Newsquawk Daily US Opening News - 16th October 2026

US President Trump said Iran had asked for a halt to US attacks and negotiations are still ongoing. Trump mentioned that he would not use nuclear weapons, but warned that they may have to go to Pickaxe Mountain. European bourses traded mostly firmer in a rebound from recent selling pressure; TSLA +5% in pre-market trade after Musk unveiled a “flying” car. DXY is under pressure after Fed Chair Warsh avoided any rate guidance; Antipodeans lead given the risk tone. Crude benchmarks edge lower; Trump mentioned that Ukrainian President Zelensky is not a good guy to deal with. Looking ahead, Highlights include US Import/Export Prices (Sep), Industrial Production (Sep), Credit Ratings update from Morningstar DBRS on Italy. SNAPSHOT STOCKS Euro Stoxx 50 +0.7% DAX40 +1% Stoxx 600 +0.5% FTSE 100 -0.1% ES Dec'26 +0.2% RTY Dec'26 +0.5% NQ Dec'26 +0.1% YM Dec'26 +0.4% FX DXY -0.3% (101.70) EUR/USD +0.3% (1.1251) USD/JPY U/C (157.95) GBP/USD +0.4% (1.3330) BONDS US T-Note Dec'26 -1 tick Bund Dec'26 -19 ticks US 10yr Yield 5.09% German 10yr Yield 3.42% ENERGY & METALS WTI Dec'26 -1.2% Brent Dec'26 -0.8% Spot Gold +0.3% LME Copper +1% CRYPTO Bitcoin +1% Ethereum +3% As of 10:35BST / 05:35EDT LOOKING AHEAD Highlights include US Import/Export Prices (Sep), Industrial Production (Sep), Credit Ratings update from Morningstar DBRS on Italy. Click for the Newsquawk Week Ahead. EUROPEAN TRADE EQUITIES European bourses (STOXX 600 +0.5%) have an upward bias to start the final trading session of the week, with cyclical-heavy indices outperforming as tech rebounds from this week's losses. Sectors highlight the positive bias. Autos lead, with Media and Telecoms following closely behind. To the downside resides Health Care, as the only sector in the red. UK banks are under pressure this morning after Bloomberg reported that UK Chancellor Healey will raise taxes on banks. The report follows a Guardian source stating that the proposal includes a 3% increase to the bank surcharge. Lloyds (-2.3%) and NatWest (-2.1%) are under the most pressure, while Barclays (-0.2%) and HSBC (+0.5%) are little moved given its large international business. US equity futures follow their European peers. Tesla (+5%) is getting a boost pre-market as it unveils its flying car, while Strategy (-2.4%) falls after MSCI announces new screening methodology that targets companies holding digital assets. Tesla (TSLA) Roadster uses thrusters to land after ramp jump, while Roadster can accelerate 0-60Mph in less than 1 second, while it will enter production in 2028. FX Snapshot: G10s are firmer against the broadly lower USD this morning. Antipodeans lead, benefiting from the risk tone, whilst the JPY holds towards the bottom of the pile, but still remains flat. USD continues the prior day’s downside, which stemmed from AI-debt concerns and lower yields. Also fuelling the downside this morning is a speech from Fed Chair Warsh, where he ultimately provided no forward guidance ahead of the October meeting; as such, money markets pared back their bets of an October hike (now 14% vs 26% earlier). The docket for the remainder of the day remains exceptionally light aside from US Import/Export Prices and Industrial Production. GBP is a touch firmer this morning, benefiting from the softer USD a little more-so than peers. Focus remains on the looming UK Budget (Oct 28), where source reports have generally been welcomed by markets. The latest was via Bloomberg, which suggested that Chancellor Healey could raise taxes on banks. The source adds that the move will likely involve increasing the bank surcharge that it added on top of the standard corporation tax rate. It seems as if markets are taking the potential tax on banks as a reliable way to improve the fiscal situation, without having a significant impact on growth. FIXED INCOME Fixed income benchmarks are a touch lower to start the final trading session of the week. USTs essentially flat, and look set to end with weekly gains despite a hotter CPI and PPI print this week, as Fed Chair Warsh fails to provide little guidance. As such, money markets pared back their bets of an October hike (now 14% vs 26% earlier). Focus will be on the US Treasury primary dealer questionnaire, expected at 17:00BST/12:00EDT, ahead of the QRA on November 4th. Some analysts expect the Treasury to cut both 20-year and 30-year auction sizes by USD 3bln each, and to be replaced by T-bills. To add, there has also been speculation that the 20-year could be cut altogether. Gilts and Bunds trade in tandem, posting losses of around 15 ticks. Focus for Gilts this morning, and heading into the Budget, is on any clues to how Chancellor Healey chooses to balance spending with income. The latest being focused on the banking sector, with Bloomberg reporting that UK Chancellor Healey will raise taxes on banks. The report follows a Guardian source stating that the proposal includes a 3% increase to the bank