MNI US OPEN - Concern Over US Regional Banks Weighs on Risk

Oct-17 09:37By: Hiren Ravji

EXECUTIVE SUMMARY

US REGIONAL BANK SHARES SINK ON CREDIT WORRIES AFTER FRAUD DISCLOSURES
FED'S KASHKARI SAYS INFLATION LINGERING, JOBS WEAKENING
TAKAICHI EFFECTIVELY CONFIRMED AS NEXT PM AFTER ISHIN ENDS TALKS W/OPPOSITION
BOJ’S UEDA KEEPS DOOR OPEN FOR RATE HIKE AS DECISION NEARS

Figure 1: More regional bank names reporting earnings today

Source: MNI

NEWS

US (FT): US Regional Bank Shares Sink on Credit Worries After Fraud Disclosures

Shares in US regional banks fell on Thursday after two lenders disclosed that they were exposed to alleged fraud by borrowers, raising broader concerns about the health of bank loan portfolios. The disclosures by Western Alliance Bank and Zions Bank follow the recent failures by car parts maker First Brands and auto lender Tricolor, which have left credit investors nursing losses and are under scrutiny from the US Department of Justice.

US/RUSSIA (NYT): Trump Plans to Meet With Putin to Talk About a Cease-Fire in Ukraine

After speaking for more than two hours on Thursday with President Vladimir V. Putin, President Trump said he planned to meet with the Russian leader in Hungary in “two weeks or so” to discuss ways to bring an end to Moscow’s three-year invasion of Ukraine. Mr. Trump held what he termed a “productive” call with his Russian counterpart a day before he was set to meet with President Volodymyr Zelensky of Ukraine, who is expected to make the case that the United States should give Kyiv weapons capable of striking deep inside Russia.

FED (MNI): Inflation Lingering, Jobs Weakening - Fed's Kashkari

It's too soon to tell whether tariffs will have a persistent effect on inflation while demand for workers is weakening, Minneapolis Federal Reserve Bank President Neel Kashkari said Thursday. "Is that going to lead to a permanent increase in prices or is it just a one time event, and is it just goods prices, or does it spill over to other sectors of the economy? The short answer is, so far, it's too soon to know for sure," he said during Q&A at an event in Rapid City, South Dakota.

CHINA (MNI EXCLUSIVE): China Advisors Eye 4.8% Q3 GDP Amid Slowing Momentum

Chinese analysts and advisors share their Q3 GDP outlook. On MNI Policy MainWire now, for more details please contact sales@marketnews.com

BOJ (BBG): BOJ’s Ueda Keeps Door Open for Rate Hike as Decision Nears

Bank of Japan Governor Kazuo Ueda indicated that the bank will continue normalizing policy if confidence in achieving its economic outlook strengthens — keeping the door open for a near-term interest-rate hike. “There’s no change in our stance that we will adjust the degree of monetary easing if our confidence in hitting the outlook increases,” Ueda told reporters Thursday in Washington after a Group of 20 meeting. The BOJ has since last year been dialing back its monetary stimulus via interest-rate hikes and adjusting its balance-sheet policy.

BOJ (MNI EXCLUSIVE): BOJ's Concerns Grow Over Slowing Price Hikes

The BOJ is looking for signs of slowing inflation amid sluggish private consumption. On MNI Policy MainWire now, for more details please contact sales@marketnews.com

BOJ (MNI EXCLUSIVE): BOJ Goes to Neutral Even if Govt Pressure - Sheard

Former Japanese government adviser and BOJ visiting scholar Paul Sheard discusses the outlook for Japanese rates. On MNI Policy MainWire now, for more details please contact sales@marketnews.com

JAPAN (MNI): Takaichi Effectively Confirmed as Next PM After Ishin Ends Talks w/Oppo

Speaking after a second set of meetings in as many days with governing Liberal Democratic Party (LDP) President Sanae Takaichi, co-leader of the libertarian-federalist Japan Innovation Party (Ishin), Fumitake Fujita, said, "Both sides consider this to be a major step forward. We will now adjust the final wording and interpretation." He also said, "There are still some things that need to be sorted out." Crucially, the issue of the identity of the next Japanese PM looks to have been settled after Fujita said that Ishin will not continue discussions with opposition parties. Fujita added that an Ishin party executive had told the main opposition liberal Constitutional Democratic Party (CDP) and conservative populist Democratic Party for the People (DPFP) that Ishin lawmakers would find it difficult to vote for their leaders for PM.

