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US Treasury yields still grinding higher this morning while Asian equities extended gains on a burst of trade optimism. The 10-year Treasury yield ticked up to 4.08% (Figure 1, Bloomberg) and the 30-year to 4.63%, as investors digested the Federal Reserve’s muddled message – a 25-basis-point rate cut paired with a hawkish tone that muddied the outlook for December.
Risk appetite faded as Powell’s “no preset path” comment unnerved traders. Stocks erased early gains despite Nvidia’s historic $5 trillion valuation, while the dollar strengthened. The Fed’s divided stance (with Miran calling for 50 bps and Schmid calling for no cut) has added another layer of uncertainty for investors already juggling diverging central bank paths. OIS pricing implies the lower bound of the fed funds rate at 3.706% after the December meeting up from 3.64% pre FOMC, with only 17.5 bps of cuts priced for December.
The Fed’s quarter point cut comes at a time when the SP500 is at all-time highs, the 5th time this has happened (figure 2, JP Morgan). In all prior instances the index was up a year on, with the worst one year return 15% and the average return 20%. To add fuel to the fire, the Fed will also be halting QT in December. In fact, they will reinvest all mortgage backed securities principals into treasury bills. If in doubt, print your way out.
Over in Asia, Beijing will pause countermeasures and export controls for one year, while Washington removes the 10% “fentanyl tariff.” Both sides pledged cooperation on fentanyl and agriculture, extended tariff exemptions, and committed to properly address TikTok-related issues.
Also the KOSPI rose another 0.23%, setting a new all-time high and extending a 19% rally this month, as South Korea announced a blockbuster $350 billion trade package with the US (Figure 3, Bloomberg). The deal includes major Korean investment in U.S. shipbuilding and energy purchases, aimed at deepening industrial ties and securing long-term supply chains. The agreement follows an upbeat meeting between Presidents Trump and Xi in Korea, where the two leaders pledged to ease trade tensions and halve certain tariffs on Chinese goods – a move investors saw as supportive for global growth.

The renewed optimism across Asia came as Japan’s bond markets stayed subdued after the Bank of Japan held policy steady. The board voted 7–2 to keep rates unchanged, with limited changes to inflation forecasts – a clear sign that a December hike remains unlikely. JGB yields drifted slightly lower post-meeting, underperforming recent U.S. moves. The US–Japan 10-year yield spread widened to about +242 basis points, up from recent lows around 230, reinforcing yen weakness and boosting export-heavy Japanese equities (Figure 4, Bloomberg).
Data today: Euro Area GDP, Italy unemployment, ECB decision, initial jobless claims

Happy FOMC day! The Federal Open Market Committee is set to lower the US federal funds rate target by 25 bps to 3.75% – 4%, focusing instead on any changes to the Fed’s post-meeting statement and comments from Chairman Jerome Powell. The FOMC’s statement is due to be released at 14:00 ET (18:00 GMT) with Chair Powell’s press conference scheduled for 2:30 ET. Currently, there is an 88.2% chance being priced in for a further 25 bps reduction at the 9-10 Dec meeting.

In other important news this week, US President Donald Trump and Chinese President Xi Jinping will meet in Busan, South Korea on 30 Oct. President Trump has hinted at a partial reduction in tariffs on China. Meanwhile, China has bought at least two cargoes of US soybeans, its first known purchase this season. Chicago soybean futures significantly climbed this week, crossing $11/bushel (a 15-month high) on trade optimism, but have eased since, reportedly on profit-taking and farmer hedging.
LME Copper also climbed above $11,000 amid the trade optimism.

In equities, technology stocks continue to drive global equities higher amid the trade optimism, with President Trump saying he will discuss Nvidia’s Blackwell AI processors (“it’s the super duper chip”) with President Xi Jinping. Nvidia’s share price soared above $200 on 28 Oct, and the company is set to open above the $5 trillion market value on Wednesday, becoming the first company to reach the milestone. The technology sector will also await earnings reports from Microsoft Corp., Alphabet Inc., Meta Platforms on 29 Oct and Apple Inc. and Amazon on 30 Oct.

The Reserve Bank of India has intensified its efforts to repatriate its gold reserves held abroad, buying back nearly 64 tonnes of gold in the first six months of the financial year (beginning in April), as per a report on foreign exchange reserves on 28 Oct. The RBI now holds more than 65% of its gold reserves at home, nearly double the share from four years ago,

Data releases today – US EIA oil inventories, Fed Interest Rate Decision

Gold drops convincingly below $4k/oz, now trading near $3.9k/oz. Other precious metals are also struggling with silver falling towards $45/oz and palladium and platinum down hard. But copper is performing better, continuing its recovery from its late-July tariff driven volatility. It has recovered to over $5/lb. (Figure 1) Anglo American reported a 9% drop in copper output in Jan-Sep this year.

Equities cool from their post-weekend record highs, as the Hang Seng and Nikkei each fall around 0.33% and S&P 500 Emini futures are down 0.1% this morning. Concerns over concentration of the equity market continue but the long-term trend shows only 3.44% of companies have driven all net wealth in the US stock market in a century. (Figure 2)

Dollar/yen continues long term up trend but finding significant resistance at 153 (Figure 3). Markets expect Bank of Japan to continue hiking cycle, with OIS pricing 47.4 bps of hikes over the next 12 months, up from 35.8 bps in mid-October.

Amazon is reportedly preparing massive job cuts of up to 30,000 corporate employees. This would be the company’s biggest ever layoff at nearly 10% of total corporate employees and shares rose 1.2% yesterday and are higher in pre-market trading this morning.

There are mixed signals coming from Germany, as Ifo Business Climate was stronger than expected at 88.4 and Expectations were up at 91.6. Yet, this morning’s GfK Consumer confidence was much weaker than hoped, down at -24.1, even below expectations for -22. The measure has been negative since December 2021!
South Korea is performing better, as GDP grew 1.7% y/y in Q3, far ahead of expectations for 0.9%. That was the strongest quarter of growth since Q2 2024. China’s Ministry of Commerce said it signed an upgraded free trade agreement with ASEAN nations today, focussing on supply chains and trade facilitation. Meanwhile, Trump says he’s open to meeting Kim Jong Un in his Asia visit. The US government shutdown reaches 28 days – one more week and it will be a record!

Data today – India industrial and manufacturing production, Redbook