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President Trump appears to be busy rolling back years of entrenched Ukraine policy. Starting last week he announced the controversial diesel deal with Putin, and this week Ukraine's Zelensky is complaining that intelligence-sharing has been throttled, and possibly even cut off.

The possibility or even likelihood of this heading to another TACO moment aside, what's next? New reporting in the Financial Times gives an idea. The United States has floated a proposal that European countries unfreeze some of Russia's sovereign assets and deposit them in an entity controlled by Washington.

The FT report cites four people familiar with the matter, who describe that the idea was formally presented by envoys Steve Witkoff and Jared Kushner during a meeting of Western allies and Ukraine in Miami on Oct.10.

"The US suggested several possible methods for unfreezing the assets, including for them to be moved into a new special-purpose financial vehicle overseen by Washington," the sources said.

This US plan would be enacted in the hope of opening up momentum toward a comprehensive Ukraine peace plan. Moscow has of late rejected any 'temporary' proposal, including a 60-day pause in fighting recently offered by Zelensky. It wants a lasting political settlement and not a mere 'pause' along the front lines.

At the Miami meeting were NATO representatives, as well as officials from the US, France, Germany, and the EU.

"Many ideas have been floated as to how Moscow's frozen assets could be used after the war, the US official added," the FT says.

European officials are said to have balked at any initiative to let go of Russian assets. "They were told that this was just simply not going to happen," one source said. For example, Germany has voiced its clear position:

"Those are assets that are frozen ?in Europe and they should remain frozen in Europe. ?This is our business and we are deciding over ?it," Merz said in Brussels ahead of an EU ?summit.

At least €260 billion in sovereign assets belonging to Russia's central bank were frozen in 2022 as a result of Russia's full-scale invasion of Ukraine in February of that year. Most of this is held at the Belgian securities depository Euroclear. The vast majority, or over €210 billion of the sum, is held in the EU.

The last couple years of war has seen the EU work out a scheme wherein payments are made to Ukraine utilizing interest gained from Russa's funds.

Washington's sudden willingness to ease off the pressure on Moscow has interesting implications regarding the Iran war...

President Trump said on October 13 that he did not believe Russia was helping Iran. This raises a question: is this information really being withheld from the US president? In 2025, Russia and Iran signed a 20-year strategic treaty. They help each other with weapons, technology, and money to sustain their wars and weaken the United States. Iran attacks shipping to keep oil prices high. According to Reuters on October 14, 2026, two senior Iranian officials directly linked this strategy to the US elections on November 3. They also discussed expanding attacks beyond the Strait of Hormuz. This benefits Russia: its oil becomes more expensive, buyers accept smaller discounts, and demand rises. According to CREA, high prices helped Moscow maintain its revenues at the end of March, even after Ukrainian strikes on Russian export infrastructure. Russia offers the US its diesel and gets sanctions relief. Iran disrupts fuel supplies, while Moscow offers to help and receives concessions in return. Iran gave Russia Shahed-131/136 drones, components, equipment, and technology to manufacture drones in Alabuga. Russia is now returning the favor by supplying Iran with improved drones and sharing its experience in bypassing air defense systems. On March 27, 2026, the Associated Press, citing US and European officials, reported deliveries of such drones to Iran. Additional reports about Russian components and their use emerged in August. Iran provided the original technology; Russia refined it in Ukraine, and those improvements are now helping Iran attack US forces. Russia provides Iran with intelligence on US facilities. In September, CNN linked Russian satellite intelligence to Iran’s March 27 attack on Prince Sultan Air Base in Saudi Arabia. The strike wounded 12 US service members and destroyed an AWACS aircraft. Russia is helping Iran develop engines for supersonic cruise missiles. On September 1, 2026, the Financial Times reported on a secret program known as C430L, which has been operating since 2023. Russian specialists linked to Rosoboronexport and the United Shipbuilding Corporation’s NPO Mashinostroyeniya are involved. The program could allow Iran to manufacture more sophisticated weapons capable of threatening US ships and bases in the region. Iran supplies Russia with ballistic missiles and trains Russian troops to use them. In September 2024, the US officially announced the first delivery of Fath-360 missiles and reported that Iranian instructors were training Russian missile crews. For Moscow, this means additional ammunition for its war against Ukraine. Russia sells Iran air defense systems and combat aircraft. In February 2026, the Financial Times reported a contract worth approximately €495 million for 500 Verba man-portable air defense launchers and 2,500 missiles, scheduled for delivery between 2027 and 2029. Iran has also confirmed purchasing Su-35 fighter jets, while visual evidence of the first Mi-28 helicopter deliveries emerged in January 2026. The exact number of aircraft and helicopters Iran has received remains unclear. Russia is transferring US weapons captured in Ukraine to Iran. In March 2023, CNN reported that Russia had handed over Javelin and Stinger. US sources expected Iran to attempt to dismantle and copy the systems. Even if reverse-engineering fails, Tehran can study how they work and how to counter them. Russia helps the Houthis through Iran’s Islamic Revolutionary Guard Corps (IRGC). According to the Wall Street Journal in October 2024, the Houthis received Russian satellite data through this channel to target commercial shipping. Reuters also reported that Iran had acted as an intermediary in talks over possible Russian deliveries of Yakhont anti-ship missiles. It has not been established whether those deliveries took place. Iranian allies attack maritime routes and facilities belonging to US partners. Following an attack on Aramco’s headquarters, the Houthis vowed on October 14 to continue strikes on Saudi airports and oil facilities. The US and its allies are consequently forced to defend more sites and commit additional resources. Russia’s VTB bank helps Iranian banks process payments in circumvention of sanctions. On September 14, 2026, the US Treasury Department sanctioned VTB over its dealings with sanctioned Iranian banks, settlements in rubles and rials, and attempts to move billions of dollars in frozen Iranian assets. This gives Tehran access to funds that Washington had sought to block. The Russia-linked A7 network helps Iran receive oil revenues and pay for weapons. According to documents released by the US Treasury Department and FinCEN on October 1, its intermediaries also worked with Iran’s central bank and the IRGC. One intermediary and an affiliated company received nearly $140 million from entities involved in evading Iranian sanctions. Financial schemes developed for Russia are also serving Iran’s needs. Russia and Iran transport weapons in both directions across the Caspian Sea. The US Treasury Department identified the vessel Port Olya-3 as having transported Iranian missiles to Russia. In August 2026, NBC, citing a European government document, reported Russian shipments of drone components, ammunition, and explosives to the Iranian port of Amirabad. This route allows the two countries to supply each other directly with military cargo. Russia and Iran are developing the International North–South Transport Corridor together with India. According to the Center for Strategic and International Studies (CSIS), the project accelerated after 2022, partly to reduce dependence on Western routes and exposure to sanctions enforcement. Russia supports Iran’s nuclear energy sector and is preparing gas projects. Moscow helps operate the Bushehr nuclear power plant and build additional reactor units. Following wartime evacuations, Russian engineers began returning in August 2026. The two countries are also discussing gas supplies of up to 55 billion cubic meters annually, although this remains a proposed volume. Russia launches Iranian satellites. In July 2025, Russia launched Iran’s Nahid-2 telecommunications satellite into orbit. Russia and Iran exchange technologies for internet surveillance and communications interception. This cooperation is underpinned by a 2021 agreement and the 2025 strategic treaty. CSIS has also documented Russian assistance to Iran in intercepting telecommunications. Russia and Iran conduct influence operations targeting US elections. The US Treasury Department documented campaigns by both countries during the 2024 elections. Russia shields Iran from international scrutiny. On September 17, 2026, Russia and China blocked the extension of the mandate of a UN expert panel monitoring compliance with sanctions against Tehran. This makes it more difficult to independently document violations and increase pressure on Iran.

