US markets saw relatively firmer data last week with both CPI and PPI coming in on the stronger side. Markets were initially confused by the data impact, but ultimately decided that the ‘core’ inflation trend remained intact and the curve steepening move continued on. US equities made new all time highs, with high beta names and FX breaking out further, as markets continue to expect a ~85%+ chance of a 25bp cut in December. Citi macro strategists are now calling for ‘max bullish equities’ while GS has been busy raising price targets for both US and China stocks over the past few weeks.

Over to China, the much anticipated MOF press conference over the weekend was a mixed bag, as there was no explicit mention of a particular stimulus number, an overall lack of implementation details, and a lack of initiatives announced to boost retail spending. While iron ore, oil, and A-shares fell in the early Monday session, prices have rebounded aggressively into the mid-day break as the recent mobilisation of China retail money is likely going to stay in a ‘buy-the-dip’ mode for the foreseeable future.

This week will be a holiday-shortened week in the US (Columbus Day), and markets will be riding into the Q3 earnings season on a high with JPM kicking things off on a very strong note. The banking giant saw a 5% jump in its stock price after reporting a surprise gain in interest income and with a revenue forecast increase. The overall KBW bank index also rose to the highest levels since April 2022, with the treasury curve steepening expected to drive further revenue gains for banks in the upcoming quarters.

Over in crypto, while SPX was busy making a new high roughly every ~5 days YTD, crypto has done the opposite with observers pointing out it has been 285 days since the market broke out from its current range. US equities are doing its best to pull crypto prices higher, but we continue to think that the path to higher prices will be long as we wait for a more endaring narrative. Traders remain biased towards selling volatility as well as income generation while we are stuck in this year-long range.

Prices did manage to jump this morning to above $64k as Chinese equities rebounded off the weekend disappointments, so risk sentiment will likely remain in ‘buy everything’ mode until further notice. A strong BTC inflow on Friday might be a positive sign of things to come as we head into the final weeks of the election campaign, but patience will likely be required before we can make new ATHs anytime soon.

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