Corporate Calendar Heats Up

STOCK INDEX FUTURES

The indexes moved higher after hitting new records on Monday ahead of the Fed’s meeting this week, where the central bank is expected to lower interest rates. President Trump and President Xi are still set to meet on Thursday. The US and China appeared to have hammered out the framework of the deal, set to be finalized by the respective leaders. In the corporate world, Amazon said that on Tuesday it would begin to substantially reduce its corporate workforce, marking the largest job cuts in the company’s history. Gains in the indexes yesterday were led by the tech sector; Qualcomm led the charge with a 13% surge after it unveiled two AI chips for data centers that will rival Nvidia’s. Quarterly results from Microsoft, Alphabet, and Meta on Wednesday will drive market direction ahead of earnings from Apple and Amazon on Thursday.

On the data front, October consumer confidence, the Richmond Federal Reserve business survey (Oct), the Dallas Fed service sector business survey (Oct), and August house prices will be released today.

CURRENCY FUTURES

US DOLLAR: The USD index slipped on Tuesday, as signs of easing tensions ahead of a Trump-Xi summit led to risk-on sentiment that pressured the dollar. President Trump and Xi will meet in South Korea on Thursday to decide on the framework of a trade deal that was created over the weekend. Markets have fully priced in a rate cut from the Fed this week. The anticipation around the outcome of trade talks and an expected rate cut from the Fed has led the dollar lower to start the week. Investors will listen for any signals on how far interest rates are expected to drop at future meetings, although formal guidance from Fed Chair Powell is not expected.  Fed Funds futures have been slowly scaling back bets of a December rate cut. Contracts are implying a 92.8% chance of a cut, down from over 98% a week ago.  Cautious commentary coming out of the Fed could provide support for the dollar given that a December cut is almost fully priced in.

EURO: The euro was little changed against the dollar. Germany’s GfK consumer climate survey recorded its lowest level since April, as income expectations fell. The consumer-climate index fell to -24.1 in its forecast for November and -22.5 in October. The data comes in contrast to the Ifo business climate index, which showed that business confidence rose slightly due to improved expectations, though the current business situation was assessed as slightly worse, the Ifo Institute said. Thursday will be a jam-packed day for Eurozone data and monetary policy. The ECB is expected to keep its benchmark rate unchanged on Thursday, given recent data releases and commentary from officials that the current rate is well-positioned. Eurozone business and consumer surveys for October on Thursday, alongside unemployment figures from Germany for October and Italy and the eurozone for September. Third-quarter GDP figures are also due for release from Germany, France, Italy, and the Eurozone on Thursday. CPI figures from a host of countries will also be watched following a slight uptick in inflation last month, although markets widely expect inflation to fall below the ECB’s 2% target in early 2026.

BRITISH POUND: The pound slipped against the dollar ahead of tomorrow’s Fed decision in what is a quiet week of economic data for the UK. Britain’s Office for Budget Responsibility is expected to cut its trend productivity growth forecast by about 0.3%, which could lead to a hit to public finances. However, Finance Minister Rachel Reeves had acknowledged previously that the OBR was likely to cut its forecast after being too optimistic in the past. Last week, CPI inflation data for September came in below expectations, with inflation holding at 3.8%, showing no changes in September after rising 0.3% in August. Notably, the figures came in below the expectations of the Bank of England, who had expected a rise to 4%. Inflation is expected to continue to moderate, offering the BoE a potential reprieve if those expectations are reflected in upcoming data. The data led markets to increase bets on BoE rate cuts; markets are pricing in a 67% chance of a rate cut by year-end, up from 50% before last week’s inflation data was released. The BoE is likely to be highly divided when it votes on interest rate moves in November. Mortgage lending, mortgage approvals, and consumer credit data will be in focus this week as investors continue to look ahead to the government’s budget on November 26.

JAPANESE YEN: The yen rose following comments from US Treasury Secretary Scott Bessent, where he called for “sound monetary policy” during his meeting with his Japanese counterpart ahead of the Bank of Japan’s meeting this week. Markets widely expect the bank to hold rates steady at 0.5%. However, the focus will be on whether or not it provides any clues on the timing of upcoming rate hikes. President Trump met with Japan’s new prime minister, Sanae Takaichi; the two leaders signed deals relating to trade and rare earths. Japan’s new economic revitalization minister, Minoru Kiuchi, said on Tuesday that the new administration’s priority would be to accelerate economic growth. The remark highlights the market’s focus on the new administration’s plans on reflating the economy through expansionary fiscal policy. On the data front, Tokyo consumer price data for October on Friday offers a leading indicator of country-wide trends, which comes out alongside national industrial production and retail sales figures for September.

AUSTRALIAN DOLLAR: The Australian dollar was little changed against the dollar, following a rally yesterday, as optimism surrounding US-China trade talks has sparked a risk-on sentiment that supported the currency. Reserve Bank of Australia Governor Michelle Bullock on Monday played down the significance of September’s unemployment jump while reiterating caution on policy. Bullock said a rise in core inflation of 0.9% in the third quarter would be a “material miss” to forecasts that would have to be weighed by the board when judging whether to cut interest rates next week. Third-quarter inflation data out later this evening (CST time) will be decisive for the RBA in whether or not it decides to cut rates at its meeting in November. Markets forecast headline CPI to rise to 3.0% annually, at the upper end of the RBA’s 2–3% target. PMI data out last week showed that among surveyed businesses, composite input cost inflation eased to near a one-year low even as manufacturing input prices rose at the quickest rate since April, while selling price inflation fell to its softest pace in around five years. Still, if the CPI data shows inflation is at the upper end of the RBA’s target, the bank is still expected to lower interest rate cuts next year given the current macroeconomic backdrop.

INTEREST RATE MARKET FUTURES

Futures are lower at the front end and higher at the long end following a volatile start to the week ahead of the Fed’s meeting and a meeting between President Trump and Xi, helping to spark a global risk-on sentiment. Markets are hopeful a trade breakthrough will happen after productive weekend discussions between US and Chinese negotiators. Several issues, such as export controls, fentanyl, and shipping levies, were reportedly resolved. Focus at the Fed’s meeting will also center around any signals about when the bank might end its quantitative tightening cycle, after Powell recently signaled that the end of QT is approaching. An end to QT would be bullish for Treasurys, as it reduces bond supply and lowers the Treasury’s financing requirements.

Markets will look to today’s 7-year note auction following mixed results from yesterday’s 2- and 5-year note auctions.

Friday’s CPI inflation report showed a smaller-than-expected rise in inflation. Headline CPI inflation rose to 3.0% from 2.9% in August on an annualized basis, below expectations of a rise to 3.1%. Core CPI rose 0.2% on the month, a slower pace than the previous two months, at 0.3%, landing the annualized core figure at 3.0%, below expectations of a rise to 3.1%. The data all but confirms that the Fed will move to cut rates by 25 bps at its meeting. Markets will parse commentary from the central bank for any signals on the extent of easing, which the economy could see before year-end, as markets have largely priced in another rate cut in December. Any signals that easing in December may not be entirely on the table could prove to be a headwind for Treasurys.

The spread between the two- and 10-year yields fell to 48.70 bps from 51.90 bps on Monday, while the 2-year yield, which reflects interest rate expectations, rose to 3.508%.

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