— Anton Gerashchenko (@Gerashchenko_en) October 15, 2026

European Commission President Ursula von der Leyen said that Moscow "must pay for the destruction it has caused. And we are using the proceeds from the immobilized Russian assets to make sure it does."

"We are making a further [$1.62] billion of them available to Ukraine. This will support Ukraine's continued resistance against Russia's illegal war," she had announced in August.

For the fifth straight week, the number of Americans filing for jobless benefits for the first time was less than 200k (199k)...

That is the longest streak below that level since 1969! (And remember, the labor force then was a fraction of what it is now).

Interestingly, Ohio, Tennessee, and California saw a rise in unadjusted claims last week...

Continuing claims remains low too - holding around 1.7 million Americans - the lowest level since March 2023...

However, as we noted last week, payrolls tell the other half of the story. September nonfarm payrolls came in at just +29k (with prior months revised down), well below the already modest recent trend. Net employment change is simply hires minus separations. When separations are that low but the net number is mediocre, hiring itself must have slowed substantially.

So the market has cooled mainly through reduced hiring rather than rising firings. That keeps the unemployment rate relatively contained (4.2% in September) even as it becomes harder for job seekers, switchers, and new entrants to land roles. 

Economists (including various Fed research notes) have been describing this as a stable-but-fragile equilibrium for a while: low layoffs prop things up, but the low hiring rate leaves little cushion if demand weakens further or a shock forces companies to start cutting.

It’s also consistent with slower labor-force growth from demographics and reduced immigration - fewer people needing to be absorbed means weaker payroll growth can still leave unemployment from rising sharply.

The bottom line is simple: the 'low-hire, lowest-fire' economy continues to roll along with no obvious signs of AI's productivity surge (or replacement projections).

BofA's omniscient analysts expected a hotter than expected retail sales print this morning (but it came with a warning as they start to see some substitution effects as rising gasoline spend is wearing on discretionary purchases).

Once again, BofA was right, with headline Retail Sales surging 0.8% MoM (+0.3% exp), lifting sales up by 6.3% YoY...

Spending at gasoline stations soared...

Eight out of 13 categories posted increases, led by a 6.4% increase in the value of purchases at gas stations. While consumers pulled back on spending on things like hobbies and building materials, sales at furniture retailers, electronics stores and restaurants increased.

This was not good for GDP as the so-called control-group sales - which feed into the government’s calculation of goods spending for gross domestic product - increased just 0.1% after surging the prior month. The measure excludes food services, auto dealers, building materials stores and gasoline stations.

The figures indicate consumers took a breather as the third quarter drew to a close and price pressures mounted. Faster inflation is taking a bigger toll on Americans’ paychecks and squeezing their budgets.

And BofA's data appears to confirm that spending at the pump is squeezing spending elsewhere...

The AAA national average price of gasoline has stayed above the politically sensitive $ 4-per-gallon level for the last three months. Diesel has been above $5 over the same period and is flirting with a record high amid a global refining crisis. As we've outlined using high-frequency data, high fuel prices affect consumer behavior and spending patterns at convenience stores and gas stations. 

The latest comes from UBS analyst Ritu Solanki, who wrote in a brief note on Wednesday about US bank earnings that delivered an inconvenient message for those hoping for a recession: the economy remains resilient, but inflationary pressures persist.

Solanki said consumer spending, loan growth, and corporate activity remain healthy, while credit performance shows limited evidence of broad deterioration.

Solanki then cited Bank of America spending data for September showing consumers are spending more on fuel with credit and debit cards, up more than 20%. The risk is that rising fuel bills are crowding out other purchases. 

BAC's card data show accelerating fuel spending alongside softening spending across several other major categories, suggesting higher pump costs are pinching household budgets.

Total card spending per household rose about .2% in the month, slowing from 1% in August, on a seasonally adjusted monthly basis. Meanwhile, gas spending jumped 5%, up from 3.1% in August. 

Several categories contracted in September:

• Home improvement: 1.6%
• Department stores: 1.1%
• Clothing: .9%
• Furniture: .5%
• Restaurants: .4%
• Groceries: .2%
• Online spending: .1%

The spending data suggest that fuel bills are squeezing room for other purchases, translating into dismal consumer sentiment ahead of the midterm elections. 

Is it really as bad for the American consumer as it has ever been?

Chief executives at Domino’s Pizza and Albertsons acknowledged in recent earnings calls that many consumers remain in a challenging economic environment. Even so, Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. have also signaled that the consumer remains resilient.

After yesterday's accelerating CPI scare, this morning analysts expected a concomitant surge in producer prices - the big question remains whether it's all energy... or are price-hikes 'broadening out' making The Fed's job harder.

Headline PPI exploded higher in September, rising 1.3% MoM (more than double the 0.6% expected and biggest monthly jump since March 2022), dragging producer prices up 6.3% YoY (+5.4% exp) - the highest since Dec 2022...

Energy dominated the surge in prices...

Final demand goods: Prices for final demand goods advanced 2.6%, in September, the largest increase since data were first calculated in December 2009. Over 80 percent of the broad-based rise in September is attributable to the index for final demand energy, which jumped 10.8 percent. Prices for final demand foods and for final demand goods less foods and energy advanced 1.2 percent and 0.3 percent, respectively.

Product detail: Half of the September increase in the index for final demand goods can be traced to prices for gasoline, which jumped 20.3%. The indexes for diesel fuel, fresh and dry vegetables, jet fuel, residential electric power, and crude petroleum also rose. In contrast, prices for chicken eggs dropped 39.7 percent. The indexes for thermoplastic resins and materials and for commercial electric power also declined.

Final demand services: Prices for final demand services moved up 0.8% in September, the largest rise since advancing 0.8% in April. Nearly half of the broad-based September increase can be attributed to a 1.4-percent rise in margins for final demand trade services. The indexes for final demand transportation and warehousing services and for final demand services less trade, transportation, and warehousing also advanced, 3.4 percent and 0.3 percent, respectively.

Product detail: Over 20 percent of the September increase in prices for final demand services can be traced to margins for machinery and vehicle wholesaling, which advanced 3.9 percent. The indexes for truck transportation of freight, food and alcohol wholesaling, traveler accommodation services, food retailing, and airline passenger services also rose. Conversely, margins for automotive fuels and lubricants retailing dropped 30.3%. The indexes for securities brokerage, dealing, and investment advice and for chemicals and allied products wholesaling also fell.

The Energy PPI component is now at a record high (clearly tracking diesel prices more than crude)...

Over 80 percent of the broad-based rise in September is attributable to the index for final demand energy, which jumped 10.8 percent

• Half of the September increase in the index for final demand goods can be traced to prices for gasoline, which jumped 20.3 percent.

• The indexes for diesel fuel, fresh and dry vegetables, jet fuel, residential electric power, and crude petroleum also rose.

More problematically, Services costs are soaring too as energy costs spread across the economy...

Portfolio management costs ticked up along with stocks yet again...

Core PPI was just as bad, rising 0.7% (more than double the 0.3% expected) and that pulled core Producer Prices up 5.0% YoY (the hottest since Dec 2022)...

Prices for final demand goods advanced 2.6%, in September, the largest increase since data were first calculated in December 2009' but Services costs are also jumping...

Worse still, the pipeline for future producer prices is ugly with intermediate demand prices surging...

The CPI-PPI spread continues to (broadly speaking) signal increased pressure on corporate margins...

None of this provides any support for doves at The Fed and 2Y Yields and rate-hike odds are rising again, but not like they did post-CPI.

