MNI US OPEN - White House Signals Openness to China Deal

EXECUTIVE SUMMARY

• TRUMP, VANCE OPEN DOOR TO CHINA DEAL AS TRADE SPAT DRAGS ON
• TRUMP TO ADDRESS ISRAELI PARLIAMENT AS HOSTAGES ARE RELEASED
• MACRON APPOINTS FRENCH CABINET IN NEW BID TO QUELL CRISIS
• CHINA'S EXPORTS INCREASE 8.3% Y/Y IN SEPTEMBER, IMPORTS RISE 7.4%

Figure 1: Polymarket odds for the US government to remain shut down until at least Oct. 31 rises to around 2/3

Source: polymarket.com

NEWS

UK (MNI): Keeping UK Manifesto Promises Tough, Not Impossible - IFS

Restoring the UK’s fiscal headroom will be “difficult, but not impossible” without breaking Labour’s manifesto pledges not to raise VAT, National Insurance, or income tax in the Nov 26 budget, the Institute for Fiscal Studies said in a report published on Monday. Reversals to planned benefit cuts this summer and a possible downgrade to the Office for Budget Responsibility’s productivity forecast could “easily eliminate” the GBP10 billion headroom Chancellor of the Exchequer Rachel Reeves left herself in March, the IFS said in its “Green Budget.”

UK (The Guardian): Rachel Reeves Looks for Extra Headroom in Budget to Insulate UK Economy Against Bond Market

Rachel Reeves is aiming to create more “headroom” against her fiscal rules in November’s tax-raising budget, to cushion the UK against volatile government bond markets. “We would like more headroom. We want to try to insulate ourselves better against the volatility in the bond markets,” said a Treasury source, adding that tax increases and spending cuts were on the table.

UK (The Times): Nigel Farage to Abandon Reform Manifesto’s Big Plans for Tax Cuts

Nigel Farage will break with his manifesto pledges of £90 billion in tax cuts as he attempts to bolster his party’s ­economic credibility. The leader of Reform UK will promise not to reduce taxes before reducing spending, deep cuts to the civil service and a ban on borrowing to fund government expenditure in his first big speech on the economy next month.

BOE (MNI EXCLUSIVE): BOE Needs To Change Reserves Regime – NEF

Lead economist at the left-leaning New Economic Forum looks at BOE reserve remuneration. On MNI Policy MainWire now, for more details please contact sales@marketnews.com

RBA (MNI EXCLUSIVE): RBA Sees 3.6% as Still Likely Restrictive

The RBA believes its cash rate is still restrictive. On MNI Policy MainWire now, for more details please contact sales@marketnews.com

DATA

CHINA DATA (MNI): China's Sep Exports +8.3%, Imports +7.4%

• CHINA SEP TRADE SURPLUS +$90.45 BLN VS MEDIAN +$98.2 BLN
• CHINA SEP EXPORTS +8.3% Y/Y VS MEDIAN +6.5% Y/Y
• CHINA SEP IMPORTS +7.4% Y/Y VS MEDIAN +1.8% Y/Y

MNI (Beijing) China's exports increased 8.3% y/y in September, while imports rose 7.4%, data released by China Customs showed on Monday. Exports in September rose 8.3% y/y to USD 328.6 billion, accelerating from 4.4% in August and exceeding expectations for 6.5% growth. Imports climbed 7.4% y/y, up sharply from 1.3% in August and well above the 1.8% market consensus. China’s trade surplus in September hit USD90.45 billion, smaller than the consensus of USD98.2 billion, taking Jan-Sep’s final surplus to USD875.1 billion. 

CHINA DATA (MNI): China Sept Trade Rises 8% Y/Y in CNY Terms

MNI (Beijing) China’s total imports and exports reached CNY4.04 trillion in September, up 8% y/y, higher than the 4% growth in Q3, Deputy Head at the General Administration of Customs Wang Jun said Monday. Wang noted that Beijing's foreign trade “circle of friends” continued to widen with China ranked among the top three trading partners for 166 countries and regions, 14 more than in the same period last year. Wang said the nation’s large domestic market and industrial system would underpin steady foreign trade growth in the coming months.