surcharge. Australia sold AUD 1bln in 3.25% April 2029 bonds, average yield is 4.8238%, bid to cover of 4.89. COMMODITIES Crude benchmarks are on the backfoot, with mild underperformance in the WTI Dec’26 (-1.2%) vs Brent Dec’26 (-0.8%). The former currently holds towards the bottom end of a USD 95.29-96.39/bbl range, whilst the latter sits within a USD 104.91-105.94/bbl range. The mild underperformance seen in WTI is likely a bit of an unwind following yesterday’s relative outperformance, on the back of large weekly US headline inventory and as the US Treasury extended a sanctions waiver allowing Lukoil petrol stations to operate within the US. The geopolitical environment remains tense on three major fronts: 1) The US-Iran situation remains unresolved, though President Trump did mention that Iran requested a halt to attacks and that negotiations are ongoing. A factor which is likely weighing on the complex this morning. 2) Saudi Arabia and the Houthis continue to strike each other, and 3) Russia and Ukraine have continued to strike energy facilities, despite Trump’s announcement of an energy ceasefire. Spot gold currently trades within a USD 4,147-4,189/oz range, continuing to build on the prior day’s gains; the yellow metal now eyes its 21-DMA at USD 4.2k/oz. Strength today is facilitated by a slightly softer USD, which comes after Fed Chair Warsh avoided any guidance surrounding the October confab, which saw a slight paring of tightening bets. Base metals are rebounding from recent losses as global sentiment improves. 3M LME Copper (+1%) currently trades at the upper end of a USD 14,296-14,482/t range, and now eyes USD 14.5k/t. South Korea is reportedly to extend oil fuel price cap for another four weeks. Russia and Iran is reportedly discussing gas pipeline route and pricing, TASS reported. Japanese Chief Cabinet Secretary Kihara said Japan expects October crude procurement to be at the same level as last year. China set 2027 corn import tariff quota at 7.2 mln tons and wheat import tariff quota at 9.64 mln tons. TRADE/TARIFFS China's MOFCOM is to revise the "Catalogue of Technologies Prohibited and Restricted from Export in China," and temporary registration management will be implemented for the export of related technologies. Taiwan is to curb AI chip exports to China as part of the US trade deal, Bloomberg reported. Servers and high-end chips will be added to the controlled items list. France is said to have agreed to support UK inclusion in the bloc's proposed "Made in Europe" legislation, although Britain would need to align with the EU's approach to tariffs on Chinese EVs. Japan is to open anti-dumping probe on Chinese pigments and preparations made from Chinese rutile titanium dioxide. US Commerce Secretary Lutnick throws future of US-Mexico trade talks into further doubt as he has objected to significant reductions in tariffs on Mexican steel, aluminum and automobiles, according to WSJ. NOTABLE EUROPEAN HEADLINES UK Ofcom proposes to cap Second Class stamp price for a further year, until March 2028. Chinese Finance Minister met with the EU Economy Commissioner Dombrovskis, ECB President Lagarde and Eurogroup President Pierrakakis. Chinese side is willing to give full play to the role of China-EU financial dialogue and other mechanisms with the EU side. Germany's Finance Minister said he is not against China, China is an important partner, but is not playing by the rules and we should not be naive. NOTABLE EUROPEAN DATA RECAP European HICP Final (Sep) 104.31 vs. Exp. 104.30 (Prev. 103.69). European HICP Final (Sep YY) 3.8% vs. Exp. 3.8% (Prev. 3.2%). European Core HICP Final (Sep YY) 2.5% vs. Exp. 2.5% (Prev. 2.4%). European HICP Final (Sep MM) 0.6% vs. Exp. 0.6% (Prev. 0.4%). European Trade Balance (Aug) -16.1B (Prev. 10.7B). Italian CPI Final (Sep YY) 4.2% vs. Exp. 4.2% (Prev. 3.3%). Italian CPI Final (Sep MM) 0.7% vs. Exp. 0.7% (Prev. 0.5%). Italian HICP Final (Sep YY) 4.2% vs. Exp. 4.1% (Prev. 3.2%). Italian HICP Final (Sep MM) 2.1% vs. Exp. 2% (Prev. 0.1%). Swedish Employed Persons (Sep) 5.292M (Prev. 5.423M). Swedish Unemployment Rate (Sep) 8.6% (Prev. 8.5%). NOTABLE EUROPEAN EQUITY HEADLINES Rio Tinto (RIO LN) CEO said that they are looking to build commodity trading capabilities. CENTRAL BANKS Fed Chair Warsh said he may be over-scarred from the Global Financial Crisis, adds since September FOMC, world has broadly conformed to our expectations. Will be crystallising what is happening to output, employment and inflation. We will be meeting a couple more times this year, which will be the crystallising moment. Right now, we have structural growth and an investment surge. Obviously, the Fed's policies spill over to the rest of the world, but their policies spill back to the US too. Will make judgements at the October and December meetings. At the Fed, we made clear that we would deliver price stability; I do not believe in prejudging meetings. Do not prejudge meetings. Do not believe in signalling what I