US futures are lower as the AI unwind goes global - Korea's Kospi crashed into a bear market and tripped circuit breakers, CoreWeave bonds sank deeper into distress and Anthropic's still-blistering but slowing growth failed to impress - while yesterday's hot CPI scare has morphed into a growth scare; as a result Treasuries are ripping higher with 10Y yields tumbling 10bps to 5.08%, the lowest since Sept. 23. As of 6:20am ET, S&P futures are 0.3% lower at 7,749 while Nasdaq futures slide 1.1% to 29,857 and Dow futures are up 0.2%; small caps are the odd man out with Russell 2000 futures up 0.3%. Yesterday the S&P 500 fell 1.1% to its worst day since July, the Nasdaq 100 lost 2% and the SOX dropped for a sixth straight session. Premarket, Mag-7 and AI baskets are all lower with Apple the only Mag 7 name in the green; chipmakers, memory, neoclouds and AI infrastructure names are all sliding, with CoreWeave down another 6-7% after imploding 15% yesterday as its bonds traded at distressed levels. The day's driver is AI financing (again): Anthropic's $16.8 billion Q3 revenue implies slowing growth, and a Gartner report that $3,5 trillion of AI infrtastructure spending could be exposed to impairment by 2030 is making the rounds. Bonds rally across the curve in a bull flattener with yields down 7-11bps, as the AI selloff pushes investors into havens and odds of an October Fed hike slide back to around 30% from a post-CPI intraday peak of 58%; bunds and gilts also rally about 10bps, helped by the pullback in energy. The dollar is lower, with the Bloomberg Dollar Spot Index down 0.3%-0.4% and the Swiss franc leading G-10 gains while the Aussie slumps after a weak jobs report. In commodities, Brent drops almost 2% to $104 on the risk-off tone and talk of the US easing shadow fleet sanctions, gold jumps 1.3% to $4,158 and silver is up 2.1%, while copper slides. Bitcoin is down 0.6% near $81,200. US economic data slate includes September retail sales, PPI, October Empire manufacturing and Philly Fed, and weekly jobless claims (all 8:30am) and August business inventories (10am). Fed speaker slate includes Goolsbee (10am), Hammack (4:30pm) and Chair Warsh, who has a fireside chat with the IMF's Georgieva in Bangkok at 11:30pm ET before the blackout. Treasury sells $110 billion of 4-week and $105 billion of 8-week bills at 11:30am.

In premarket trading, Apple (AAPL) outperforms the group during the AI selloff (AAPL +0.8%, Microsoft -0.5%, Alphabet -0.8%, Meta Platforms -1%, Tesla -1.4%, Amazon -1.8%, Nvidia -1.6%)

• Chipmakers and other AI-related firms slide after Anthropic disclosed third-quarter revenue that likely slowed from the previous quarter. Among notable movers: CoreWeave (CRWV) -3%, Dell (DELL) -4%, Micron (MU) -4%, Intel (INTC) -3%, Marvell (MRVL) -4%, AMD (AMD) -3%, Broadcom (AVGO) -2%
• AngloGold Ashanti (AU) rises 3% after Goldman Sachs initiated coverage at buy, citing increased central-bank purchases that should support gold prices. Gold is also higher on Thursday morning.
• Cirrus Logic (CRUS) slips 2% after being downgraded to sector weight at KeyBanc, which sees a weak outlook for the Apple supplier.
• FMC Corp. (FMC) sinks 27% after the agricultural chemicals firm cut its third quarter outlook.
• Fortrea Holdings (FTRE) gains 3% after Deutsche Bank upgraded the health services firm to buy, citing potential for revenue growth and margin expansion.
• Kimberly-Clark (KMB) climbs 3% after the household products company reported preliminary net sales for the third quarter that met the average analyst estimate.
• Penske Automotive Group (PAG) climbs 8% after entering a deal to be taken private for $212 per share in cash by Penske Corp. and Mitsui.
• Quantinuum (QNT) rises 3% as Morgan Stanley upgrades to overweight, saying the stock offers the most attractive valuation among peers.
• Rocket Lab (RKLB) falls 11% after adjusting the target launch timing for its Neutron medium-lift rocket, with the vehicle’s inaugural launch now expected to occur in 2027.
• Walmart (WMT) gains 2.8% after Deutsche Bank upgraded the retailer to buy, citing a favorable setup into 2027.

In other corporate news, the US FTC has subpoenaed Anthropic and OpenAI seeking documentation in relation to safety incidents and privacy policies, Axios reports, just as the AI sector needed one more thing to worry about. IDC said the smartphone market suffered its worst decline on record in the September quarter, with rising memory costs pushing shipments down 22% and "the worst is yet to come." Rocket Lab drops almost 10% after delaying the inaugural Neutron launch to 2027, while IonQ filed to offer about $2 billion in shares and warrants. Barclays analysts said a Tesla-SpaceX merger has become widely expected and an announcement could come before Tesla's annual general meeting. Marsh will shoulder a larger share of the CS-Greensill settlement, the FT reports; EasyJet shareholders are being asked to support an Apollo takeover proposal; VW is pivoting to trucks and rugged SUVs in a quest for US profit; and Iambic Therapeutics raised $150 million in a US IPO priced at the midpoint. Schwab, Marsh McLennan, US Bancorp, PNC, BNY and Prologis report before the open, with Interactive Brokers, Alcoa and JB Hunt after the close.

The global AI unwind is gaining momentum: negative headlines are piling up, from signs of Anthropic's slowing growth to CoreWeave bonds plunging into distress and Gartner's warning that $3.5 trillion of AI infrastructure spending could be at risk of impairment by 2030. Even good results from TSMC - a Q4 revenue guide of $52.3-54.3 billion against a street at about $50 billion - failed to dispel the concerns, and a global selloff in semis dragged South Korea's benchmark down nearly 8% into a bear market, while the SOX is down 12% over the past six sessions, as Goldman warned of a semi "air pocket" last week.

As discussed last night, Anthropic's pre-IPO investor event failed to impress as the revenue growth shared was well below the double digit growth observed earlier in the year. “In any normal world, companies would kill for 45% q/q growth,” said Vital Knowledge founder Adam Crisafulli. “But in the land of AI, where investors are used to parabolic figures, a slowdown in growth undercuts sentiment.”

The market is especially worried about the financing model of neocloud companies, which are borrowing huge amounts at high rates to build data centers. CoreWeave's 5Y CDS closed at 1,118bps yesterday, up a massive 136bps, and its debt due 2032 dropped below 78 cents on the dollar - paper investors bought at par just four months ago! CoreWeave, for its part, said it isn't worried about the market's reaction and wants access to "unlimited" pools of money (what could go wrong). Meanwhile, hyperscaler capex is expected to total more than $3 trillion over the next three years, which is a lot of money to finance with 10Y yields north of 5%.

“AI stocks in EM will be the first to go, given their outperformance this year,” said Vey-Sern Ling, a managing director at Union Bancaire Privee. “Higher rates and USD also hurt EM tech disproportionately.”

“The market is juggling a number of risks at the moment, notably geopolitical, which is fueling oil prices and in turn inflation and monetary policy,” said Roland Kaloyan at Societe Generale. Some investors “are looking to take profits and rotate out of the semiconductor trade. With yields where they are today, bonds are becoming increasingly attractive.”

That said, yesterday's hot CPI hasn't gone away: headline CPI rose 0.65% m/m and core 0.335% vs 0.2% expected, briefly lifting October hike odds above 50% before the AI rout unwound the entire move. Deutsche Bank's Henry Allen thinks the market is too complacent.

“The 50 risk is live,” Henry Allen, macro strategist at Deutsche Bank Research, said in an interview with Bloomberg TV, warning that the more the Fed stays behind the curve, “the risk is they have to play catch up.” Markets are grappling with offsetting forces, “where AI is pushing down the one side, CPI is pushing up on the other, but the risks are definitely on the hawkish side.”

