Closing Recap

It was a weekend of high drama that has completely reset the market narrative. Friday’s trading session was a bloodbath, with the S&P 500 suffering its biggest one-day drop since April after President Trump threatened a “massive increase” in tariffs on China. U.S. stock futures are surging, rebounding sharply from Friday’s rout after President Trump softened his tone on China, easing fears of an immediate tariff escalation; gold is rallying on safe-haven demand from the ongoing U.S. government shutdown, while oil is firm and Treasury yields have tumbled. In the currency markets, the U.S. dollar is on the defensive, with the DXY index slipping as risk appetite improves on the softer China rhetoric, while the Japanese Yen plunged on domestic political turmoil and the Euro firmed slightly. 

Key Takeaways 

• Futures Rebound Sharply from Friday’s Rout: Equities are set for a strong open (S&P futures +1.6%, Nasdaq +2.2%), reversing a significant portion of Friday’s steep losses after President Trump walked back his aggressive tariff threats against China. 
• Trump Softens China Tone: Over the weekend, Trump stated the China situation “will all be fine” and that the U.S. wants to help, not hurt China, which has significantly calmed market fears of an immediate trade war escalation. 
• Government Shutdown Enters New Week: The U.S. government shutdown continues, with a payroll deadline looming this week, which is keeping some safe-haven bids alive and delaying key economic data. 
• Gold Rallies on Shutdown & Policy Uncertainty: Gold prices are up strongly, retesting recent all-time highs near $4,060/oz, driven by the U.S. shutdown and expectations of dovish Fed policy. 
• Safe Havens Retreat, Risk Assets Surge: The U.S. dollar is on the defensive as risk appetite returns, while the Japanese Yen is the standout loser, plunging after the new pro-stimulus PM signaled a dovish policy stance, and the Euro is trading cautiously amid French political turmoil. 
• Crypto Whipsaws Traders, Snaps Back: Bitcoin and crypto assets are rebounding sharply, with Bitcoin up 5% and Ethereum up over 10%, after a massive “flash crash” of liquidations on Friday. 
• Political Drama in France and Japan Weighs on Euro & Yen: The Euro remains under pressure as France unveils a new government amidst political turmoil, while the Japanese Yen is weighed down by political fractures delaying the confirmation of a new Prime Minister.
• Oil Prices Firm: Crude oil prices are higher as the improved trade sentiment offsets some supply concerns.
•  Yields Tumble: Treasury yields have fallen sharply, with the 10-year yield dropping significantly, as investors react to the mix of geopolitical news and domestic policy uncertainty. 

Market Overview 

U.S. equity markets are poised for a significant rebound at the open, with futures pointing to a strong rally that would erase a large portion of Friday’s brutal, tariff-induced sell-off. The catalyst for the sharp turnaround in sentiment was a series of comments from President Donald Trump over the weekend that softened his aggressive stance on China. After threatening a “massive increase of tariffs” on Friday, which wiped out an estimated $2 trillion in market value, Trump stated on Truth Social that the situation “will all be fine” and that the U.S. wants to help China. This pivot has provided immense relief to investors, who are now betting that the two sides will find a path to de-escalate before the November 1st deadline. 

Index (Futures)	Up/Down	% Change	Last
E-Mini Dow Continuous Contract	544	0.0119	46250
E-Mini S&P 500 Future Continuous	109	0.0165	6704.25
E-Mini Nasdaq 100 Index Continuous	540.25	0.0221	24937.25
E-mini Russell 2000 Index Futur	48.4	0.0201	2456.9

The positive trade sentiment is overshadowing ongoing concerns about the U.S. government shutdown, which is now stretching into a new week and threatens to delay a key payroll deadline for federal workers. The shutdown continues to create an information vacuum by delaying key economic data releases. In the background, political turmoil in France and Japan is also creating headlines, with a new government unveiled in France and significant political fractures emerging in Japan. 