might do at meetings for the rest of 2026. AI is going to hit the demand side of the economy before the supply shock. AI will help central banks have confidence in data and monetary policy. AI will change the real economy, but near-term impact on employment is uncertain. AI will make economy more productive, more wealth, but path to them will be a bumpy one. Fed's Goolsbee (2027 voter) said it's a discouraging month regarding inflation and still feel some optimism if drivers of inflation can go away in short order, if inflation is from overheating demand from AI, that's more disturbing and have to address it. Fed's Hammack (2026 voter) said hearing more from lower-income Americans struggling with inflation, adds anecdotal information provides important economic guidance. Businesses are seeing a lot of input cost price pressures. Worries about formation of inflation mentality. Formation of inflationary mindset might force more aggressive Fed policy action. Hard to know what a neutral rate is. Financial conditions do not appear restrictive right now. BoJ Governor Ueda said underlying inflation is approaching 2% and the BoJ will continue to raise policy rate in accordance with economic, price and financial developments. There is a risk of underlying inflation overshooting 2% price target. ECB's Wunsch said further tightening would be reasonable given persistent inflation pressures and the resilient EZ economy. Inflation is running at almost 4%, domestic inflation stands at 3% and energy prices are likely to remain elevated for longer than previously expected. Not committing to anything due to the high degree of uncertainty. Market pricing of three rate hikes seems reasonable. ECB's Nagel said Germany is getting fit for the challenges of the future and a fitness program of reforms is always important. Regarding bond market, Germany will remain the anchor of stability in Europe. ECB's Rehn said growth outlook is better today than start of the year, adds not seeing second-round effects on inflation. Labour market not as tight, wage moderation ongoing. Must show vigilance on inflation outlook. BoE Governor Bailey said it's too early to form strong views on strength of second round effects. So far signs of second round effects are subdued and businesses emphasizing cost cutting. UK economy is more resilient than we expected and not as strong as we need. News from Middle East is the biggest factor moving UK gilt yields. Second-round inflation pressures look subdued so far. More hopeful than a month ago that they will get more international alignment on AI testing. RBNZ Chief Economist Conway said there is reasonable confidence that inflation has not become broad-based and that rate hikes help contain spillovers from an energy shock. PBOC's Pan said that the PBOC is to support offshore CNY markets development; to further expand liquidity management tools. PBoC injected CNY 60bln via 7-day reverse repos with rate kept at 1.40%. PBoC set USD/CNY mid-point at 6.7220 vs exp. 6.6947 (prev. 6.7253). Bank of Canada Governor Macklem said Canada hasn't raised rates yet, but the longer it goes, the harder it is to look through increases in energy prices. NOTABLE US HEADLINES US President Trump is to deliver remarks in Dalton, Georgia at 14:45 EDT/19:45BST on Friday. US President Trump said no real reason for him to go to Maine and thinks he will go to Minnesota, while he said he is not involved in that when asked regarding probe into Democrat Rep. Omar. Japan is to sidestep 3.5% defence spending target despite US pressure, according to Asahi. US President Trump said he will be going to Iowa state on Thursday, October 22nd and Sunday, November 1st. GEOPOLITICS RUSSIA-UKRAINE US President Trump said Ukrainian President Zelensky is not a good guy to deal with, adds Zelensky is more difficult than Putin to deal with. He is allowed to do a self-pardon. Plenty of other targets besides refineries to hit. Need an election in Ukraine. US President Trump said Ukraine's resumption of strikes on Russian refineries is a disgrace. EU President of the European Commission Von Der Leyen said that they are working on the 22nd package of sanctions against Russia, adding that no sanctions will be lifted unless Russia stops its war. Russian forces struck a vessel sailing to Ukraine's Odessa, according to IFX. Temporary restrictions introduced at Pulkovo Airport in St. Petersburg, Russia, according to TASS. Ukrainian drones are attacking Russia's Moscow region and reportedly hitting industrial warehouse facilities. Massive fire breaks out in Ukraine's Khmelnitsky region following a reported strike on a fuel depot. US senators are demanding an investigation into disruption of a satellite system supporting Ukraine, according to an Al Jazeera correspondent. Order to limit Ukraine's access to Starshield system came from inside the White House, according to sources. Ukraine's Air Force said jet drones spotted over Kirovohrad region heading west. Russian local