MNI EUROPEAN OPEN: Further Gold Weakness Short Lived, Vol High

EXECUTIVE SUMMARY

• TRUMP SAYS HE DID NOT WANT 'WASTED MEETING' AFTER PLAN FOR PUTIN TALKS SHELVED - BBC
• JAPAN'S NEW PM IS PREPARING LARGE ECONOMIC STIMULUS TO TACKLE INFLATION, SOURCES SAY - RTRS
• JAPAN SEPT EXPORTS POST 1ST RISE IN 5 MONTHS - MNI BRIEF 
• INDIA, US TRADE DEAL LIKELY SOON, HUGE TARIFF CUTS ON THE HORIZON - MINT 
• GOLD AND SILVER WAVER AFTER MASSIVE PULLBACK AS RALLY FIZZLES - BBG 

Fig 1:  Gold 1mth Volatility, Close To 2022 Highs

Source: MNI - Market News/Bloomberg/Refinitiv. 

EU

FINLAND (MNI INTERVIEW): Finland will issue a new 10-year benchmark bond in 2026, the State Treasury's debt management head Anu Sammallahti told MNI, adding that forecasted borrowing needs mean that the current debt issuance strategy is expected to continue.

ECONOMY (POLITICO): “Leaders from 19 EU countries wrote to European Council President António Costa on Monday calling for a "constant stream" of proposals to simplify the bloc’s rules. The letter, sent ahead of a key EU summit starting Thursday in Brussels, signals that leaders will push to intensify the EU's deregulation drive in order to boost their economies.”

CHINA/EU (MOFCOM): “China’s Minister of Commerce Wang Wentao told European Commissioner for Trade and Economic Security Maroš Šefčovič that China remains committed to safeguarding the security and stability of global supply chains and has consistently facilitated the rare earth approval processes for EU enterprises, according to a statement on the ministry's website.” 

US

US/RUSSIA (BBC): “Donald Trump has said he did not want a "wasted meeting" after a plan to have face-to-face talks with his Russian counterpart Vladimir Putin about the war in Ukraine were put on hold.”

CORPORATE (BBG): “Anthropic PBC is in discussions with Alphabet Inc.’s Google about a deal that would provide the artificial intelligence company with additional computing power valued in the high tens of billions of dollars, according to people familiar with the matter.” 

US/CHINA (BBG): “US President Donald Trump predicted an upcoming meeting with his Chinese counterpart, Xi Jinping, would yield a “good deal” on trade — while also conceding that the highly anticipated talks may not happen.” 

OTHER

INDIA/US (MINT): “ New Delhi: India and the US are closing in on a long-pending trade deal that could slash the current tariffs for Indian exports to 15-16% from a punishing 50%, according to three people aware of the matter.” 

JAPAN (MNI BRIEF): Japan’s exports rose 4.2% year-on-year in September, marking the first increase in five months, driven by stronger shipments of semiconductor manufacturing equipment and mineral fuels despite continued weakness in automobile exports, data from the Ministry of Finance showed Wednesday.

JAPAN (MNI BRIEF): Demand for financing by Japanese corporates via commercial banks increased from three months ago as sales and capital investment picked up, the Bank of Japan’s senior loan officer opinion survey on bank lending practices showed Wednesday.

JAPAN (RTRS): “Japan's new Prime Minister Sanae Takaichi is preparing an economic stimulus package that is likely to exceed last year's $92 billion to help households tackle inflation, government sources familiar with the plan said on Wednesday." 

JAPAN (RTRS): "The Bank of Japan will raise its key interest rate in either October or December, a majority of economists said in a Reuters poll, while nearly 96% of them expect borrowing costs to increase at least 25 basis points by end-March." 

COMMODITIES (BBG): “Gold and silver extended drops after their steepest selloffs in years, as investors took profits on concern the dizzying surges in the precious metals in recent weeks had left them overvalued.” 

CHINA 

RARE EARTHS (BBG): “ China convened an unusually large meeting with foreign businesses in an effort to reassure them that its new rare earth export controls aren’t meant to restrict normal trade — evidence policymakers are trying to calm a backlash over the move.” 

STOCKS (BBG): “Goldman Sachs Group Inc. expects China’s key stock index to gain 30% by end-2027, supported by pro-market policies, rising profits and strong money flows.” 

MNI: PBOC Net Injects CNY94.7 Bln via OMO Wednesday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY138.2 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY94.7 billion after offsetting maturities of CNY43.5 billion today, according to Wind Information. 