FOREX: AUD Rallies, JPY Offered on Smoother China Language

• US markets are partially closed for Columbus Day on Monday, leaving no cash Treasury trade - which should also limit volumes and price action across currency markets. With the US still in government shutdown, data releases this week are further limited: although the BLS confirmed on Friday that this Wednesday's scheduled release of US CPI will go ahead on October 24th. Modestly stronger risk sentiment today has been fueled by the more complementary tone from Trump on China over the weekend, keeping low-yielders on the back foot while Antipodean currencies outperform.
• BoE's Greene & Mann are both set to appear today in speeches that could set the tone for UK trade this week. No fewer than 14 MPC appearances are on the schedule, and with no rate cut fully priced until April next year, markets will look to see if any speeches suggest this timeline can be brought forward, particularly if this Tuesday's jobs data comes in weaker-than-expected.
• Into the MPC speeches and the run of UK data, GBP/USD is off last week's lows, but inside the Friday range. This leaves the 1.3262 low as key support this week, a break below which exposes the 200-dma of 1.3178 and levels last seen at the beginning of August. It remains difficult to see a protracted GBP/USD sell-off absent a move in the USD however, and with an October Fed rate cut fully priced, there may be limits on how much further the greenback can rally from here.
• As was the case last Monday, the JPY is the weakest currency in G10. USD/JPY is back above 152.00, but a further rally above 152.64 will be needed to erase the sell-off triggered by Trump's threats to raise tariffs on China on Friday. Politics remains a key driver of the currency, with opposition parties set to meet tomorrow to discuss the collapse of the governing coalition last week. These meetings could help determine whether Takaichi goes ahead with a minority government, or looks to bring forward elections.
• The AUD/USD bounce, triggered by Trump's softer China language over the weekend, has the pair again either side of the 0.6532 100-dma. The 0.6560 50-day EMA marks the next upside level, which would go further in erasing last week's sell-off. This comes after Friday's support breaks undermined a recent bullish theme, potentially signaling scope for a deeper retracement towards key support at 0.6415, the Aug 21 and 22 low.
• Further newsflow and tone by both US and Chinese administrations in terms of rare earths and trade have the potential to induce volatility in the coming sessions. Polymarket odds for the US government to remain shut down until at least October 31st rose to above 2/3 over the weekend - suggesting that most official US data may be set for a continued absence. 

EGBS: Bund Futures Testing Friday's High With Trade Uncertainty Back In Focus

Bund futures have drifted higher through the morning, now testing Friday's high at 129.41 (+10 ticks today). Despite the White House's softened weekend stance with respect to China tariffs, trade policy uncertainty is back in focus.

• A bullish theme in Bund futures is intact, with attention on key resistance at 129.44 (Sep 10 high). Clearance of this hurdle would pave the way for a climb towards 129.58, a Fibonacci retracement point.
• The German curve has bull steepened, with Schatz yields down ~2bps and 30-year Bund yields down ~1bp.
• A reintroduction of trade policy uncertainty and increase in US/China tariffs would have dovish implications for the ECB. Such an outcome would compromise recent optimism around the growth outlook and potentially renew concerns around disinflationary Chinese trade diversion. ECB officials will want to see how the situation evolves in the coming weeks, with focus also on the heavy regional data calendar towards the end of this month.
• 10-year EGB spreads to Bunds have moved away from early lows, with BTPs and OLOs now the only bonds trading narrower on the session.
• Markets remain sensitive to French headline flow. Lecornu's reappointment as PM is unlikely to reduce medium-term fiscal/political challenges facing France, so scope for meaningful OAT/Bund tightening still appears limited. OATs currently underperform peers, with the 10-year spread to Bunds +0.5bps at ~84bps.
• This week’s regional data calendar is light, headlined by final September HICP readings. 

GILTS: Futures Through Next Resistance

Gilts have rallied a little after trading either side of unchanged around the open, futures last +14 at 91.30, piercing resistance at 91.28.

• A fresh extension higher would expose more meaningful resistance at 91.82
• Yields 1-2bp lower, curve bull steepens.
• The impact of hope surrounding the potential for a moderation in Sino-U.S. trade tensions has worn off in recent trade, with gilts outperforming vs. Bunds by ~1bp.
• Fiscal headlines remain front and centre domestically.
• The IFS has noted that “It would be difficult, but not impossible, for the Chancellor to raise tens of billions of pounds more revenue without breaking Labour’s manifesto promise”:
• We have covered the remainder of the major fiscal stories from the weekend in another bullet.
• SONIA futures flat to +4.0, BoE-dated OIS prices ~6bp of easing through year-end, which we believe underestimates the odds of a Q4 cut.
• BoE’s Greene & Mann will speak later today.
• More focus will be placed on the labour market data & comments from BoE Governor Bailey (both due Tuesday).

