BONDS: Japanese Investors Were Large Net Buyers Of Italian Debt In September
Japanese investors net bought JPY361bln of Italian debt in September, according to domestic balance of payments data released overnight. This was the third largest single month net inflow since the start of 2021, after JPY423bln in February ’25 and JPY375bln in July ’21.
- After being subject to modest widening pressure in late-August/early-September, the 10-year BTP/Bund spread has resumed this year’s narrowing trend. BTP outperformance has been supported by relatively political stability in Italy versus the likes of France, improved domestic fiscal metrics and lower EUR rates vol. This combination of factors looks to have tempted Japanese investors back into BTPs in September, after a few months of net outflows in late Q2/early Q3.
- Japanese investors net bought JPY188bln of French debt in September, despite ongoing political uncertainty through the month amid the resignation of ex-PM Bayrou. It will be interesting to see aggregate net flows in October, with new PM Lecornu's budget negotiations dominating headline flow.
- There were JPY180bln of net sales in German bonds in September, while Gilts saw familiar net inflows.
- Meanwhile, Japanese investors net purchased JPY1,126bln of US Treasuries, bringing the year-to-date net inflow to JPY6,451bln.
- Our Asia-Pac team highlighted overnight that the larger-than-expected Japanese current account surplus was a combination of both the trade balance component and a surge in the primary income balance.
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US: Trump Oval Office Announcement Underway Shortly
US President Donald Trump is shortly due to deliver an announcement in the White House Oval Office. LIVESTREAM The announcement is expected to relate to drug pricing and could follow a similar template to a recent pledge from Pfizer.
- The announcement will be Trump's first press remarks since a market-moving Truth Social statement earlier today in which Trump suggested calling off a meeting with Chinese President Xi Jinping and raising tariffs on China in response to new export controls from Beijing on rare earths. See earlier bullets here and here.
RATINGS: Moody's Completes Periodic Review Of Belgium, No Rating Action
No ratings actions for Belgium from Moody's, which is quoted in a press release on Bloomberg: "Moody's Ratings (Moody's) has completed a periodic review of the ratings of Belgium and other ratings that are associated with this issuer. The review was conducted through a rating committee held on 2 October 2025 in which we reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), and recent developments. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future."
- There had been some speculation there could be a ratings action - MNI wrote Thursday: "* Moody's on Belgium (Current rating Aa3, Outlook Negative): We expect Moody's to maintain their current stance in the absence of 2026 budget details."
MACRO ANALYSIS: US Macro Week Ahead: No CPI, But Plenty Of Pre-Blackout FedSpeak
Below is the week’s data schedule, with MNI’s annotation of whether or not data will be postponed.
- As we went to press, the Fed announced that next week's Industrial Production data will be postponed (was due to be published next Friday Oct 17) as the data “incorporate a range of data from other government agencies, the publication of which has been delayed as a result of the federal government shutdown.”
- We won’t be getting September CPI as scheduled on Oct 15, but at least the BLS announced it will publish the data on Oct 24.
- As such next week we’ll be looking at some under-covered data points, including the Redbook weekly and Chicago Fed’s CARTS retail sales data (in lieu of the Census Bureau retail sales report), with a little more focus than usual on regional Fed manufacturing indices (NY, Philadelphia).
- Once again, the dearth of tier-one data leaves Fed commentary in focus ahead of the pre-FOMC blackout period: highlights for us are Philadelphia Fed President Paulson making her first comments on monetary policy on Monday since being appointed in the summer, while as always Chair Powell bears watching on Tuesday (we also hear from Bowman, Waller, Collins, Miran, Schmid, and Musalem).
- Additionally we get the latest Beige Book which was already key given the FOMC was already increasingly focused on anecdotal information as it attempts to navigate murky economic waters.
