US President Trump may order another strike on Iran before the midterms; Brent +2% - Newsquawk EU Market Open

• US President Trump might order another Iran strike before the midterms, and Pentagon planners are crafting options, although no final decision has been made, Atlantic reports. On that note, the US military has been ordered to be ready for possible Iran strikes as President Trump weighs the timing, Axios reports. The directive did not provide a specific date.
• US President Trump stated that he doesn't think an Iran deal is something he wants to do.
• Mediation efforts between Washington and Tehran have stalled, while Hormuz is no longer a priority for Washington after Iran lost control of it.
• APAC stocks were on the backfoot on added geopolitical risk; European bourses set for a flat cash market open.
• DXY rangebound with FOMC Minutes largely uneventful; G10s mixed against the USD.
• Crude benchmarks firmer on reports of an early strike on Iran by the US.
• Looking ahead, highlights include German Trade Balance (Aug), US Initial Jobless Claims (Oct/03), Atlanta Fed GDP (Q3), ECB Minutes (Sep), UK Holborn and St Pancras parliamentary by-election, Speakers including US President Trump, ECB's Lane, BoE's Greene, Bailey & Lombardelli, Fed's Waller, Kashkari & Musalem, Supply from US, Earnings from PepsiCo.

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LOOKING AHEAD

• Highlights include German Trade Balance (Aug), US Initial Jobless Claims (Oct/03), Atlanta Fed GDP (Q3), ECB Minutes (Sep), UK Holborn and St Pancras parliamentary by-election, Speakers including US President Trump, ECB's Lane, BoE's Greene, Bailey & Lombardelli, Fed's Waller, Kashkari & Musalem, Supply from US, Earnings from PepsiCo.
• Click for the Newsquawk Week Ahead.

FOMC MINUTES

• FOMC Minutes stated that all participants supported the 25bps hike in September and most assessed another increase would likely be appropriate by the end of the year. Participants generally emphasised inflation remained elevated while the job market appeared near full employment. Participants offered a range of views for why they supported a rate increase and generally saw inflation risks skewed to the upside, with some seeing those risks becoming more skewed in recent months. Furthermore, almost all participants saw inflation risks tilted to the upside, while job market risks were broadly balanced.

IRAN CONFLICT

• US President Trump might order another Iran strike before the midterms, and Pentagon planners are crafting options, although no final decision has been made. White House has asked the Pentagon to develop strike options against Iranian targets that could be exercised ahead of the midterms, according to two administration officials. Furthermore, the size and targets of the potential strikes—and whether the administration will ultimately proceed—are still being debated.
• US military has been ordered to be ready for possible Iran strikes as President Trump weighs the timing, with the Pentagon said to have instructed US CENTCOM several days ago to conclude preparations for resuming major combat operations in Iran, according to Axios. The directive didn't include a specific date for launching strikes and President Trump hasn't made any final decisions, although US and Israeli sources said it could happen before the US midterm election. Furthermore, it was stated that if major combat operations resume, they are likely to be a joint US and Israeli campaign and expected to include large bombing of Iranian energy, infrastructure and nuclear targets.
• US President Trump and his national security team have discussed possibly resuming large-scale US military operations in Iran in the coming weeks, including the option of launching strikes before the midterm elections next month, according to NBC.
• US President Trump stated that he doesn't think an Iran deal is something he wants to do. It was separately reported that Trump said the Iranians are ready to offer us anything to stop what's happening, even though an agreement with them is not the option he truly wants, while Trump was also reported to say that Witkoff is now working on reaching an agreement with Iran and is making very good progress, according to Al Jazeera.
• US CENTCOM rejected IRGC claims that the Strait of Hormuz is closed and that Iran has full control over it, while it stated that traffic is flowing through the strait carrying commercial goods and energy supplies, including 20mln bbls of crude.
• Mediation efforts between Washington and Tehran have stalled, while Hormuz is no longer a priority for Washington after Iran lost control of it, according to sources cited by Al Hadath and Al Arabiya. Furthermore, it was stated that progress in negotiations is linked to Iran's response to Trump's demands regarding its nuclear capabilities, with Washington demanding that Iran acknowledge it will not continue developing its nuclear capabilities.
• Iran and Oman agreed on geographical coordinates of safe transit routes through the Strait of Hormuz and how they will be communicated to the relevant international authorities.
• Iran's Foreign Ministry spokesperson Baghaei said Iran's considerations and conditions for ending the war on all fronts and restoring security to the Persian Gulf region and the Strait have been clearly and firmly explained, and the necessary response to US proposals will be provided through mediators. He also stated that Iran will continue its efforts to strengthen trust and interaction between regional countries, while he stated that Tehran has spared no effort, in consultation with Oman as another coastal state, to restore security to the Strait of Hormuz, and the two sides had agreed on the geographical coordinates for safe transit routes and on how the agreement will be presented internationally, while the agreement between Iran and Oman on the safe routes of Hormuz will soon be reflected in international references.
• Iranian working assumption is that there will be a US attack, according to Jerusalem Post's Stein, citing two regional diplomats, while the debate in Tehran is if they should attack first.
• UK MTO received a report of an incident 51nm North of Madinat Ash Shamal, Qatar, in which casualties have been reported, after a tanker was struck by multiple projectiles.
• Saudi-led coalition said it conducted another round of retaliatory strikes against Houthis and that attacks on civilian targets won't go unpunished, while it destroyed a launcher used to attack Riyadh.
• Yemeni armed forces stated that 1,860 Houthi militia members were neutralised in the 'Dawn of Yemen' operation and that hundreds of pieces of equipment, supplies and military sites belonging to the Houthi militias were destroyed. Furthermore, it said 2,103 precision targeting operations were carried out against Houthi militias as part of the operation.
• Yemen's Houthis said they attacked King Khalid International Airport in Riyadh with a ballistic missile and stated Saudi airspace will be a target of operations except over Mecca and Medina.
• Pakistani army confirmed the presence of its military forces in Saudi Arabia, while it stated that Pakistani soldiers are performing their duties in multiple capacities and areas.
• Syria officially denied reports of sending troops to Yemen, with its presidential media advisor stating the reports are lies with no truth, and affirmed that Syria stands with Saudi Arabia's security.