Despite the U.S. holiday (Columbus Day, bond market closed), the risk-on mood is palpable. Asian markets were mixed but China’s resilient September trade data was a positive. European stocks are also opening higher. Safe-haven assets are seeing mixed action; gold is rallying strongly on the shutdown uncertainty, while Treasury yields have tumbled. Cryptocurrencies are also staging a massive rebound after a “flash crash” of liquidations on Friday.

Economic Calendar

The U.S. bond market is closed for Columbus Day. The economic calendar is very light.With the U.S. government shutdown now on Day 10 and a partial market holiday today, there were no major economic data releases overnight. The primary focus remains on political headlines and their market impact.

Today’s Major U.S. Events: 

• U.S. Bond Market Closed (Columbus Day Holiday) – Stock market is open. 
• NO U.S. DATA due to government shutdown.
• Central Bank Speakers: BoE’s Greene & Mann, Fed’s Paulson.
• Data Released Overnight: China Trade Balance (Sep): +$90.45B. Exports +8.3% y/y (beat 6.6% est.), Imports +7.4% y/y (beat est.). 

Commodities, Treasuries and Currencies 

Gold prices are rallying strongly, with the continuous contract up $88.60 (+2.21%) to $4,089.00 per ounce, as investors seek safety amid the ongoing U.S. government shutdown, even as risk assets rebound. Silver is also up a massive 5%.In other markets, the reversal is just as dramatic. Crude oil prices are firm, with WTI gaining 1.53% to $59.80/bbl, as the positive shift in U.S.-China trade sentiment bolsters the demand outlook. 

Asset	Change	Unit	Last
WTI Crude	0.9	USD/bbl	59.8
Gold	88.6	USD/oz	4089
EUR/USD	-0.0012	USD	1.1609
USD/JPY	1.09	JPY	152.27
US 10-Yr Yield	-10.8 bps	%	0.04036

The currency market is in full risk-on mode, reversing many of Friday’s sharp moves. In the currency markets, the Japanese Yen is the standout loser, with USD/JPY gapping up and trading 0.72% higher near 152.27 as the new pro-stimulus Prime Minister’s agenda weighs on the currency. The U.S. Dollar Index (DXY) is slightly firmer at 99.01, supported by the Yen’s weakness, but the Euro is down only slightly at 1.1609, and the Australian dollar is up 0.69% on the risk-on mood:

• EUR/USD: The pair is trading with modest losses near 1.1620, unable to participate in the broader risk rally. The Euro is being weighed down by persistent political turmoil in France, where a new government has been unveiled but faces significant opposition. Large options expiries today between 1.1635 and 1.1650 are likely to act as a ceiling for any attempted bounce. 
• GBP/USD: Sterling is showing some resilience, trading just above 1.3350. The pair is benefiting from dovish Fed bets and the general risk-on mood, which is overshadowing domestic concerns for now. 
• USD/JPY: The pair gapped up about 60 pips at the open and is trading above 152.00. The Yen is being pressured by the risk-on impulse and ongoing political uncertainty in Japan, where fractures are delaying the confirmation of the new Prime Minister.

U.S. Treasury markets are closed today, but yields ended sharply lower on Friday, with the 10-year yield falling to 4.036%. After a brutal “flash crash” on Friday that saw nearly $20 billion in liquidations, the crypto market is roaring back. Bitcoin has surged 5% to retake the $115,000 level, while major altcoins like Ethereum and Solana are up over 10%.

Looking Ahead 

The market will be entirely driven by trade headlines, particularly any further comments from President Trump or Chinese officials that confirm a path toward de-escalation. The ongoing U.S. government shutdown and any progress (or lack thereof) in funding negotiations will also be a key focus. With the bond market closed and a light economic calendar, trading volumes in the stock market may be lighter than usual. A host of Fed and BoE speakers are on the docket for today, but their comments are unlikely to move the needle significantly. The entire market is currently trading on the hope that Trump will walk back his tariff threats. Any new headlines or social media posts that either confirm or contradict this narrative will be the primary driver of volatility today. The shutdown is now approaching a critical deadline. October 15th is the next payday for most federal workers. If a deal isn’t reached and paychecks are missed, it could escalate the political and economic pressure, potentially injecting a new wave of risk aversion into the market.