JPM's Market Intel desk under Andrew Tyler stays Tactically Bullish, noting the two big questions yesterday were the reversal in bond yields and how much longer the tech selloff can run. On the former, the team blames a market that clearly overreacted when October hike odds jumped above 50%, a move into quality and safe assets, and "concern about a possible AI-related credit event." On tech, the SOXX fell for a seventh straight day; with JPM's TPM positioning at a neutral ~46th percentile vs ~19th near the late-July lows, the desk sees potential for further de-grossing into key tech catalysts, but says "we remain constructive on the sector and still see a possible opportunity to buy the dip." JPM FX sales' Steve Bruner put it more colorfully: "Have rates finally crossed the AI Rubicon? My instinct is Not Yet."

Goldman's desks spent the night counting casualties. In London, Rich Privorotsky writes that the GS global neocloud basket is down 20% in five sessions, "a roughly 1st pctl move over ten years", adding that "in hindsight, the pain trade was long AI/ short bonds. Now we're watching both sides unwind." His conclusion: "the market is discovering that demand for compute can grow exponentially, but the capital available to finance it cannot." Praneet Shah echoes that "the cost of financing the AI buildout is starting to collide with how much the market can comfortably absorb", while Gen Sales' Dioni Ellinikaki notes that in an increasingly debt-funded capex cycle, "access to credit is becoming the key constraint rather than AI adoption itself." On the damage: GS Prime shows TMT-focused funds lost 2.7% on the day (a -2.6 standard deviation move), and the TMT desk's info-tech sell skew was the highest in more than four weeks. In Asia, Rachel Hu notes the TAIEX saw a record ~$9.3 billion foreign outflow, yet market color "suggested limited capitulation versus the July selloff" — a polite way of saying there may be more to come.

In Europe, French bonds remain in focus: the OAT-bund spread widened 1bp to 142bps, just shy of Monday's closing peak, as France sold €12 billion of bonds at the top of its target range. Former ECB chief Mario Draghi said the ECB is unlikely to step in any time soon with market intervention to help France, setting a high bar for the TPI.

In Europe, the Stoxx 600 is down 0.1% at 637.05, with 225 members down and 369 up, as investors turn to defensive sectors while the global tech selloff gathers pace; telecoms, food & beverage and insurance lead, while tech, basic resources and industrials lag. The FTSE 100 is up 0.5% thanks to its low tech exposure, while the Euro Stoxx 50 drops 0.6% and the DAX is down 0.3%. ASML falls 5.5%, ASM International 9.1% and BE Semi 6.1%; JPM notes Semis, AI Data Centers and Momentum Longs baskets are showing 1-3z moves, while AI Disruptions and Luxury outperform. Here are the biggest European movers:

• Ericsson shares surge as much as 11% after the 5G gear maker reported sales and profits ahead of expectations, driven by its core networks business and projects in Japan and India.
• Pernod Ricard shares gain as much as 4% after analysts broadly welcomed the beverage maker’s first-quarter results, noting improved momentum in the US and China and signs the quarter marked a low-point for the company.
• THG surges as much as 17% after the nutrition and beauty company upgraded its profit guidance, which Peel Hunt says is likely to trigger increases to consensus estimates.
• EQT rises as much as 4.7% after the alternative investment firm reported an increase in assets under management driven by Coller Capital, which the firm acquired earlier this year.
• Dunelm gains as much as 7.6% after analysts said the UK home-furnishings retailer’s first-quarter trading update was better than analysts had expected, driven by a recent sales improvement.
• TotalEnergies shares rise as much as 1.1% after the French energy company published its 3Q trading statement. Analysts tout strong refining margins while oil and gas production and LNG also performed above expectations.
• DocMorris shares rise as much as 9.4% after the online pharmacy delivered “long-awaited” positive adjusted Ebitda in the third quarter and raised its guidance for the full year.
• European semiconductor stocks sink on Thursday as Anthropic’s sales growth failed to impress investors that have grown more anxious about the sustainability of AI spending.
• Entain slides as much as 3.8% after posting softer online net gaming revenue growth due to unfavorable sports results in Italy and a provisional ban on online gambling in Brazil.
• Workspace shares fall as much as 9.8% after the UK flexible-office landlord said its target of an additional £100m+ of disposals is unlikely to be fully achieved by March 2027.
• Alfa Laval drops as much as 4.2% as Nordea downgrades its rating on the Swedish industrial equipment maker to hold from buy on a more balanced risk-reward following recent strength in the shares.
• Kinnevik slides as much as 11% as DNB Carnegie says the Swedish investment company’s third-quarter unlisted net asset value came in “clearly below” expectations.
• Mining stocks fall across Europe, driven by industrial metals amid a global selloff in the artificial-intelligence trade.

Asian stocks slumped as the semiconductor selloff deepened on concerns over AI financing, with the MSCI Asia Pacific Index falling as much as 3.3%, the most since July 28, and its tech subgauge sinking as much as 7.1%; Samsung Electronics, SK Hynix and TSMC were the biggest drags. South Korea's Kospi plunged 7.6%, triggering Level 1 circuit breakers for the first time since July 29 and entering a bear market, as Samsung fell 9.5% and SK Hynix 11.1%, with foreigners net sellers for an 8th straight session. Japan's Nikkei sank 4.9%, its worst day since March, while Taiwan's Taiex fell 3.4% on a record ~$9.3 billion of foreign selling. China's CSI 300 dropped 2% and the Hang Seng lost 1%, while Australia's ASX 200 held up relatively well as financials and defensives offset weakness in tech and miners. India's Nifty bucked the trend, rising 1.9% on rotation and lower crude. Asian central banks stepped in to support their currencies, with Taiwan's state banks selling dollars and the RBI and Bank Indonesia intervening.

In FX, the Bloomberg Dollar Spot Index is down 0.3%-0.4%, giving back the post-CPI spike as US yields fall; the DXY trades in a 101.87-102.39 range after hitting its highest level since May 2025 on Wednesday. The Swiss franc leads G-10 gains, with USD/CHF down 0.6% to 0.8297, while EUR/USD rises 0.5% to 1.1212 and cable is up 0.4% at 1.325, shrugging off a better-than-expected UK August GDP print. The Aussie is the laggard, down 0.6% to 0.6930 after an unexpected contraction in September employment pushed the jobless rate up to 4.7%, prompting traders to scale back RBA hike bets. USD/JPY edges up 0.2% to 158.0.

In rates, Treasuries extend their advance across the curve in a bull flattener as investors seek havens amid the slump in technology stocks, with the 10-year yield down 10bps to 5.08%, the lowest since Sept. 23 - and a far cry from the 5.33% hit right after yesterday's CPI print. The 2-year yield is down about 8bps at 4.72% after having spiked as much as 16-20bps intraday on Wednesday, while the 30-year falls 7bps to 5.45%. If the rally continues, the Sept. 23 session was the last time a sub-5% 10Y was seen (and for the record, we are still some way off the 5.365% early-October peak). Bunds rally, led by the belly, with the German 10Y falling 10bps to 3.37%, the lowest since Sept. 8, as money markets pare ECB hike bets and no longer fully price three increases by end-2027; gilts jump with the UK 10Y down 9bps to 5.33%, ignoring the GDP beat. Spain sold €5.4 billion and France €12 billion of bonds. In the US, Treasury sells $110 billion of 4-week and $105 billion of 8-week bills at 11:30am, with the focus on PPI and retail sales and then Chair Warsh's final word before the blackout.