JAPAN (BBG): Japan’s Opposition Party Leader Says Coalition Chance Is ‘50-50’

The likelihood of the ruling Liberal Democratic Party forming a new coalition with opposition party Ishin is 50-50, the leader of the smaller party said Friday, as key talks continue ahead of a parliamentary vote on who will lead the nation. “We are standing at a cross-roads of where we will go,” said Hirofumi Yoshimura, the co-leader of the Japan Innovation Party, also known as Ishin, during a TV show broadcast Friday morning. The comments may be a negotiation tactic to extract more last minute concessions from the LDP. But with the negotiations reaching crunch time, Ishin can still tip the scales either way.

RBA (MNI EXCLUSIVE): RBA to Remain Cautious Despite Unemployment Surge

Economists and former staffers share their RBA cash rate outlook. On MNI Policy MainWire now, for more details please contact sales@marketnews.com

DATA

SWEDEN DATA (MNI): Fall in LFS Unemployment Rate Was for the Wrong Reasons

SWEDEN SEP SA UNEMPLOYMENT 8.7%

The Swedish LFS unemployment rate fell a tenth to 8.7% in September, in line with analyst consensus. On a 3mma basis, that leaves the Q3 unemployment rate at 8.8%, a tenth above the Riksbank's September MPR projection. September's decline in the unemployment rate was also for the "wrong" reasons, with the participation rate falling two tenths and employment growth down 0.1% M/M. The Riksbank expects labour market conditions to improve from the start of 2026, so a stabilisation in Q3/Q4 is a necessary first step. Data from the Public Employment Service gave some early evidence of this on Wednesday, but the LFS data does not corroborate yet.

FOREX: Heavy APAC Equity Close Weighs on Risk, But Floor Under USD For Now

After a heavy start to the session, markets have stabilised somewhat, with haven currencies holding their outperformance, while the USD trades mixed and risk proxies (most notably AUD) hold losses into the NY crossover. Heavy equity selling across Asia followed the negative Wall Street close, itself spurred by fresh concerns over regional bank loan portfolios. As such, while focus earlier this week was on big banks and financial institutions, focus has shifted to regional banking reports - and today sees more notable multi-state, regional names reporting: Regions Financial (Alabama), Truist Financial (North Carolina), Fifth Third Bancorp (Ohio) and Huntington Bancshares (Ohio).
While on more stable footing after the European open, focus is on whether the sell-off extending from regional banks to broader global equities is justified, or whether markets are finding a suitable moment to de-risk after the recent sharp rally.
USDJPY's new daily low at 149.38 is holding for now - and the USD has recouped a small part of the early losses. The bounce off lows for the USD Index seemed to coincide with a bout of sales in EM currencies; most notably the CNH, ZAR and MXN. In sympathy with JPY gains, CHF stands out: EURCHF's low print of 0.9219 is through the April low, with horizontal support expected layered between 0.9206-22.
On top of the global risk-off theme, note that Japanese LDP leader Takaichi was effectively confirmed as next PM after Ishin party said it will not continue talks with opposition parties. Looking at today's price action in USDJPY, safe-haven characteristics of the yen outweigh the fiscal and monetary implications of Takaichi's agenda which is now more likely to be implemented. With questions around potential concessions to Ishin party remaining, USDJPY at -0.4% this session pierced below both 150.0 handle and its 20-day EMA, strengthens short-term bearish conditions.
EM currencies also trade notavly weaker, with ZAR, CNH and MXN the key underperformers. Selling pressure across EM coincided with the particularly heavy Asia-Pac equity close (both CSI 300 and Hong Kong's Hang Seng lower by over 2.0%), which appeared to help put a floor in the USD - despite sharply lower US yields.

