US stocks were ultimately mixed, while treasuries and the dollar climbed after the Fed cut rates but Powell pushed back against a December cut - Newsquawk Asia-Pac Market Open

• US stocks, Treasuries, and Gold saw notable selling, while the Dollar soared in the wake of a very hawkish Powell at the Fed press conference. In the decision beforehand, it cut rates by 25bps, as expected, to 3.75-4%, albeit in a 10-2 decision. Governor Miran dissented for a 50bps reduction, as he said he would, while Schmid opted to leave rates unchanged. It also announced it will end the balance sheet contraction from December 1st; two-way action was seen in markets. However, Powell started his presser by noting there are strongly differing views on how to proceed in December, with another cut far from assured. He added that today's cut was another risk management move, but going ahead, it is different. Continuing to add to the hawkish rhetoric, the Chair noted there is a growing chorus of feeling they should maybe wait a cycle [regarding another cut]. As such, a hawkish reaction was seen with T-Notes tumbling, ES falling beneath 6.9k, and spot gold testing USD 3.9k/oz to the downside.
• USD rallied following the hawkish comments from Fed Chair Powell at the post-meeting press conference. Nonetheless, the Fed cut by 25bps as widely expected, with dissent growing at the October meeting as Schmid (2025 voter) and Miran (voter) dissented, albeit with the former arguing for unchanged rates, while Miran continued to advocate for 50bps increments. At the presser, USD strength accelerated after Fed Chair Powell downplayed market expectations of another cut in December, arguing another cut is far from assured, with differing views present on the committee regarding the policy path ahead.
• Looking ahead, highlights include New Zealand ANZ Business Survey, Australian Export & Import Prices, BoJ Policy Decision & Press Conference, Trump-Xi Meeting.

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LOOKING AHEAD

• Highlights include New Zealand ANZ Business Survey, Australian Export & Import Prices, BoJ Policy Decision & Press Conference, Trump-Xi Meeting.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks, Treasuries, and Gold saw notable selling, while the Dollar soared in the wake of a very hawkish Powell at the Fed press conference. In the decision beforehand, it cut rates by 25bps, as expected, to 3.75-4%, albeit in a 10-2 decision. Governor Miran dissented for a 50bps reduction, as he said he would, while Schmid opted to leave rates unchanged. It also announced it will end the balance sheet contraction from December 1st; two-way action was seen in markets. However, Powell started his presser by noting there are strongly differing views on how to proceed in December, with another cut far from assured. He added that today's cut was another risk management move, but going ahead, it is different. Continuing to add to the hawkish rhetoric, the Chair noted there is a growing chorus of feeling they should maybe wait a cycle [regarding another cut]. As such, a hawkish reaction was seen with T-Notes tumbling, ES falling beneath 6.9k, and spot gold testing USD 3.9k/oz to the downside.
• SPX +0.00% at 6,891, NDX +0.41% at 26,120, DJI -0.16% at 47,632, RUT -0.87% at 2,485.
• Click here for a detailed summary.

FOMC

• Fed cut rates by 25bps as expected to 3.75-4.00%, with two dissenters as Miran voted for a 50bps cut and Schmid voted for unchanged. Fed said it is ending the drawdown of its balance sheet and is to reinvest MBS proceeds into Treasury bills from December 1st and said available indicators suggest that economic activity has been expanding at a moderate pace, while job gains have slowed this year, and the unemployment rate has edged up but remained low through August. Fed noted that more recent indicators are consistent with these developments and stated that inflation has moved up since earlier in the year and remains somewhat elevated. Fed also said the Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months. Furthermore, it maintained guidance that in considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
• Fed Chair Powell reiterated that data available suggests the outlook for employment and inflation has not changed much since the September meeting, while he noted there are different views on how to proceed in December and that another cut in December is far from assured.
• Fed Chair Powell reiterated in the Q&A that a reduction in December is not a foregone conclusion, far from it, and that there is tension between two goals, while no decision has been made for December and they had strongly differing views. Fed Chair Powell said the latest cut was risk management, but going forward it is a different thing, as well as noted that the Fed cannot address both employment and inflation risks with its one tool, and that policy makers have different forecasts and have a different risk tolerance.
• Fed Chair Powell said for the latest rate cut, it was a strong, solid vote, and the different views at the FOMC were about the future. Powell also stated that at a certain point they will want reserves to gradually start growing, and will be adding some reserves at a certain point, but want to move the balance sheet to shorter-duration and have not decided on an end point. Fed Chair Powell, when asked about why they wouldn't cut in December aside from lack of data, replied that there are many estimates on the neutral rate level on the committee and some think it is time to take a step back, while he added they have moved 150bps already. Furthermore, he said there is a sense from some to pause, but a sense from others to go ahead with rate cuts.