SMBC Nikko's Makoto Noji thinks the 10-year yield may be topping out: Wednesday's move was a rare return to the "textbook" pattern - stocks fell and the 10-year yield declined as the curve twist-flattened - which may signal long-term yields are close to peaking, as lower stock prices could prompt higher-income households to rein in spending. Not everyone is convinced; Bloomberg's Vassilis Karamanis argues the move is less a haven trade than a rates trade, with Treasuries rallying "because the tightening already embedded in yields starts doing some of the Fed's work."

In commodities, WTI November is down 0.2% at $94.92 (in a $93.58-95.31 range) and Brent December slides 1.9% to $104.06 (in a $103.64-105.83 range), as the equity selloff pushes investors away from risky bets and the Trump administration considers easing sanctions on shadow fleet vessels to bring down record-high freight rates. That is overshadowing escalation risk: CNN reports the US military has drawn up new strike plans that include potentially using the "mother of all bombs" against Iranian energy and nuclear sites, Ukraine's Zelenskyy has ordered strikes on Russian refineries to resume and a drone strike set the Ryazan refinery on fire overnight, while a cargo ship sank in the Strait of Hormuz after a strike. API data showed an 11.1 million barrel crude draw (vs. a 1.9 million build expected); the delayed EIA report is out at noon and WTI November options expire today. Dutch TTF slips toward €85/MWh. Spot gold rises 1.3% to $4,158 on haven demand and the softer dollar, silver gains 2.1% to $56.72, while LME copper trades near the bottom of a $14,320-14,480/t range.

US economic data slate includes September retail sales, PPI final demand, October Empire manufacturing and Philadelphia Fed business outlook, and initial jobless claims (all 8:30am), August business inventories (10am) and the September federal budget balance (2pm). Fed speaker slate includes Goolsbee (10am) and Hammack (4:30pm), with Chair Warsh in a fireside chat with the IMF's Georgieva at 11:30pm ET.

The IMF-World Bank meetings continue in Bangkok, EU leaders meet for a summit in Brussels, and SEMICON West wraps up in San Francisco.

Market Snapshot

Top Overnight News

• Nasdaq futures fell as a plunge in chip stocks deepened the equity selloff and extended the AI trade pullback. South Korea’s Kospi sank almost 8%, entering a bear market. BBG
• TSMC bucked the gloom with an upbeat outlook, yet failed to dispel rising concerns about the sustainability of a global AI buildout. The chipmaker is considering expanding in Texas and confirmed talks with Elon Musk’s Terafab about capacity. BBG
• Anthropic PBC told prospective investors its third-quarter revenue hit $16.8 billion, according to people familiar with the matter, as the artificial intelligence company pushes ahead with plans to go public. BBG
• CoreWeave shares plunged as much as 17% on Wednesday, while its debt due in 2032 dropped to less than 78 cents on the dollar, after investors bought it at par four months ago. BBG
• US FTC has subpoenaed Anthropic and OpenAI, seeking documentation in relation to safety incidents and privacy policies; plans to compel executives to testify: Axios
• Asian central banks stepped in to support their currencies as stocks dropped. State-owned banks in Taiwan sold US dollars and the RBI supplied greenbacks in onshore and offshore markets, traders familiar said. Bank Indonesia intervened to steady the rupiah. BBG
• IDC said that the smartphone market suffered its worst decline on record in the September quarter. Rising memory costs pushed shipments down 22%, and “the worst is yet to come,” the research firm said. BBG
• The Fed’s Mary Daly told Reuters that further rate hikes are probably needed, but there’s no urgency. Her Chicago colleague Austan Goolsbee called Wednesday’s US inflation report “discouraging.” BBG
• Deutsche Bank sees a growing risk that the Federal Reserve will need to raise its benchmark rate by 50 basis points in a single move in coming months if it delays tightening policy while inflation remains elevated and economic growth holds up. BBG
• The US military has developed new strike plans that include potentially using the so-called “mother of all bombs” to target Iranian energy infrastructure and nuclear sites should President Donald Trump give the order to resume combat operations either before or after the midterm elections, according to multiple US officials familiar with the matter. CNN
• The Trump administration is considering easing sanctions on so-called shadow fleet vessels that have transported oil and petroleum products from countries including Russia, Iran and Venezuela, in an effort to reduce record-high global freight rates, a US official said on Wednesday. RTRS
• President Volodymyr Zelenskyy has said Ukraine will restart strikes on Russia’s oil refineries as he expressed anger over a “dangerous” withdrawal of US intelligence and simultaneous weakening of Starlink satellite internet service at a time of intense Russian attacks. FT
• The US has proposed that European countries unfreeze some Russian sovereign assets immobilized after Moscow’s invasion of Ukraine and transfer them to a vehicle overseen by Washington in an attempt to revive peace talks. FT
• The European Central Bank is unlikely to step in any time soon with market intervention to help France, according to its former chief, Mario Draghi. BBG
• Bank of England policymaker Megan Greene says the UK should raise interest rates to lean against the risk of significant second-round effects from high energy prices. BBG
• UBS is mapping out contingency plans to move its HQ from Switzerland if Swiss lawmakers proceed with tougher capital requirements under the country’s too-big-to-fail banking laws: WSJ
• White House Council of Economic Advisers Chair said referring to the inflation report that this is not a good month and that Bureau of Labor Statistics data is reliable.
• Trump administration's investigation into Rep. Omar is aimed at building a case to strip her of her US citizenship and ultimately deport her, according to US officials and other people familiar with the probe: WSJ
• Goldman's global neocloud basket is down 20% in five sessions, "a roughly 1st pctl move over ten years," while hyperscaler IG spreads widened another 7.4bp last week. GS
• JPM's Feroli sees September PPI at +0.5% m/m headline and +0.3% core, and retail sales +0.4% with the control group +0.2%, both on strength in Chase card data. JPM

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were lower across the board as the sell-off rolled over into the region following the losses stateside owing to the tech rout and hot CPI data. ASX 200 was slightly lower but with the downside limited as underperformance in tech and miners was offset by resilience in financials, telecoms and defensive sectors, while disappointing jobs data further lessened the likelihood of the central bank hiking rates again next month. Nikkei 225 slumped by more than 3000 points, with double-digit losses seen in several tech stocks. KOSPI was the worst performer and triggered circuit breakers after dropping as much as 8% owing to its large tech exposure and the ongoing bloodbath in the sector. Hang Seng and Shanghai Comp conformed to the broad-based tech-driven weakness, with recent stronger-than-expected lending data doing little to spur risk sentiment.

Top Asian News

• Chinese Premier Li said regarding New Yalu River Bridge, which connects China and North Korea, said opening of the bridge will strongly promote economic and trade cooperation and further strengthen personnel exchanges.
• South Korea and Japan extend their currency swap agreement, Yonhap reported.

European bourses (STOXX 600 -0.2%) point to a mixed picture, with so-called defensives (FTSE 100 +0.3%, SMI +0.4%) outperforming while cyclical-heavy indices (DAX 40 -0.3%, AEX -0.9%) underperform, primarily driven by the continued selloff in chip and memory names. Sectors have a slight positive tilt. Telecoms lead, with Food, Beverages & Tobacco and Insurance rounding out the sector gainers. Unsurprisingly, Tech is the sector laggard, with Basic Resources and Industrials following behind. US equity futures are mixed, with the NQ and ES being weighed on by tech names. AI funding has returned as a worry for investors, with the Broadcom CEO recently highlighting concerns about AI buildout financing. Additionally, CoreWeave has been pressured, with shares plunging 15% in the prior session (-6% pre-market) as it has been heavily reliant on the high-yield debt markets to finance its build out. TSMC EARNINGS: TSMC earnings failed to result in a rebound in the tech space, despite a better-than-expected revenue outlook. In brief, Q3 net income topped estimates while gross margin printed a tick lower than consensus. The chipmaker projected Q4 sales as much as USD 54.3bln (exp. USD 48.8bln), which should result in a c. +44% rise in 2026 revenue in USD. Following the Q3 release, analysts at Saxo Markets see this as a much-needed vote of confidence in the AI demand story, amid a selloff triggered by growing signs of stress.