• The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4035% at 09:29 am local time from the close of 1.4433% on Tuesday.
• The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 50 on Tuesday, compared with the close of 47 on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Higher At 7.0954 Weds; +0.35% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.0954 on Wednesday, compared with 7.0930 set on Tuesday. The fixing was estimated at 7.1251 by Bloomberg survey today.

MARKET DATA

JAPAN SEPT. EXPORTS +4.2% Y/Y; EST. 4.4%; AUG. -0.1%
JAPAN SEPT. IMPORTS +3.3% Y/Y; EST. 0.6%; -5.2%
JAPAN SEPT. TRADE BALANCE -Y234.6B; EST. +Y22.5B; AUG. –Y242.8B
JAPAN SEPT. ADJUSTED TRADE -Y314.27B; EST. –Y112.4B; AUG. –Y171.2B

SOUTH KOREA SEPT. PPI +1.2% Y/Y; AUG. +0.6%

MARKETS

US TSYS: Modest Declines in Yields Again Today

Bond futures finished -01 lower today for TYZ5 on low volumes, looking for a catalyst for the next move .  

• The US 2-Yr did very little all morning before rising modestly to 3.465 in the afternoon trading session.  
• The US 5-Yr ground was flat at 3.56%
• The 10-Yr has consolidated below 4.00%, rallying again modestly by -0.5bps to reach 3.96% in line with October 24 yield levels.
• The 30-Yr continues to outperform rallying -0.5bps overnight to reach 4.53%. Likely next inflection point could be the April lows of 4.40%.
• Yield moves are appearing disjointed relative to current interest rate pricing as the government shutdown continues as bond traders agonize over the potential impact on the economy. New ranges are being defined and as markets await the release of the September CPI, markets appeared skewed towards lower yields for now.
• There is limited Tier 1 data releases for markets to follow tonight, only MBG mortgage applications.  Equity weakness in Asia will be watched for any follow through particularly as many bourses reach new highs.  

JGBS: Slightly Richer As Market Digests Fiscal Policy News

JGB futures are slightly stronger, +2 compared to the settlement levels, but well off session lows.

• Headlines have crossed from Japan's Growth Strategy Minister Minoru Kiuchi. Kiuchi stated that the focus now is compiling an economic stimulus package, albeit with one eye still on fiscal discipline (DJ) (and diverse funding sources). Various ministers are being consulted, with a focus on helping tariff impacted sectors. Kiuchi stated that no timeline is set for when the economic package will be compiled. Early focus for markets for the new Takaichi regime is fiscal stimulus, in terms of size and how it will be funded (particularly with parallels drawn with the Abenomics-like policy set).
• Cash US tsys are slightly richer in today's Asia-Pac session.
• Cash JGBs are flat to 1bps richer across benchmarks, but significantly better than early session yield highs, as the market digested today’s news on the fiscal policy.
• The benchmark 30-year yield is 0.6bp lower at 3.125% versus the session high of 3.148%. (see chart) Notably, the current yield is more than 20bps below the cycle high of 3.351%, hit shortly after Takaichi was announced as the LDP leader.
• Swap rates are little changed.
• Tomorrow, the local calendar will see Weekly International Investment Flow data alongside Auction for Enhanced-Liquidity 15.5-39 YR.

Bloomberg Finance LP

AUSSIE BONDS: Subdued Session, Market Scales Back Chances Of A Nov Cut

ACGBs (YM -0.5 & XM +1.0) are slightly mixed.

• Cash ACGBs are little changed with the AU-US 10-year yield differential at +15bps.
• The bills strip is -1 to -2 across contracts.
• A 25bp rate cut in November is assigned a 64% probability, with a cumulative 23bps of easing priced by year-end.
• Compared with previous instances in this easing cycle, the market appears less confident than usual about a November 4 cut.
• This caution aligns with the RBA’s pattern over the past year of easing less than what six-month forward expectations had implied. Those expectations currently sit around 3.20%, compared with the cash rate of 3.60%.  (see chart)
• The local data calendar remains fairly quiet throughout the week.
• Today’s auction of the Jun-35 showed solid pricing for ACGBs, with the weighted average yield coming in 0.43bps below prevailing mid-yield. However, the cover ratio nudged lower to 2.9056x from 3.2958x at the previous auction.
• The AOFM plans to sell A$800mn of the 2.75% 21 November 2029 bond on Friday.
• QTC has priced a A$2 billion increase to its 4.50% August 22, 2035 A$ fixed rate benchmark bond, according to BofA Securities. - BBG

Figure 1: RBA Cash Rate Vs. OIS 6M1M (6M Ago)

Source: Bloomberg Finance LP / MNI

BONDS: Closed With A Bear-Flattener, NZ-US 10Y Diff Looks Too Low

NZGBs closed showing a bear-flattener, with benchmark yields flat to 2bps higher.