EQUITIES: Recent Sharp Sell Off in E-Mini S&P Considered Corrective, For Now

The trend condition in Eurostoxx 50 futures is unchanged, the direction is up and the latest pullback is - for now - considered corrective. The key support zone to monitor is 5549.76 - 5474.21, the area between the 20- and 50-day EMAs. A clear break of the 50-day average would highlight a stronger reversal. On the upside, the bull trigger has been defined at 5689.00, the Oct 2 high. Clearance of this hurdle would confirm a resumption of the uptrend. A sharp sell-off in S&P E-Minis on Friday is - for now - considered corrective. The contract has found support below the 50-day EMA, currently at 6598.55. Friday’s low of 6940.25 has been defined as a key short-term support. Note that moving average studies remain in a bull-mode position, highlighting a dominant uptrend. The bull trigger is 6812.25, the Sep 9 high. A breach of this hurdle would confirm a resumption of the uptrend.

• In China the SHANGHAI closed lower by 7.526 pts or -0.19% at 3889.502 and the HANG SENG ended 400.84 pts lower or -1.52% at 25889.48.
• Across Europe, Germany's DAX trades higher by 118.67 pts or +0.49% at 24359.52, FTSE 100 higher by 8.79 pts or +0.09% at 9436.29, CAC 40 up 40.01 pts or +0.51% at 7958.01 and Euro Stoxx 50 up 33.77 pts or +0.61% at 5565.09.
• Dow Jones mini up 441 pts or +0.96% at 46147, S&P 500 mini up 89.75 pts or +1.36% at 6684.75, NASDAQ mini up 464 pts or +1.9% at 24860.75.

Time: 10:00 BST

COMMODITIES: Friday's Move Lower in WTI Futures Confirms Resumption of Bear Leg

A bearish theme in WTI futures remains intact. Friday’s move down confirmed a resumption of the bear leg - support at $60.40, the Oct 2 low, has been breached. This highlights an extension of the bearish price sequence of lower lows and lower highs. The move down opens $57.50 next, the May 30 low. On the upside, initial key resistance is at $66.42, the Sep 29 high. Clearance of this level would highlight a reversal. A bull cycle in Gold remains intact and today’s fresh cycle marks a bullish start to this week’s session. The move higher maintains the price sequence of higher highs and higher lows. Sights are on the $4100.00 handle, and $4113.5, 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 is $3836.5, 20-day EMA.

• WTI Crude up $1 or +1.7% at $59.86
• Natural Gas up $0 or +0.06% at $3.107
• Gold spot up $60.84 or +1.51% at $4078.26
• Copper up $11.55 or +2.36% at $500.6
• Silver up $1.34 or +2.67% at $51.5025
• Platinum up $64.15 or +4.02% at $1662.5

Time: 10:00 BST

Date	GMT/Local	Impact	Country	Event
13/10/2025	1105/1205		GB	BOE Greene at Society of Professional Economists Conference
13/10/2025	-	***	CN	Money Supply
13/10/2025	-	***	CN	New Loans
13/10/2025	-	***	CN	Social Financing
13/10/2025	-		EU	ECB Lagarde and Cipollone at IMF/World Bank Meetings
13/10/2025	1655/1255		US	Philly Fed's Anna Paulson
13/10/2025	1910/2010		GB	BOE Mann in MonPol Panel, National Association of Business Economists
14/10/2025	2301/0001	*	GB	BRC-KPMG Shop Sales Monitor
14/10/2025	0600/0700	***	GB	Labour Market - AWE & Unemployment
14/10/2025	0600/0800	***	DE	Germany CPI (f)
14/10/2025	0600/0700	***	GB	Labour Market - Payrolls & Claimants
14/10/2025	0600/0800	***	DE	Germany CPI (f)
14/10/2025	0750/0950		EU	ECB Cipollone Speech on Digital Euro
14/10/2025	0900/1100	***	DE	ZEW Current Expectations Index
14/10/2025	1000/0600	**	US	NFIB Small Business Optimism Index
14/10/2025	-		EU	ECB Lagarde and Cipollone at G20 Meeting
14/10/2025	1200/1300		GB	BOE Taylor Remarks and Fireside Chat at University of Cambridge
14/10/2025	1230/0830	*	CA	Building Permits
14/10/2025	1245/0845		US	Fed Governor Michelle Bowman
14/10/2025	1255/0855	**	US	Redbook Retail Sales Index
14/10/2025	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
14/10/2025	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
14/10/2025	1610/1210		CA	BOC Sr Deputy Rogers fireside talk in Vancouver
14/10/2025	1620/1220		US	Fed Chair Jerome Powell
14/10/2025	1700/1800		GB	BOE Bailey Fireside Chat at Institute of International Finance
14/10/2025	1925/1525		US	Fed Governor Christopher Waller
14/10/2025	1930/1530		US	Boston Fed's Susan Collins