Top European News

• UK Chancellor Healey said he will follow IMF advice to stick to deficit reduction plans in October 28th Budget.
• UBS (UBSG SW) is mapping out contingency plans to move its HQ from Switzerland if Swiss lawmakers proceed with tougher capital requirements under the country’s too-big-to-fail banking laws, according to WSJ.

FX

• G10s are mostly firmer against the USD, which is under mild pressure this morning. The Aussie is the clear underperformer following a weak jobs report, whilst the CHF holds at the top of the pile, on narrowing yield differentials and the broader risk-off tone.
• DXY is currently trading with modest losses, giving back some of the strength seen in the prior session; as it stands the index holds within a 101.87 to 102.39 range. Pressure which appears to be a pull back from the prior day’s post-CPI gains, and as US yields falter, amidst the latest tech sell off. Overnight, the likes of SK Hynix and Samsung Electronics sank in excess of 11%, with investors worried about AI spending sustainability, and most recently, default concerns related to CoreWeave.
• The selling pressure also comes in the aftermath of a hot US CPI report, which only further exacerbates credit concerns and expectations of tighter conditions ahead. Money markets currently assign a 27% chance of a hike in October, and 90% by December 2026; a few sell-side banks have also brought forward their calls of a hike by year-end vs previously viewing a hold.
• Aussie (-0.6%) is the clear underperformer this morning, and currently holds at the lower end of a 0.6936 to 0.6980 range. This comes after a very poor regional jobs report, which showed an unexpected contraction in headline Employment Change, which was solely due to part-time work, while the Unemployment Rate rose, although it coincided with a fall in the Participation Rate. A report which saw money market pare back their bets of a hike in November (16%); c. 40% chance of a hike is assigned by year-end.
• CHF (+0.6%) is the outperformer this morning, joined closely by the EUR (+0.5%) and GBP (+0.5%), all benefiting from the broader USD pressure. The Swiss Franc cheers narrowing yield differentials, whilst the GBP counts down the days to the UK Budget (Oct 28th).
• On that note, recent source reports about Chancellor Healey’s plans have been taken in the market’s stride. Most pertinently, he 1) does not intend to equalise income tax and CGT, 2) will fund the package without fresh borrowing. Into the Budget, the August GDP M/M reading saw the UK grow 0.1%, topping expectations of -0.1%, but beneath the prior 0.4%. So whilst Healey will welcome the growth in August, the slight slowdown will no doubt lessen some of the breathing room he would have liked to have. Cable kneejerked higher on the series itself, but then pared back given it has little impact on monetary policy in the near-term. On this subject, a couple of BoE members have spoken today; Greene reiterated that she sees risks of second round effects as “pretty significant”, whilst Breeden questioned whether the energy shock is gone or just delayed. A stark contrast between the two MPC members. GBP/USD currently holds within a 1.3186 to 1.3259 range.

Central Banks

• Fed's Daly (2027 voter) said we are more likely than not to need more rate hikes, but still deliberating on timing, adds not in a posture of urgency and better to be thoughtful and deliberate. Reassuring that after markets' initial 'robust' reaction to CPI data, markets are calmer. Markets understand the Fed's reaction. CPI showed gas prices are driving headline inflation, while core inflation remains sticky, as expected. Feels imprudent to react when there is time to make a good decision. Don't know yet if inflation will come down as shocks abate or worsen if shocks persist. Risks to above-target inflation remain elevated; stable labour market means the Fed can focus on price stability. The Fed has a responsibility to communicate effectively and be accountable, transparent and clear.
• US President Trump said the Fed has interest rates artificially high.
• UBS expects the Fed to hike for a third time in March 2027 (prev. saw hiking cycle to end in December).
• BoJ Board Member Koeda said she believes that the bank should adjust the policy interest rate in a timely manner with an eye on the economic and price situation, while keeping in mind the estimated range of the neutral interest rate. The monetary environment has been accommodative; no pace of hikes in mind, sees neutral rate "significantly" above 1%.
• ECB's Kazaks said that there is no immediate rush on interest rates, inflationary pressure remains strong in the near term.
• ECB's Pereira said yields rise is more related to fiscal issues, adds good news is that inflation is not spreading and if inflation starts broadening, central banks will be forced to act. Growth is surprising on the upside and wouldn't be surprised if it continued in the next few months.
• ECB's Dolenc said don't see second-round effects yet and the labour market isn't so tight anymore, adds must be vigilant on inflation data. Approaching a restrictive policy stance. ECB may not have to do much if markets tighten and have tools including TPI which will be used if needed.
• BoE's Breeden said are looking to whether the energy shock is gone or just delayed; the loosening of the labour market hopefully means that there will not be wage price pressure like in 2022.
• BoE's Greene said the risks of second-round effects are quite significant.
• BoE's chief economist Pill said should not give impression that hike now would be at the start of a series of increases.
• RBNZ Chief Economist Conway said New Zealand is feeling the effects of oil price shock, while he affirm's direction of the OCR is most likely up and the next OCR decision is wide open.
• PBoC Governor Pan attends China-GCC Central Bank Governors' Meeting, while the PBoC and Qatar Central Bank renew FX swap agreement.
• PBoC injected CNY 45bln via 7-day reverse repos with the rate at 1.40%.
• PBoC set USD/CNY mid-point at 6.7253 vs exp. 6.6977 (prev. 6.7249).
• SARB Governor sees upside risks to inflation to remain, adding that he expects CPI to return to the 3% target only in 2028; policy rates are moderately restrictive and consistent with the outlook.

Fixed Income

• In short, the post-CPI rebound continues as the tech/AI selloff extends and a FTQ ensues.
• USTs at a 105-18 peak, firmer by 22 ticks on the day already into PPI, retail sales and Fed speak. Taking USTs to the highest since the 23rd of September, when 106-08+ printed. Amidst this, yields are lower across the curve with the 10yr down by 10bps on the day, at a 5.08% low; if the move continues, it is worth reminding that the referenced 23rd September session was the last time a sub-5% US 10yr yield was seen. For context, we are some way off the 5.365% early-October peak.
• Bunds in-fitting with drivers much the same, and ECB speak and data prints having no real impact on the market thus far. Price action that has lifted Bunds to a 121.92 peak, firmer by 96 ticks at best; though, for what it is worth, the peak hit in APAC trade (in slight contrast to USTs) during the worst of the South Korea selloff.
• Gilts opened higher by just over 50 ticks before extending to gains of exactly a full point on the day, hitting 84.91 and the highest since October 2nd. A move driven by the above FTQ. No real followthrough to the UK’s GDP data, as while better than expected this was essentially due to favourable service revisions in the last two periods, and a stagnate service picture in August, as opposed to any surprise growth. While the better-than-expected print is welcome, it does not change the narrative for policymakers.
• Spain sells EUR 5.436bln vs Exp. 4.5-5.5bln 2.35% 2029, 2.60% 2031 and 3.55% 2033 Bono.
• France sells EUR 12bln vs Exp. EUR 10-12bln 2.70% 2031, 0.00% 2031, 3.25% 2032 and 3.50% 2033 OAT