• On a relative basis, the NZGB 10-year has underperformed its US tsy counterpart, with the NZ-US yield differential 2bps higher at flat. (see chart)
• A simple regression of the 1Y3M forward swap spread against the 10-year yield differential over the past 18 months suggests the current differential is 6bps below its estimated fair value of +6bp
• “NZ's central bank considered Hayley Gourley as a potential board member and recommended that option to the government before she was appointed to the MPC.” – BBG
• “NZ is relaxing climate reporting rules due to concerns over the cost to businesses, with companies listed on the NZX only having to provide disclosures if their market capitalisation is NZ$1 billion or more.” - BBG
• Swap rates closed little changed.
• RBNZ dated OIS pricing closed little changed across meetings. 25bps of easing is priced for November, with a cumulative 39bps by February 2026.
• The local calendar will be empty until next Tuesday's release of Filled Jobs data for September.
• On Thursday, the NZ Treasury plans to sell NZ$225mn of the 4.50% May-30 bond, NZ$175mn of the 4.25% May-36 bond and NZ$50mn of the 5.00% May-54 bond.

Figure 1: NZ-US 10-Year Yield Differential

Source: Bloomberg Finance LP / MNI

FOREX: USD Largely Holding Recent Gains, Japan Fiscal Package May Exceed Last Yr

The USD index sits a touch off Tuesday session highs, last near 1212. Cross asset trends have focused on gold volatility, although this hasn't spilled over much to the majors, with moves at 0.20% or less at this stage (AUD and NZD are ticking up). US equity futures have been supported on dips, while US Tsy yields continued to bias lower, which could be capping US upside, although this most recent BBDXY index bounce has come with the real US 10yr yield falling back to 1.70% (not far off Sep lows). Policy initiatives from the new Japan government have been the other focus point, but again Japan wide asset moves are not significant, with further details awaited. 

• Japan's Growth Strategy Minister Minoru Kiuchi stated that the focus now is compiling an economic stimulus package, albeit with on eye still on fiscal discipline (DJ) (and diverse funding sources). Various ministers are being consulted, with a focus on helping tariff impacted sectors, along with cost of living relief. Kiuchi stated that no timeline is set on when the economic package will compiled.
• Following Rtrs reported: "JAPAN'S NEW PM TAKAICHI IS PREPARING ECONOMIC STIMULUS EXPECTED TO EXCEED LAST YEAR'S 13.9 TRILLION YEN ($92.2 BILLION), SOURCES SAY", although details aren't finalised yet, with the package potentially out next month.
• USD/JPY has held under 152.00 today, but dips to 151.50 have been supported. Japan equities are modestly higher, while JGB yields are drifting slightly lower.
• AUD and NZD have ticked up, likely aided by the rise in US equity futures. Local news flow has been light. AUD/USD is back around 0.6500, while NZD/USD has edged up to 0.5750, with upside focus to rest at the 0.5760 region (also note the 20-day EMA is at 0.5770/75).
• Later UK September CPI data print and ECB President Lagarde and Board members Buch and de Guindos speak.

ASIA STOCKS: Stocks Pull Back On AI-Related Profit Taking

Bellwether tech stocks declined over 1% today in Asia as a lackluster forecast from Texas Instruments saw it's stock fall, and others follow.   After many of the key tech stocks in Asia hitting new highs recently, it is unsurprising to see falls as profit takers step in.  Demand remains robust and export data from countries like Korea and Taiwan show that export growth remains strong, suggesting that whilst the outlook remains strong, a re-rating in expectations can occur.  

• Major Asian bourses have hit new highs over the last week and have followed each other lower today, with the NIKKEI leading the falls.  The NIKKEI is down -0.60% after hitting new highs yesterday as investors seek to understand the outcome of political negotiations to form a new government.  
• China's major bourses are down also with the Hang Seng falling -1.3% and back below the 50-day EMA it trended above only yesterday.   Other onshore bourses are down with the CSI 300 has pulled back -0.705 and near to the 20-day EMA again, whilst Shanghai and Shenzhen are down -0.45% and -0.55% respectively.
• The KOSPI is an outlier today, reaching yet another new high of 3,835 to be up +0.29%.  
• Ahead of the BI decision later, the JCI is down -0.6% as markets await what appears to be an imminent rate cut.  
• Headlines have crossed from Indian news source Mint, that a US-India trade deal will soon see tariff rates fall sharply. Some key quotes are outlined below, but notably the article states tariff rates may come down form 50% to 15-16%. Market optimism around a trade deal has been growing, given recent Trump remarks that India would curb Russian oil imports.  The NIFTY 50 has reached a new high of 25,866, up +0.10% in morning trade. 