governor said drones hit industrial facilities in Russia's Rostov region. Russian President Putin said Ukraine failed to grasp consequences of returning to targeting refineries. US-IRAN US President Trump said wouldn't use nuclear on Iran, while he is talking to Russia and China regarding denuclearisation, adds may have to go to Pickaxe Mountain and don't see troops on the ground in Iran. Iran has asked for a halt to US attacks and negotiations are still ongoing. IRGC Brigadier General Akraminia said "we have introduced new equipment into our combat formations", Al Mayadeen reported. IRGC Brigadier General Akraminia announces new operational plans to push back more American ships and flee ever further; reiterates that the Army Navy has complete operational control over the Sea of Oman, SNN reported. Iranian Army Commander Major General Amir Hatami said three ships entered the Sea of Oman and were fired upon by Iranian forces, severely restricting maritime traffic. Iranian Ambassador said that "The United States is not demonstrating serious political will to negotiate with Iran", Tass reported. Iranian Ambassador to Moscow's Kazem Jalali. US President Trump answered he doesn't trust anyone when was asked if he trusts Israeli PM Netanyahu. SAUDI-HOUTHIS Saudi army conducted missile attack on areas of Amran and Saada provinces in northern Yemen, according to IRNA. Yemen Houthi official said Saudi Arabia must answer for the massacre of civilians in Yemen and called for independent international probe into the Saudi war on Yemen. Saudi-led coalition noted there 20 Houthi attacks on Riyadh in October and that recent strikes included an attack on King Khalid International Airport that killed 12 on October 10th. Explosions reported in the city of Dammam, Saudi Arabia, SNN reported. Yemeni armed forces strike military positions in Aden, hitting military operation headquarters managed by Saudi officers which killed four. Saudi-led coalition said it intercepted and destroyed a drone launched towards Saudi Arabia's Eastern Region. OTHERS Chinese Foreign Minister told Israel's President promoting peace and reconciliation in the region is the cornerstone of China's Middle East policy, and China consistently held that the Palestinian question is greatest historical injustice of this century. Immediate priority is to fully open access to the Gaza Strip. Israel should stop and reverse its forced establishment of settlements in the West Bank. South Korea asks the US for a tax break for Alaska LNG project, according to Maeil. South Korea-US ties are said to be straining over intelligence sharing restrictions, trade disputes, and reduced military cooperation, raising concerns about Seoul's ability to counter North Korea's nuclear threat. South Korean President Lee Jae-myung is seeking to rebuild trust with Washington while improving ties with Beijing as trade tensions and potential Trump-Kim talks add uncertainty. US Secretary of State Rubio spoke with Israeli PM Netanyahu and spoke with Lebanon's President Aoun regarding recent developments including the seizure of a truck carrying Hezbollah explosives. Rubio also urged direct military-to-military communication between Lebanese and Israeli forces for deconfliction. CRYPTO Bitcoin (+1%) and Ethereum (+3%) attempts to rebound from recent losses as the risk tone improves. APAC TRADE APAC stocks were mostly higher as global markets regained composure following the recent tech bloodbath. Elsewhere, Indonesian stocks are the outlier with double-digit percentage losses as the MSCI consults on a proposal to reclassify Indonesia from Emerging Market to a Standalone Market Status. ASX 200 gained with the upside led by tech and miners, while recent weak jobs data also supported the case for a pause from the RBA at the next meeting. Nikkei 225 recouped some of the losses from the prior day's turmoil. KOSPI outperformed but still has far to go after falling by as much as 8% yesterday. Hang Seng and Shanghai Comp conformed to the broad recovery in risk assets, while PBoC Governor Pan also recently reiterated that China would maintain a moderately loose monetary policy. NOTABLE ASIA-PAC HEADLINES South Korean Finance Minister and Central Bank Governor held a meeting with the Fed and US Treasury Department. China is reportedly moving to lift the stock market with selling curbs and buybacks, Bloomberg reported. Japan's Finance Minister Katayama said can't comment whether we would need extra budget or not, adds even if needed, the extra budget would be limited to urgent policy priorities. NOTABLE APAC DATA RECAP Japanese Foreign Bond Investment (Oct/10) -339.7B (Prev. -345.7B). Japanese Stock Investment by Foreigners (Oct/10) 3521.5B (Prev. 2199.7B). New Zealand Food Inflation (Sep MM) 0.0% (Prev. 0.3%). New Zealand Electronic Retail Card Spending (Sep MM) -0.4% (Prev. -0.9%). New Zealand Electronic Retail Card Spending (Sep YY) 0.9% (Prev. 0.2%). New Zealand Business NZ PMI (Sep) 56.5 (Prev. 53.1).