Commodities

• WTI Nov and Brent Dec futures are softer amid the broader risk-off tone following the global tech sell-off and hotter-than-expected US CPI yesterday, with the complex also pressured by potential supply relief. Recent reports suggested the US is considering easing sanctions on shadow fleet vessels to boost oil flows, while Russian diesel could reach the US ahead of the November midterms. Nonetheless, geopolitics has subsided, with the US reportedly preparing fresh strike options against Iranian energy and nuclear facilities, while Houthi attacks on Saudi Arabia continue. Elsewhere, US private inventories yesterday showed a sizeable 11.1mln bbl draw in crude (exp. 1.9mln bbl build), although this provided little support amid the broader selling.
• WTI resides in a USD 93.58-95.31/bbl range, while Brent declined within a USD 103.64-105.83/bbl range, albeit both off worst levels. Dutch TTF is softer alongside the broader pullback in energy prices, although underlying fundamentals remain bullish ahead of winter. TTF fell to the bottom of a EUR 85.00-87.80/MWh range at the time of writing.
• Precious metals are firmer, with spot gold benefiting from haven demand amid the global tech sell-off, alongside a softer DXY and lower global yields despite yesterday's hotter-than-expected US CPI. Spot gold is firmer within a USD 4,100-4,162/oz range, while spot silver also gains, within a USD 55.49-56.37/oz range.
• Base metals are softer amid the broader risk-off tone, with copper pressured by the sharp sell-off in global equities, particularly Asian tech stocks, with the KOSPI suffering the most, alongside concerns over further Fed tightening following the US CPI report. 3M LME copper trades close to the bottom of a USD 14,320-14,480/t range.
• Chinese State Planner said that domestic gasoline and diesel retail prices will not be adjusted on Oct 15, 2026.
• Chile's state miner CODELCO called a shareholders meeting for November 5th to review production inconsistencies in 2024 and 2025.
• US Weekly Private Inventory Data (bbls): Crude -11.1mln (exp. +1.9mln), Gasoline +1.1mln (exp. -0.8mln), Distillate -1.5mln (exp. -2.0mln), Cushing +1.8mln.
• Russian Deputy PM Novak says that "a number of countries, not just the US, are interested in purchasing Russian diesel fuel"

Trade/Tariffs

• Japanese Trade Minister Akazawa said Japan and US agree on first chip project under USD 550bln investment plan, while he added that chip project has great significance in AI era and they remain strongly committed to last year's trade deal. Latest chip project is to enhance Japan and US ties further. Collaborating on chip supply is key for economic security.

Geopolitics: Middle East

• US is considering using "mother of all bombs" against Iran, according to source cited by CNN.
• US President Trump reiterated that the war with Iran will end soon and fuel prices will drop shortly, adds Iran issue will be resolved quickly.
• US President Trump said we have complete control of the Strait of Hormuz and are extracting more oil from it than ever before, while he stated that Iran was two weeks away from acquiring a nuclear weapon before we struck their sites. This matter in Iran will end very soon, and when it ends, gasoline prices will drop to levels even lower than they were before the start of military operations.
• US is reportedly discussing lifting some sanctions on shadow fleet vessels in attempt to lower global freight rates and boost oil flows in the Middle East, according to an official.
• IRGC Spokesperson said attack on violating ships was a response to America's third breach of promise.
• Saudi-led coalition says that a cruise missile has been intercepted in the Medina region, Al Hadath reports; Yemeni Army Spokesperson says Forces did not target Saudi's Medina, and these claims is a great falsehood.
• Houthis are developing their own advanced ballistic missiles that could reach Saudi Arabia and Israel using Chinese delivered parts, according to New York Post.
• Houthi media official called on Taiz residents to stay inside their homes.
• Yemen's air defences downed a Saudi Typhoon warplane in the skies over Saada in Yemen, according to Fars.
• Arab sources report hearing several explosions in Yemen's capital, according to Tasnim.
• Saudi-led coalition said it intercepted and destroyed a drone in the kingdom's eastern region.

Geopolitics: Ukraine

• Ukrainian President Zelensky's top advisors spoke with White House counterparts on Wednesday and asked whether there'd be a decision to shut down Starlink services and what could be done to fix the situation, according to sources cited by Axios's Ravid. "A senior U.S. official said the Trump administration had nothing to do with the alleged Starlink service constraints. But Ukrainian officials remain suspicious".
• US proposed European countries unfreeze some Russian sovereign assets in an effort to revive peace talks during discussions in Miami last week between Trump's peace negotiators and officials from Ukraine, France, Germany, UK, EU and NATO, according to FT. European delegates rebuffed the plan.
• Ukraine President Zelensky said Ukraine will resume strikes on Russian refineries and expresses anger at a dangerous withdrawal of US intelligence sharing and weakening of Starlink satellite internet service, according to FT.
• Dutch PM said that "we need to step up our game and make sure Ukraine wins the war".
• Russia's Ryazan refinery was reportedly attacked overnight by drone.
• Russia hits Ukraine's Izmail port and cargo vessels.
• Japanese PM Takaichi said there is no such fact when asked whether Japan is conducting espionage in Russia.
• UK Chancellor Healey called on other nations to stay the path regarding Russia sanctions and said tighter ban on Russia-linked shipping services is needed.

Crypto

• Bitcoin (-3%) and Ethereum (-5%) slip alongside the broader risk tone.

US Event Calendar

• 8:30am: Sep Retail Sales Advance MoM, est. 0.3%, prior 1.2%, revised 1.13%
• 8:30am: Sep Retail Sales Ex Auto MoM, est. 0.5%, prior 1.4%, revised 1.28%
• 8:30am: Oct Empire Manufacturing, est. 12, prior 7.6
• 8:30am: Oct Philadelphia Fed Business Outlook, est. 28, prior 37.8
• 8:30am: Oct 10 Initial Jobless Claims, est. 200k, prior 197k
• 8:30am: Oct 3 Continuing Claims, est. 1709k, prior 1716k
• 8:30am: Sep PPI Final Demand MoM, est. 0.6%, prior 0.4%
• 8:30am: Sep PPI Ex Food and Energy MoM, est. 0.3%, prior 0.2%
• 8:30am: Sep PPI Final Demand YoY, est. 5.4%, prior 5.4%
• 8:30am: Sep PPI Ex Food and Energy YoY, est. 4.4%, prior 4.6%
• 10:00am: Aug Business Inventories
• 11:30am: US to sell $110 billion 4-week bills and $105 billion 8-week bills
• 2:00pm: Sep Federal Budget Balance, est. -$30.0b, prior $197.9b

Central Bank Speakers

• 10:00am: Fed’s Goolsbee Speaks in Kyla’s Newsletter Podcast Interview
• 4:30pm: Fed’s Hammack Participates in a Moderated Discussion
• 11:30pm: Fed’s Warsh in Fireside Chat with IMF’s Georgieva

DB's Jim Reid concludes the overnight wrap

Markets have just had an incredibly tumultuous 24 hours, as a strong US CPI print was then followed up with mounting fears around the AI trade. Indeed, you can see the story of the day from the huge turnaround in bond yields, with the 10yr Treasury yield initially surging to 5.33% after the CPI print, before paring that all back to close at 5.19%, and this morning it’s now down another -8.4bps to 5.10%. Meanwhile for equities, the developments pushed the S&P 500 (-1.11%) to its worst performance since July, and futures on the index are down another -0.50% this morning. Moreover, there’s been a huge selloff in Asia overnight, with the KOSPI (-7.04%) and the Nikkei (-5.08%) both slumping, and the KOSPI even saw a circuit breaker triggered earlier given the scale of the declines.