TARIFFS/TRADE

• US President Trump said the meeting with Chinese President Xi will be three hours long before returning to the US, while he added that things will work out very well with Xi. Furthermore, the White House announced that US President Trump is to meet Chinese President Xi at 11am in South Korea (02:00 GMT/22:00 ET).
• US President Trump posted "Bringing back Trillions of Dollars to USA! A great trip. Dealing with very smart, talented, and wonderful Leaders. Tomorrow, President Xi of China. It will be a great meeting for both!!!
• Chinese Foreign Ministry said regarding the meeting between Presidents Trump and Xi, that it will inject new momentum into the steady development of US-China relations, while it stands ready to work with the US for positive outcomes.
• US Senate Minority Leader Schumer and other democratic Senators urge US President Trump not to lift restrictions on AI chips and American tech in pursuit of a China trade deal.
• China team will reportedly meet EU officials on Friday for rare earth talks, according to Bloomberg.
• Mexico's Economy Minister Ebrard and USTR Greer agreed on the next steps in trade talks and aim for a deal before the 2026 USMCA review.

NOTABLE HEADLINES

• US Senate Minority Leader Schumer said Democrats will vote for Republican Senator Hawley's bill to pay food stamp benefits during the shutdown and called on Senate Majority Leader Thune to bring in a vote, according to Bloomberg.
• Alphabet Inc (GOOGL) Q3 2025 (USD): EPS 2.87 (exp. 2.30), Revenue 102.3bln (exp. 99.73bln)
• Microsoft Corp (MSFT) Q1 2026 (USD): Adj. EPS 4.13 (exp. 3.67), Revenue 77.7bln (exp. 75.40bln)
• Meta Platforms Inc (META) Q3 (USD) EPS 1.05 (exp. 6.76), Revenue 51.2bln (exp. 49.35bln), includes one-time non-cash income tax charge of USD 15.93bln

DATA RECAP

• US Pending Sales Change MM (Sep) 0.0% vs. Exp. 1.0% (Prev. 4.0%, Rev. 4.2%)

FX

• USD rallied following the hawkish comments from Fed Chair Powell at the post-meeting press conference. Nonetheless, the Fed cut by 25bps as widely expected, with dissent growing at the October meeting as Schmid (2025 voter) and Miran (voter) dissented, albeit with the former arguing for unchanged rates, while Miran continued to advocate for 50bps increments. During the presser, USD strength accelerated after Fed Chair Powell downplayed market expectations of another cut in December, arguing another cut is far from assured, with differing views present on the committee regarding the policy path ahead.
• EUR gave up ground to the greenback in the aftermath of Powell's hawkish rhetoric, which dragged the single currency to sub-1.1600 territory, while participants also look ahead to Thursday's ECB meeting.
• GBP suffered and reverted to the 1.31 handle as the dollar reigned supreme, while it was reported that UK PM Starmer left the door open for potential tax hikes in November's budget, as he refused to rule out increases to income tax, national insurance or VAT during parliamentary questioning.
• JPY weakened with USD/JPY briefly reclaiming the 153.00 handle as US yields climbed, while focus turns to the BoJ announcement and Trump-Xi meeting.
• Bank of Canada cut its policy rate by 25bps as expected to 2.25% (prev. 2.50%). BoC stated that the current policy rate is "about the right level" to keep inflation close to 2% while helping the economy through this period of structural adjustment.

FIXED INCOME

• T-notes were pressured with the curve bear flattening after Fed Chair Powell pushed back on a December rate cut.

COMMODITIES

• Oil prices were firmer with the complex underpinned by larger-than-expected EIA draws.
• US EIA Weekly Crude Stocks w/e -6.858M vs. Exp. -0.211M (Prev. -0.961M)
• Russia's crude oil exports remain in line with October plans with no immediate impact from new sanctions, according to Reuters citing LSEG data.

GEOPOLITICAL

MIDDLE EAST

• Israeli military said it conducted a targeted strike in the northern Gaza Strip.
• Qatari PM said they are trying to engage the US and Iran to make sure talks get back on track, while he added that serious talks between the US and Iran can achieve a deal that will be better for everyone.
• UN said Iran is not actively enriching Uranium but noted movement was detected near Iran’s stockpile, according to AP citing the UN nuclear watchdog chief.

RUSSIA-UKRAINE

• Russian President Putin said Russian forces are advancing in Ukraine, while he added that Russia is ensuring its long-term security and that the enemy is blocked and surrounded in Kupiansk and Pokrovsk.

OTHER

• US Defense Secretary Hegseth said the US is not looking to create a formal multilateral alliance in Asia and dismissed reports on a potential US defence line excluding South Korea and Taiwan, according to Yonhap.

ASIA-PAC

NOTABLE HEADLINES

• Japanese PM Takaichi and Chinese President Xi are to meet on Friday, according to Kyodo.
• South Korean President Lee is to hold bilateral talks with leaders of Japan, Vietnam, Australia, Thailand and New Zealand on Thursday.
• Honda (HMC) is suspending or trimming output at some North American plants and said production cuts are due to a chip shortage.

EU/UK

NOTABLE HEADLINES

• UK PM Starmer left the door open for potential tax hikes in November's budget, as he declined to rule out increases to income tax, national insurance or VAT during parliamentary questioning, according to Bloomberg.
• UK Chancellor Reeves is looking at an early scrapping of windfall tax on the UK oil and gas sector, according to FT.
• Italy reportedly told the EU it is ready to amend its golden power legislation over strategic firms and a decision is expected on November 12th-13th, according to Reuters citing sources.