RATINGS: Italy’s Positive Trend Review at DBRS, Stable Outlook Updates Elsewhere

Potential sovereign credit rating reviews of note scheduled for after hours on Friday include:

S&P on Greece (current rating: BBB; Outlook Stable), the Netherlands (current rating: AAA; Outlook Stable) & Turkey (current rating: BB-; Outlook Stable)
Morningstar DBRS on Italy (current rating: BBB (high), Positive Trend)

EGBS: Bund Futures Move Away From Highs as Equities Stabilise

Bund futures have moved away from session highs amid a stabilisation in global equities, but remain +25 ticks at 130.25 on solid volumes. Global equity markets have been pressured since yesterday afternoon, initially spurred by renewed US regional bank concerns.

A bull cycle in Bunds futures remains intact, with the intraday high of 130.59 providing resistance. Clearance of this level would expose key resistance at 130.80, the June 13 high.
The German curve has bull steepened, with Schatz and Bobl yields down 3bps and 30-year yields down 1bp. That pushes the 5s30s curve back above 100bps (+1.8bps today). Although 5s30s has traded broadly sideways since the middle of September, a longer-term steepening trend remains intact.
German ASWs are up to 1.3bps wider, with Bunds benefitting from risk-off driven haven demand.
10-year EGB spreads to Bunds are up to 2bps wider on the session, with high-beta BTPs unsurprisingly underperforming. Despite today's price action, spreads have still tightened on the week, led by France amid a reduction in near-term political uncertainty.
Eurozone final September core HICP was revised up to 2.4% Y/Y on a rounded basis (vs 2.3% flash), but the unrounded figure was unchanged at 2.35%.
ECB's Nagel and Rehn are scheduled to speak later today.

Figure 1: German 5s30s year-to-date

Source: Bloomberg Finance L.P.

GILTS: Off Highs, Bulls in Control

Gilts have pulled back from early London highs as broader risk sentiment stabilises.

Negative headlines surrounding U.S. regional banks generated a risk-off move on Thursday, which then extended through Asia and early London hours.
Gilt futures broke next resistance at 93.00, topping out at 93.17 before fading to ~92.80.
Projection resistance located at 93.30, with bulls deepening their technical control. Initial support doesn’t come in until 92.07.
The rally from last week’s lows in futures has seen net short cover dominate from a positioning perspective.
Yields are 1.5bp lower to 0.5bp higher, curve twist steepens. 10s and 30s hit the lowest levels seen since July
SONIA futures flat to +3.0. SFIZ5/Z6 has hit a fresh cycle low.
BoE-dated OIS pricing ~10.5bp of easing through year-end.
GBP 1y1y has extended its recent move lower.
BoE’s Breeden, Pill & Greene are all set to speak today, but all have made addresses in recent days/weeks, with their views relatively well-defined (Pill and Greene at the hawkish end of the spectrum, while Breeden seemingly isn't ruling out a Q4 cut vote).
Saturday will see Governor Bailey provide the final scheduled MPC appearance ahead of the November MPC.
Next week’s CPI data provides the next major highlight on the UK calendar.