In terms of the catalysts, several names most exposed to AI have already been under mounting pressure in recent days. For instance, we mentioned in yesterday’s edition how CoreWeave’s 5yr CDS contract went over 1000bps intraday on Tuesday, highlighting how nervous some credit investors were about the company’s leverage profile. But yesterday, their CDS was then up another +136bps, closing at 1118bps, and the company’s share price fell -15.46% on the day. Moreover, this pressure started to be noted more widely, particularly among those firms that have been heavily scrutinised by credit investors given their large capex needs. So this led to big losses elsewhere, with Oracle (-8.83%) posting its largest decline since June, whilst the Philly semiconductor index (-4.30%) posted a 6th consecutive decline for the first time in over a year. In fact, that now leaves the index down -11.6% over those 6 sessions.

Those trends have shown no sign of letting up overnight, with significant moves in Asia this morning. That’s been most obvious for the KOSPI (-7.04%) and the Nikkei (-5.08%), but we’ve also seen sharp losses for the CSI 300 (-2.00%), the Shanghai Comp (-1.98%) and the Hang Seng (-1.47%) as well. Some of the individual names have seen even bigger losses, including SK Hynix (-11.28%) and Samsung (-9.91%). And looking forward, there’s no sign of the moves stabilising in the US and Europe, with futures on the NASDAQ 100 down another -1.08% this morning.

All that was exacerbated by a strong US CPI print yesterday, which led to mounting expectations about Fed rate hikes, adding to the pressure on some of these names. To be fair, the print was already expected to be a strong one given the recent rise in energy prices. But when it came out, headline CPI was at +0.649% on the month (vs. +0.6% expected), meaning it was just a whisker away from rounding up to +0.7%, and it pushed the year-on-year number to +3.7% as well. Moreover, the details didn’t look promising either, as core CPI was at +0.335% on the month (vs. +0.2% expected), taking the year-on-year number to +2.6% (vs. +2.5% expected). So this wasn’t just an energy surge driving prices higher, as there were broad-based moves across the consumer basket.

For markets, the clearest impact was on Fed pricing, as it immediately drove fresh speculation about an October rate hike. Beforehand, that had been priced at only a 22% chance, partly because multiple Fed speakers had steered away from it in the last couple of weeks. But after the CPI print came out, that then surged to an intraday peak of 58%, and it spent around half an hour above the 50% mark. Nevertheless, the AI fears and the broader risk-off tone have seen that move almost entirely unwind since, with futures now pricing in just a 27% chance of an October hike this morning, not much higher than before the CPI print even came out. So it just shows how much AI is dominating market attention right now, as fears over a broader tightening in credit conditions led to growing doubts about whether the Fed would actually move, despite the strong print. Indeed, US HY spreads (+11bps) ended yesterday’s session at 324bps, their widest since March.

With all that happening, US Treasuries saw some huge moves in the aftermath, with very large intraday ranges. For instance, the 2yr yield was initially up +16.1bps on the day, before paring that back to close only +0.8bps higher at 4.80%, and this morning it’s seen a sharp -7.8bps decline to 4.72%. Similarly, the 10yr yield initially surged to 5.33% after the CPI print but ultimately fell -2.3bps on the day to 5.19%, and has since fallen another -8.4bps overnight to 5.10%. And for the 30yr yield, there was initially a move up to 5.63%, before ending the day down -3.4bps at 5.52%, and this morning it’s down -7.2bps at 5.45%. The impact cascaded across other asset classes too, as there was initially a sharp appreciation of the US Dollar, but that’s also unwound entirely since, with the Euro strengthening +0.53% against the US Dollar this morning to $1.1215. More broadly, US equities were under pressure from both the inflation and the AI stories, but the small-cap Russell 2000 (-1.93%) took a particular hit, with the index entering correction territory yesterday, having now shed over -10% from its August peak.

Otherwise yesterday, oil prices rose slightly, with Brent crude (+0.35%) up to $106.06/bbl by the close. That came amidst no signs of progress in the US-Iran conflict, and the moves added to the inflationary concerns that had already mounted after the CPI print. However, the risk-off tone has dominated overnight, with Brent crude since down -1.75% to $104.20/bbl. Moreover, that’s despite Ukrainian President Zelenskyy saying to the FT that Ukraine would resume its strikes on Russian refineries.

Earlier in Europe, the continent’s assets put in a relatively better performance yesterday, albeit with a strong divergence across the board. For equities, there was strength in aggregate, with the STOXX 600 (+0.43%) up to a two-week high. However, there were gains for some like the FTSE 100 (+0.70%) and the CAC 40 (+0.58%), whereas Italy’s FTSE MIB was down -0.61%. Then for bonds, 10yr bund yields (-0.3bps) fell back slightly to 3.47%. But sovereign bond spreads widened, with the 10yr Franco-German spread up +4.1bps by the close to 141.5bps, just shy of its recent closing peak on Monday, at 142.3bps. And looking forward, equity futures are also pointing lower today, with those on the DAX down -0.49%.

Looking at the day ahead now, US data releases include PPI inflation and retail sales for September, the Empire State manufacturing survey for October and the weekly initial jobless claims. In Europe, we’ll also get UK GDP and Euro Area industrial production for August. Central bank speakers include the Fed’s Goolsbee and Hammack, along with the BoE’s Greene and Breeden. Finally, EU leaders will meet for a summit in Brussels.

Bulgaria has just broken ranks amid widespread European criticism over the Trump-Putin diesel deal announced last week, with the NATO country's Prime Minister Rumen Radev stunning Brussels in fresh remarks.

"You know what is our problem right now in Europe? High fuel prices," Radev said in English as he attended a two-day summit of leaders.

Reuters described of the top level meeting in Brussels, "the European Union began a packed summit on Thursday that quickly underscored wrangles over how ?to tame soaring energy prices, design a budget to keep the bloc competitive and curb surging exports from China that are blamed for job losses."

Prime Minister Radev told the summit "Any step in reducing fuel prices and to guarantee our competitiveness, we appreciate" - in a clear reference to the US-Russia diesel agreement.

And even as most continue to vocally support Ukrainian President Zelensky in his ongoing standoff with Trump and defiance of US wishes, Radev criticized Ukraine's strikes against Russia's oil refineries, again siding with the White House.

"I don't support strikes on any refineries," Radev said, at a moment Trump is strongly warning that Kiev better halt this tactic.

"I don't support strikes on any energy power plants, like Russian attacks on energy power plants in Ukraine, because this hits us back," he added. "The prices in Europe are (skyrocketing)."

Fellow European leaders voiced wide disagreement, with EU foreign policy chief Kaja Kallas echoing Zelensky's words that the diesel deal was a "gift" to Vladimir Putin.

"The question is: what has he (Putin) given in return? What we see is that he's actually increasing the attacks on civilians and civilian infrastructure. The ceasefire that was also announced is not really working on the Russian side," Kallas said.

The recently installed Radev, whose Progressive Bulgaria party won the April election, has been busy rolling back the NATO 'eastern flank' country's prior policy on Ukraine, including related to arms shipments.

The new government has made clear it has a new peace agenda, and its position is that nothing will be resolved by just pouring more heavy arms into the conflict, now in its fifth year. It was given a new mandate.

This was also notable amid the AfD's continued rise in Germany...

German AfD Leader Alice Weidel: While you attempt to finance the proxy war against the nuclear power Russia practically single-handedly, our European partners are already discreetly holding back. And while you approve one sanctions package after another, thereby ruining our own economy and public finances, the U.S. and Russia are negotiating diesel deliveries and other agreements for their mutual benefit.

— Clash Report (@clashreport) October 15, 2026

He has repeatedly criticized EU overreach on green-energy mandates, sanctions policies and what he describes as moral posturing in a "world without rules."

While analysts have lately noted he is unlikely to ultimately jeopardize the flow of EU funds that sustain Bulgaria’s economy, the result installs a distinctly Russia-friendly government at the heart of the EU's southeastern flank - a shift that has been drawing close scrutiny in Brussels, Washington and Kiev.