STIR: RBA-Dated OIS Pricing Slightly Firmer Ahead Of New CPI Monthly Data

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The discussions between US and China ahead of the leaders meeting this week has seen some positive outcomes with an initial consensus reached on various bilateral issues including agriculture, according to a statement from the Chinese Ministry of Commerce.  Chinese officials said the two sides reached a preliminary consensus on further topics including export controls, fentanyl and shipping levies, while US Treasury Secretary Scott Bessent said Trump's threat of 100% tariffs on Chinese goods "is effectively off the table". This comes ahead of the Thursday meeting with US President Trump and China President Xi in South Korea, on the sidelines of APEC summit. The weekend talks are expected to pave the way for a deal/agreement at the Thursday meeting between the two leaders and Trump expressed confidence in such an outcome.

• MNI: JAPAN SEPT SERVICES PPI +3.0% Y/Y; AUG UNREV +2.7%
• JAPAN SEPT SERVICES PPI +0.1% M/M: AUG UNREV +0.2%

After a steady rally, gold prices were lower last week and have started Monday down further following news of a draft US-China trade deal with it expected to be agreed by Presidents Trump and Xi when they meet on Thursday. The likely agreement reduces trade-associated global risks and thus safe-haven holding of gold. US equity futures are rallying (S&P e-mini +0.7%) as the news drives stronger risk sentiment. 

• The agreement includes a year’s delay to China’s rare earths licensing regulations and should mean that the additional 100% US tariff won’t be imposed on November 1.
• Gold is down 1.2% to $4063.5/oz today, close to the intraday low, after reaching $4109.27 early in the session. Initial support is at $4004.3, 22 October low. Bullion remains overbought despite last week’s 3.3% correction.
• Prices fell to $4044.5 before the September US CPI data was released on Friday but then picked up close to $4140 following the lower-than-expected print. A 25bp rate cut on Wednesday is almost fully priced in.
• The US dollar index was slightly higher and yields lower on Friday but both were off their post-CPI lows.
• Silver rose to $48.705 at the start of Monday’s trading but has fallen to around $48.10. It was down 0.6% on Friday to be 6.3% lower last week, which is considered as corrective.
• The metal made a trough of $47.837 on Friday, holding above initial support at $47.550. The overbought trend condition has been partially unwound. It continues to trade below the 20-day EMA at $48.992 making a pullback toward the 50-day EMA at $45.417 possible.