BoE Meeting	SONIA BoE-Dated OIS (%)	Difference vs. Current Effective SONIA (bp)
Nov-25	3.940	-2.7
Dec-25	3.862	-10.5
Feb-26	3.720	-24.7
Mar-26	3.667	-30.0
Apr-26	3.561	-40.7
Jun-26	3.529	-43.8
Jul-26	3.471	-49.6
Sep-26	3.452	-51.5

EQUITIES: Short-Term Weakness in E-Mini S&P Appears Corrective, For Now

The trend direction in Eurostoxx 50 futures remains up - for now - and the latest pullback appears to have been a correction. The contract remains above key support at 5493.86, the 50-day EMA. A clear break of the 50-day average is required to highlight a stronger reversal. On the upside, the bull trigger is 5689.00, the Oct 2 high. Clearance of this hurdle would confirm a resumption of the uptrend. Short-term weakness in S&P E-Minis appears corrective - for now. Price has recently found support below the 50-day EMA, currently at 6612.26, and the Oct 10 low of 6540.25 has been defined as a key short-term support. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. The bull trigger is 6812.25, the Oct 9 high. A breach of this hurdle would confirm a resumption of the uptrend.

Japan's NIKKEI closed lower by 695.59 pts or -1.44% at 47582.15 and the TOPIX ended 32.98 pts lower or -1.03% at 3170.44.
Elsewhere, in China the SHANGHAI closed lower by 76.473 pts or -1.95% at 3839.755 and the HANG SENG ended 641.41 pts lower or -2.48% at 25247.1.
Across Europe, Germany's DAX trades lower by 520.63 pts or -2.15% at 23751.48, FTSE 100 lower by 154.72 pts or -1.64% at 9281.59, CAC 40 down 68.13 pts or -0.83% at 8122.39 and Euro Stoxx 50 down 86.19 pts or -1.52% at 5566.57.
Dow Jones mini down 405 pts or -0.88% at 45748, S&P 500 mini down 78.5 pts or -1.18% at 6589.25, NASDAQ mini down 343.25 pts or -1.38% at 24483.5.

Time: 10:00 BST

COMMODITIES: This Week's Move Lower Reinforces Bearish WTI Theme

A bearish theme in WTI futures remains intact and the move down this week reinforces the current bearish theme. Note that moving average studies are in a bear-mode position, highlighting a dominant downtrend. Sights are on $57.50 next, the May 30 low, where a break would open $54.89, the May 5 low. Initial firm resistance is seen at $62.11, the 50-day EMA. Key resistance has been defined at $66.42, the Sep 26 high. A bull cycle in Gold remains intact and this week’s extension reinforces current conditions. The move higher maintains the price sequence of higher highs and higher lows. Sights are on the $4400.00 handle next, and $4404.9, a Fibonacci projection point. Note that the trend is in overbought territory. A move down would be considered corrective and would allow the overbought set-up to unwind. Support to watch lies at $3958.4, 20-day EMA.

WTI Crude down $0.58 or -1.01% at $56.88
Natural Gas down $0.03 or -0.89% at $2.913
Gold spot up $19.42 or +0.45% at $4348.04
Copper down $10.6 or -2.12% at $489.4
Silver down $0.4 or -0.74% at $53.8666
Platinum down $52.5 or -3.06% at $1667.2

Time: 10:00 BST

Date	GMT/Local	Impact	Country	Event
17/10/2025	1100/1200		GB	BOE Greene Roundtable at Atlantic Council
17/10/2025	1230/0830	*	CA	International Canadian Transaction in Securities
17/10/2025	1230/0830	**	US	WASDE Weekly Import/Export
17/10/2025	1230/0830	***	US	Housing Starts
17/10/2025	1230/0830	**	US	Import/Export Price Index
17/10/2025	1230/0830	***	US	Housing Starts
17/10/2025	1315/0915	***	US	Industrial Production
17/10/2025	1615/1215		US	St. Louis Fed's Alberto Musalem
17/10/2025	1630/1730		GB	BOE Breeden in Panel at IMF/World Bank Meetings
17/10/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
17/10/2025	2000/1600	**	US	TICS
18/10/2025	1130/1330		EU	ECB Cipollone Speech at Euro50Group Meeting
18/10/2025	1300/1500		EU	ECB Lagarde in Economic Outlook Panel at G30
18/10/2025	1300/1400		GB	BOE Bailey at G30 International Banking Seminar
20/10/2025	2145/1045	***	NZ	CPI inflation quarterly