Central banks remain firmly in hawkish territory as energy-driven inflation keeps policy normalisation off the table, with Fed futures pricing roughly an 18-19% probability of a hike at the October 28 meeting and approximately 85% odds of a 25 bp increase by December. Brent crude is hovering near $104-105 per barrel following Houthi-related strikes on Gulf shipping and Saudi targets, sustaining a geopolitical risk premium that is expected to feed directly into Wednesday's US CPI print, where consensus looks for headline inflation to accelerate to roughly 3.6-3.7% year-on-year. France's fiscal credibility is under fresh scrutiny as 10-year OAT yields approach 5%, up around 80 basis points since early September, adding a sovereign stress dimension to an already complex European macro picture. A 16-point China-EU trade and investment agreement — covering export controls, IP, and measures to cap Chinese hybrid vehicle imports — introduces a new layer of geopolitical realignment that investors will need to price into cross-border supply chains.
Across asset classes, the VIX's decline to 14.84 (-3.70%) alongside broad equity gains into Friday's close suggests risk appetite remains constructive despite elevated yields, with the 10-year Treasury pulling back 6 basis points to 5.22% and the 30-year down 7 basis points to 5.60% — moves that provided meaningful relief for rate-sensitive sectors including REITs. Gold surging to $4,216 per ounce (+1.43%), silver up 2.72%, copper gaining 1.89%, and platinum rising 3.30% collectively signal that hard-asset inflation hedging and industrial demand narratives are both active simultaneously. The dollar (DXY 102.21, +0.07%) is holding near multi-month highs, keeping USD/JPY pinned at 158.06 and intervention risk elevated in Tokyo. US equity futures pointed modestly higher into Monday's open (S&P +0.2-0.3%, Nasdaq +0.4-0.5%) with US bond markets closed for Columbus Day, meaning liquidity in rates will be thinner and any macro headline — particularly around oil or CPI expectations — could carry amplified cross-asset impact through the session.