US TRADE

EQUITIES

• US stocks finished lower following relatively broad-based weakness amid fluctuations in yields, with the Russell 2000 and equal-weight S&P 500 underperforming the major indices. The DJI also lagged, while the SPX and NDX saw more modest losses. Sectors were predominantly lower, with Industrials, Materials and Real Estate leading the declines, while Health Care outperformed.
• SPX -0.22% at 7,801, NDX -0.21% at 31,160, DJI -0.66% at 51,179, RUT -1.27% at 2,794.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said if the US didn't buy Swiss watches anymore, it would save USD 40bln, while he touted pharmaceutical company investments in the US. Trump also commented that Canada has been very difficult to deal with and that it would like to make a deal, but stated that they are not satisfied.
• USTR released a joint ministerial statement from 12 G20 countries plus the EU and Poland calling for steps to eliminate excess capacity and production in all economies.
• China has rejected an EU request to voluntarily restrict exports of hybrid cars to Europe, as the two sides enter last-ditch talks to avert a trade conflict, according to FT.

NOTABLE HEADLINES

• US President Trump said Fed Chair Warsh is great, but he's "one vote", while he added that interest rates should come down.
• US President Trump will attend a summit today meant to empower scientists and position the US as a leader in breakthroughs driven by "super intelligence," while the White House is announcing more than USD 1bln in industry commitments for the Genesis Mission from AMD (AMD), OpenAI, Anthropic and others, according to Axios.
• US Treasury Secretary Bessent said regarding high bond yields that it is a global phenomenon and core inflation is approaching target, while he separately commented that the economy is strong, but the Fed should have an open mind.

APAC TRADE

EQUITIES

• APAC stocks were mostly on the back foot following the negative handover from Wall St, where stock markets pulled back from recent record highs amid bond market volatility, while sentiment overnight was pressured as oil rebounded amid geopolitical risks after reports that the US military has been ordered to be ready for possible Iran strikes, with President Trump weighing the timing and could resume strikes before the Midterm elections, but with no decision made.
• ASX 200 was dragged lower as weakness in miners, materials and resources clouded over the gains in energy and resilience in defensives, while there was also an uptick in inflation expectations.
• Nikkei 225 retreated back beneath the 70,000 level as it continued to fade the recent tech-driven rally, while the TOPIX underperformed following the announcement that the Tokyo Stock Exchange plans to reduce the number of constituents in the index by about 40% to 986 stocks.
• KOSPI was pressured alongside indecision in Samsung Electronics shares following its preliminary Q3 earnings results, which showed operating profit surged 783% Y/Y, but missed the lofty expectations.
• Hang Seng and Shanghai Comp were subdued despite the resumption of trading in the mainland following a week-long hiatus, with pressure seen in tech stocks and sentiment was also not helped by trade frictions as the EU is said to be preparing a temporary import cap on Chinese hybrid cars.
• US equity futures remained lacklustre following the subdued performance on Wall St.
• European equity futures indicate a flat cash market open with Euro Stoxx 50 futures unchanged after the cash market closed with losses of 1.5% on Wednesday.