OIL: Report US-India Deal Close Drives Oil Higher, EIA US Stock Data Out Later

Oil has found support today from data showing a US inventory drawdown and news that the US and India are close to a deal to gradually reduce India’s Russian oil imports and US tariffs. Less Indian consumption of Russian crude would increase its demand for other sources boosting prices. WTI is up 1.7% to $58.23/bbl following a high of $58.38, remaining below the 50-day EMA at $61.76. Brent is 1.5% higher at $62.26/bbl after reaching $62.47 (50-day EMA $65.35). 

• A US-India trade deal is apparently close to completion which would allow the current 50% US duties to be reduced to around 15%, according to Bloomberg citing Mint. US President Trump has said recently that Indian PM Modi had agreed to ending imports of Russian oil. Mint is saying that the agreement could be announced at the 26-28 October ASEAN meeting.
• Oil has also found support from Tuesday’s announcement that a million barrels with delivery in December and January will be purchased for the US’ SPR, which reached a low in July 2023 and was only 17% higher last week.
• After rising the previous week, Bloomberg reported US oil inventories fell 3mn barrels last week, according to people familiar with the API data. Product stocks were also lower with gasoline down 0.2k and distillate 1mn. The official EIA data is out Wednesday.
• Later UK September CPI data print and ECB President Lagarde and Board members Buch and de Guindos speak. 

Gold & Silver’s Early Wednesday Decline Short-Lived, USD Slightly Softer

Profit taking in gold and silver begun on Tuesday continued early in Wednesday’s APAC trading but the declines have been more than unwound and both are now slightly higher on the day. The moderate decline in the US dollar, unchanged US yields and weaker equities appear to have driven the recovery. Traders have been long, with the extent unclear due to the lack of CFTC positioning data because of the US government shutdown, and Tuesday’s sell off appears to have been driven by repositioning as both metals are in overbought territory.

• Gold reached a low of $4004.26, below the 20-day EMA at $4021.6, but has recovered to be 0.2% higher at $4131.2, just below support at $4140.8 and off today’s peak at $4143.28. It remains overbought.
• Silver fell to $47.550 earlier but is now up 0.5% to $48.94, still below the 20-day EMA at $49.089. The 50-day EMA at $44.996 is a level to watch.
• Equities are generally weaker with the Hang Seng down 1.3%, Nikkei -0.5% but S&P e-mini close to flat. Oil prices are stronger with WTI +1.7% to $58.20/bbl. Copper is down 0.1%.
• Later UK September CPI data print and ECB President Lagarde and Board members Buch and de Guindos speak. 

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
22/10/2025	0600/0700	***	GB	Consumer inflation report
22/10/2025	0600/0700	***	GB	Producer Prices
22/10/2025	1100/0700	**	US	MBA Weekly Applications Index
22/10/2025	1100/1300		EU	ECB de Guindos at Barcelona Real Assets Meeting
22/10/2025	1225/1425		EU	ECB Lagarde Keynote at Frankfurt Finance & Future Summit
22/10/2025	1430/1030	**	US	DOE Weekly Crude Oil Stocks
22/10/2025	1430/1030	**	US	US DOE Petroleum Supply
22/10/2025	1700/1300	**	US	US Treasury Auction Result for 20 Year Bond
22/10/2025	2000/1600		US	Fed Governor Michael Barr
23/10/2025	0645/0845	**	FR	Manufacturing Sentiment
23/10/2025	0900/1000	**	GB	Gilt Outright Auction Result
23/10/2025	1000/1100	**	GB	CBI Industrial Trends
23/10/2025	1100/0700	***	TR	Turkey Benchmark Rate
23/10/2025	-		EU	ECB Lagarde at Euro Summit in Brussels
23/10/2025	1230/0830	***	US	Jobless Claims
23/10/2025	1230/0830	**	US	WASDE Weekly Import/Export
23/10/2025	1230/0830	**	CA	Retail Trade
23/10/2025	1230/0830	**	CA	Retail Trade
23/10/2025	1330/1530		EU	ECB Lane Award Acceptance Speech