Ten Stories Moving the Market

Treasury Secretary Scott Bessent announced the U.S. and China have sealed a two-month extension to their trade truce, as Xi Jinping landed in America for his first state visit in eleven years – Bloomberg. (Why you should care – Bessent said China has not stood up to their deliverables promise and he’s unsure if a larger deal can be struck)

Iranian President Masoud Pezeshkian said Tehran would not surrender in the war with the ‌U.S. but remained open to diplomacy to end the conflict, while accusing U.S. President Donald Trump of a "bullying ​mentality", during a speech at the United Nations – Reuters. (Why you should care – while Iran’s leadership is trying to put on a good face at home and abroad, the door for negotiations still appears to be open)

Canadian Prime Minister Mark Carney said a mutually beneficial trade pact with the U.S. is still possible, but his country won’t give up its freedom to strike deals with the European Union and other parts of the world as it seeks to diversify global connections and protect its national sovereignty – WSJ. (Why you should care – Carney said the two sides have made progress since talks broke down in August, but not enough yet to clinch a deal)

The world's leading artificial intelligence companies warned the United Nations Security Council of the risks ​posed by AI to humanity, appealing for governments to work together to manage the increasingly powerful technology – Reuters. (Why you should care – the industry leaders are likely seeking to employ regulatory moats as a strategy to protect and entrench their businesses)

National Economic Council Director Kevin Hassett criticized Federal Reserve policymakers who spoken in favor of  tightening monetary policy in the face of inflation he characterized as subdued; Hassett noted history shows that Fed chairs and vice chairs typically leave when their leadership terms are up, pointing to current board members Jerome Powell and Michael Barr – Bloomberg. (Why you should care – the statement points to a White House that may use more tools at the Treasury to try and ease bond yields and borrowing costs)

U.S. business activity raced to a more than five-year ‌high in September, fueled by a surge in new orders, though strong demand strained supply chains and pushed prices higher, according to S&P Global’s preliminary U.S. Purchasing Managers’ Index survey – Reuters. (Why you should care – rising economic activity is stoking fears of rising inflation growth, pushing bond yields higher)

The AI build-out is on track to become the biggest economic bet in U.S. history, dwarfing the investments made to fund other huge U.S. infrastructure projects such as the railroads, the highway system and the plumbing for the internet; total investment in data centers and related artificial-intelligence infrastructure is projected to total $10.3 trillion from 2025 to 2032 – WSJ. (Why you should care – current spending is closer to 2% of U.S. GDP) 

Federal Reserve Governor Michael Barr said the backdrop ⁠of rising inflationary risks and a strong economy means the Fed is likely to deliver more rate hikes; he stated the risks to achieving the 2% inflation target have increased, while risks to the labor market have receded – Reuters. (Why you should care – the central bank tends to leave rates unchanged heading into elections, but will raise them in the case of hot inflation)

An examination of Chinese cargo seized en-route to a Houthi-controlled city reveals an array of commercial goods that can also be used to assemble ballistic missiles and drones; the Houthis were using similar cargos to prepare missiles and drones that would by September strike Saudi Arabia’s oil infrastructure – Bloomberg. (Why you should care – more than a decade of Chinese smuggling efforts have made the Houthis an increasingly sophisticated military outfit, capable of acting autonomously from Iran)

Surging government bond yields are a “major concern” to countries’ public finances given the mounting share of spending being consumed by debt interest, the OECD said on Wednesday, as it urged nations to rein in expenditure – FT. (Why you should care – organizations like the OECD tend to sound the alarm when the situation is at its worst)

Economic Calendar:

Earnings: COST, DRI

Markets in South Korea are Closed

Swiss National Bank Monetary Policy Announcement (3:30 a.m.)

Germany - Ifo Business Climate Index for September (4 a.m.)

Fed's Williams (New York, Voter) Speaks (4:10 a.m.)

SNB’s Schlegel Speaks (4:30 a.m.)

BoE's Dhingra (MPC Member) Speaks (5:30 a.m.)

U.S. - Building Permits for August (7:50 a.m.)

U.S. - Initial Jobless Claims (8:30 a.m.)

U.S. - Continuing Claims (8:30 a.m.)

U.S. - Current Account for Q2 (8:30 a.m.)

BoE's Breeden (MPC Member) Speaks (9:30 a.m.)

U.S. - New Home Sales for August (10 a.m.)

U.S. - KC Fed Manufacturing Survey for September (11 a.m.)

Treasury Auctions $44 Billion in 7-Year Notes (1 p.m.)

Fed's Balance Sheet Update (4:30 p.m.)