FX

• DXY was range-bound after having benefitted yesterday alongside further bond volatility, while there was little in the way of fresh FX-moving catalysts overnight and the FOMC Minutes release was uneventful, in which it noted that all participants supported the 25bps hike in September and most assessed another increase would likely be appropriate by the end of the year.
• EUR/USD gradually rebounded from the prior day's trough and just about reclaimed the 1.1200 status after suffering the previous day as French fiscal woes weighed on the single currency.
• GBP/USD attempted to nurse some of its recent losses but with the recovery hampered by the risk-off environment and as catalysts for the UK remained light, while several BoE speakers are scheduled today.
• USD/JPY was choppy with the pair continuing to oscillate around the 158.00 level in the absence of any tier-1 data and after recent fluctuations in global yields.
• Antipodeans were indecisive amid a rebound in commodities and the mostly negative sentiment.
• PBoC set USD/CNY mid-point at 6.7367 vs exp. 6.7254 (prev. 6.7351).

FIXED INCOME

• 10yr UST futures pulled back overnight after yields fluctuated yesterday alongside oil prices and with support from a strong 10yr auction, while FOMC Minutes were a non-event and noted that changes in real rates contributed to most of the net increase in longer-maturity Treasury yields.
• Bund futures took a breather after recent whipsawing and with German trade data scheduled later.
• 10yr JGB futures continued its rebound from the prior day's trough despite a 30yr auction, which proved to be stronger-than-previous, while there were some comments from Japanese PM Takaichi that fiscal stability is a prerequisite to policy.

COMMODITIES

• Crude futures rebounded from the prior day's trough after ultimately settling lower on Wednesday in choppy trade as participants weighed up supply and geopolitical-related updates. UKMTO announced that a tanker was struck by multiple projectiles near Qatar, which resulted in casualties, while risks of a resumption of strikes on Iran linger, with reports noting that the US military has been ordered to be ready for possible Iran strikes as President Trump weighs the timing, while Trump and his national security team have discussed possibly resuming large-scale US military operations in Iran in the coming weeks, including the option of launching strikes before the Midterm elections.
• US EPA Administrator said the EPA is days away from unveiling next oil and gas proposal. Venezuela's Cardon refinery is resuming crude distillation after a fire, according to workers.
• EU will only conduct further releases of oil and diesel reserves after the IEA makes clear such a move would not damage the bloc's energy security, according to Politico citing sources.
• EU Commission spokesperson said EU countries agreed that any release of oil stocks should be done under the IEA's March stock release action.
• France will release 10mln barrels of diesel from reserves, according to France Info.
• Syrian Petroleum Company said an oil pipeline in the northeast of the country was subjected to a "sabotage attack" that caused damage, which was the third such incident in about 10 days.
• Spot gold edged amid a rebound in commodities and as the dollar faded some of its recent gains.
• Copper futures rallied with upside seen at the open of Shanghai Commodities trade as the metal's largest buyer returned to the market following a week-long absence.

CRYPTO

• Bitcoin gradually declined and returned to beneath the USD 83,000 level.

NOTABLE ASIA-PAC HEADLINES

• China is building data centres at rapid speed across its energy-rich rural areas as Beijing seeks to turn abundant electricity and cheap land into an advantage in a global race to develop AI, according to FT.
• Samsung Electronics (005930 KS) Q3 (KRW) prelim. oper. profit rose 783% Y/Y to 107.4tln (exp. 108.7tln), rev. 195tln (exp. 199tln).

DATA RECAP

• Australian Consumer Inflation Expectations (Oct) 5.3% (Prev. 4.9%)

GEOPOLITICS

RUSSIA-UKRAINE

• US President Trump said regarding the lab death in Russia that he doesn't think it is a bioweapon, while he added that Russia said it is under control but also stated Russia isn't saying much.
• US President Trump said he has a call set up with Russian President Putin.

EU/UK

NOTABLE HEADLINES

• UK PM Burnham and German Chancellor Merz will hold security talks today, according to the BBC.
• French Finance Ministry said there is no change in bond issuance strategy and that French bond issuance strategy follows investor demand.

DATA RECAP

• UK RICS House Price Balance (Sep) -32% vs. Exp. -30% (Prev. -28%)