Central banks remain in a hawkish holding pattern heading into the US open, with markets pricing no Fed or ECB move at their late-October meetings but assigning elevated probability to 25bp hikes from both in December, as sticky inflation and energy-driven price pressures persist. Geopolitical risk is elevated on two fronts: renewed Iran-backed attacks on Saudi infrastructure and continued Houthi activity are supporting crude — WTI firmed to $103.66/bbl (+2.22%) — while a Trump executive order waiving select Russian sanctions added fresh volatility to the energy complex. French political instability, following weekend riots and OAT-Bund spread widening to 148bp with France's 10-year yield reaching 4.94%, weighed heavily on European equities, dragging Euro Stoxx 50 down 0.96% and the CAC 40 down 1.11%. Risk sentiment was bifurcated: US tech staged a dip-buying rebound while Europe and Japan faced selling pressure.
Cross-asset implications for Tuesday's US session are cautiously constructive on the margin. The VIX fell 7.75% to 18.44, signalling a meaningful reduction in near-term hedging demand following last week's selloff, and Nasdaq futures point modestly higher as investors position ahead of key earnings catalysts including META on Wednesday. US 10-year yields eased 1bp to 5.09% and the 2-year fell 3bp to 4.74%, providing a modest tailwind for rate-sensitive growth names without materially changing the restrictive policy backdrop. WTI's sharp 2.22% surge is a headwind for consumer sentiment and a tailwind for energy majors, but the widening WTI-Brent spread at -$10.77/bbl and the distillate crack at $99.75/bbl warrant close attention as refining margin signals diverge.