JPM International Market Intelligence | Morning Briefing

20 SECONDS: Tech-led equity rally, supported by lower oil & rates. BOE and BOJ bring busy central bank week to a close. EU & China trade tensions, Trump-Xi summit preview. German politics. Week ahead.

• Oil and Rates extend moves lower, supporting global equities – Tech remains in the lead (NDX outperforming vs EU lagging), with APAC catching up to overnight rally.

• Drivers behind oil weakness incl. reports that China called on Iran to help rein in Houthis and top Iranian leaders getting visas to attend UN meeting next week. Natasha’s latest note addresses the challenges on modelling the endgame given vol around the geopolitical narrative & sensitivities.

• BOE & BOJ bring busy central bank week to a close.

o BOE on hold as expected, but geared up to hike: beyond Nov, Allan now expects another move in Feb.

o The main focus was on the QT announcement: stock of gilt APF holdings for monetary policy purposes will be reduced to zero; the

runoff rate slowed; and active sales (now at £20bn) will be direct to DMO. Gilt curve bull flattened, supported by no QT sales to private sector going forward.

o Our UK Banks analyst sees QT changes as supportive for Corporate deposit growth.

o BOJ hiked by 25bps today, but vote split skewed dovish as two Takaichi-appointed members dissented. Cross-asset, front-end JGBs lower, yen weaker (USDJPY breaking above 157 for first time since early Sept) and Equities rallying (Tech > Banks).

o For Japan, risks remain on the long-end, if concerns about BOJ being behind the curve + fiscal noise pick up again. All eyes on Ueda presser this morning.

• EU & China trade tensions remain in focus, with EU trade chief to visit Beijing Oct 8th. A policy stance is emerging, with EU asking China to ‘voluntarily limit hybrid car exports to 15%’ (vs over 1/3 today). The FT reported Chemicals are another product in focus.

• Trump-Xi summit key event next week (‘low bar, high stakes’). Tech & AI obvious focus points, especially given Amodei’s warnings, but attention should also turn back to critical minerals – which have notably de-rated since peaking at the last Trump-Xi meeting in May.

• Germany’s Merz under pressure ahead of another round of state elections on Sunday, where AfD looks set to win. Politico flagged risks that Merz’s CDU could fall below the 5% threshold required to enter parliament.