, DJI -0.77% at 52,381, RUT -1.28% at 2,922.
• Click here for a detailed summary.

TARIFFS/TRADE

• US trade official said China is ramping up their purchases and is on track to fulfil farm purchases ahead of Chinese President Xi's Washington visit, according to SCMP. It was separately reported that China bought 1mln tons of US soybeans ahead of Xi's visit to the US, according to sources.
• US Senator Slotkin said they are hearing rumours that President Trump is planning to allow Chinese cars to be sold in the US as part of a larger deal.

NOTABLE HEADLINES

• US President Trump said he will give a 'Trump dividend' to every adult in the US of USD 5,000 if Republicans win the Midterm elections, while he added that the dividend must be spent in the US.
• US Treasury Secretary Bessent touted tax cuts, job increases, trade rebalance and Trump accounts during his speech at the RNC Midterm Convention.
• US Agriculture Secretary Rollins said some food costs have come down in the last two years.

APAC TRADE

EQUITIES

• APAC stocks were mostly lower following the losses stateside, where all major indices declined as yields and oil prices climbed, with Brent crude topping USD 100/bbl for the first time since July.
• ASX 200 underperformed amid broad-based weakness across sectors and with the downside led by materials, mining, resources, and tech.
• Nikkei 225 was pressured alongside a higher yield environment and ongoing rate hike expectations, while BoJ board member Masu also stuck to the hawkish hymn sheet.
• KOSPI declined at the open but was off today's worst levels as SK Hynix rebounded from intraday lows.
• Hang Seng and Shanghai Comp conformed to the subdued mood across the region in the absence of bullish drivers and after the PBoC conducted open market operations, but at a paltry amount of CNY 3bln.
• US equity futures were range-bound ahead of the incoming inflation metrics and with little reaction to President Trump's pledge to give US adults a 'Trump dividend' of USD 5,000 if the GOP wins the Midterms.
• European equity futures indicate a flat/firmer cash market open with Euro Stoxx 50 futures up 0.2% after the cash market closed with losses of 1.6% on Wednesday.

FX

• DXY traded little changed following the recent choppy performance and as catalysts for the dollar remained sparse, while there was little reaction across asset classes to US President Trump's speech at the RNC Midterm Convention, where he pledged a USD 5,000 'Trump dividend' to all adults in the US if Republicans win the Midterms. The attention now turns to incoming inflation metrics with US PPI and CPI scheduled for Thursday and Friday, respectively.
• EUR/USD lacked direction with price action confined within a tight range at the 1.1600 handle amid very few fresh catalysts for the bloc and with the ECB expected to raise rates at its meeting today.
• GBP/USD eked slight gains in range-bound trade after oscillating throughout the week in the absence of pertinent drivers and amid a quiet calendar.
• USD/JPY held on to recent losses amid rate hike expectations and comments from officials, including hawkish rhetoric from BoJ's Masu, who said the BoJ is expected to continue hiking rates given current accommodative conditions.
• Antipodeans rebounded from the prior day's lows, but with upside capped in the absence of tier-1 data.
• PBoC set USD/CNY mid-point at 6.7766 vs Exp. 6.7074 (prev. 6.7769).

FIXED INCOME

• 10yr UST futures remained subdued after yields rose alongside higher oil prices and following the Treasury's long-end buyback announcement of a maximum of USD 6bln of 10yr-20yr nominal coupons on Thursday, which was above its previous guidance for "at least" USD 4bln, but disappointed as there were some expectations of as high as USD 10bln.
• Bund futures lingered around the prior day's trough heading into a widely expected ECB rate hike.
• 10yr JGB futures followed suit to the declines in global peers, with prices not helped by the looming enhanced-liquidity auction and hawkish comments from BoJ's Masu, who called for the BoJ to raise rates further and move its policy rate within the estimated neutral-rate range so it can conduct policy flexibly.

COMMODITIES

• Crude futures took a breather after extending their gains yesterday alongside the current backdrop of escalating US/Iran and Saudi/Yemen tensions, which lifted Brent crude north of the USD 100/bbl level.
• US Weekly Private Inventory Data (bbls): Crude -0.3mln (exp. -1.3mln), Gasoline -1.9mln (exp. -1.8mln), Distillate +2.0mln (exp. -0.2mln), Cushing -0.3mln
• US President Trump said after the election, oil prices will tumble lower, and gasoline prices will take a bit longer, but they will get gasoline below USD 2.
• US Energy Secretary Wright said the current refining capacity is a bigger problem than oil supply.
• Data showed Strait of Hormuz commodity vessel traffic fell to 7 on Wednesday vs. 10-day average of around 14.
• Russian Finance Minister Siluanov said reducing the cutoff price to USD 50/bbl will ensure budget stability and that this is the baseline option, while others are not being considered.
• Spot gold traded marginally higher but with upside capped following recent two-way price action around the USD 4,400/oz level and with the attention turning to incoming inflation metrics.
• Copper futures were contained overnight amid the subdued risk appetite and as LME futures stalled after recently extending to fresh record levels.
• LME said a steel futures contract linked to Shanghai prices will launch on October 27th.

CRYPTO

• Bitcoin marginally gained in indecisive trade, and after finding support around the USD 78,000 level.

NOTABLE ASIA-PAC HEADLINES

• BoJ Board Member Masu said one‑ to two‑year real interest rates remain negative and that they need to keep the price trend from going above 2%, while he added that the BoJ is expected to continue raising interest rates given current accommodative financial conditions. Masu said Japan is no longer in deflation, so real interest rates should be moved out of negative territory as soon as possible, and noted that the policy rate is approaching the estimated neutral-rate range, so prices, employment and financial conditions must be monitored carefully. Furthermore, he said with Japan’s financial conditions still accommodative, the BoJ could be forced to raise rates rapidly if inflation accelerates, and that the BoJ must raise rates further and move its policy rate within the estimated neutral-rate range so it can conduct policy flexibly.
• Chinese AI chipmakers have reportedly lifted prices amidst higher memory prices, sources suggest; the likes of Huawei have lifted prices by c. 20-50% more than quotes given a couple of months.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukraine's Air Force said attack drones targeted Zaporozhzhia and that drone groups were headed to Dnipro and Kamienske.
• Ukrainian President Zelensky's aeroplane was nearly hit by an attack drone as it took off from Moldova on Tuesday, according to FT.
• US President Trump said he had a great conversation with Russian President Putin and that Putin wants to make a deal, while he added that a bilateral meeting could happen.
• White House denied a report by FT that CIA director Ratcliffe was preparing to take a bigger role in the Russia-Ukraine negotiations and that it was considering paring back the involvement of Special Envoys Witkoff and Kushner.

EU/UK

NOTABLE HEADLINES

• EU social media ban is to test fragile truce with US President Trump as the proposal to restrict children's access to platforms risks stoking tensions with the US on tech regulation, according to FT.

DATA RECAP

• UK RICS House Price Balance (Aug) -28 vs Exp. -30 (Prev. -30, Rev. -29)