US futures are higher, led by a sharp rebound in semis and memory names, as dip buyers emerge after Thursday's AI bloodbath which saw the Nasdaq 100 suffer its worst day since March 2020, while traders brace for the October jobs report; at the same time the dollar is up against every G10 currency and oil reversed an early jump above $100 after Qatar's Emir and Trump discussed de-escalating the Iran war, leaving the 10Y yield fractionally higher at 4.86% as the "sell everything" day gives way to a "buy what got hit hardest" morning. As of 8:05am ET, S&P futures are 0.1% higher at 7,390 while Nasdaq futures are up 1.3% at 27,100 and Dow futures are down 1.1%, as the rotation out of tech and into everything else reverses. On Thursday, the S&P 500 tumbled 4.4%, its worst day since April 2025, the Nasdaq 100 plunged 6.4% and the Philly semis index crashed 12%, wiping out $2.3 trillion in tech market value (and tech hedge funds' entire 2026 gain), as the Democratic midterm sweep stoked fears of a regulatory crackdown on the AI buildout. In premarket trading, chip and memory stocks are retracing roughly 30-40% of yesterday's losses according to JPM: Micron +7.8%, AMD +7.1%, Intel +4.7%, Broadcom +4.4% and Nvidia +4.3%, while Lam Research jumps 10% after unveiling a $25 billion buyback; outside of AI, Cloudflare and Airbnb soar on strong guidance while DraftKings and Atlassian tumble. The day's driver is AI (again): having been the market's biggest tailwind for three years, the AI capex trade is now its fulcrum, and the only question that matters this morning is whether Thursday's six-standard-deviation puke in semis was capitulation or, as we asked last night, just the opening act. Treasuries are slightly weaker after a two-day haven rally, with yields 2-3bps cheaper across the curve and the 10Y around 4.86%, near the session high, while swaps now price about 72% odds of a December Fed hike, down from near 80% on Tuesday. The Bloomberg Dollar Spot Index is up 0.2% at a one-week high, with the Aussie sliding to a seven-month low and cable suffering its biggest drop since mid-October. In commodities, Brent briefly topped $100 as Iran claimed two tankers hit mines in the Strait of Hormuz, before sliding to as low as $98 after the Qatar call, WTI is up 0.5% at $90.94, and gold drops 0.5% to about $4,069/oz. Bitcoin trades just above $76,000. US economic data slate includes the October jobs report (8:30am), the November preliminary University of Michigan sentiment (10am) and September consumer credit (3pm). Fed speaker slate includes Musalem (9:10am), Bowman (12:15pm) and Daly (1pm).

In premarket trading, Mag 7 stocks are mixed, with Nvidia leading gains among Magnificent Seven peers during the AI infrastructure rebound: Nvidia (NVDA) +4%, Tesla (TSLA) +1.7%, Alphabet (GOOGL) -0.1%, Meta Platforms (META) +0.01%, Apple (AAPL) -1.2%, Amazon (AMZN) -0.8%, Microsoft (MSFT) -0.7%

• Artificial intelligence infrastructure stocks are set for a rebound after tech stocks wiped out $2.3 trillion in market value in Thursday’s rout. Among notable movers: Micron (MU) +8%, AMD (AMD) +8%, Intel (INTC) +6%
• Among notable movers: Micron (MU) +7.8%, AMD (AMD) +7.1% Intel (INTC) +4.7%, Broadcom (AVGO) +4.4%
• Airbnb (ABNB) jumps 12% after the online travel agency gave an outlook for fourth-quarter revenue that exceeded the consensus estimate.
• Affirm (AFRM) falls 4% as investors looked past first quarter results that beat and instead focused on loan delinquencies at the buy-now-pay-later company.
• Akamai Technologies (AKAM) gains 7% with analysts positive on the software company’s results, which showed positive trends for its cloud business.
• Atlassian (TEAM) slumps 19% after the software company’s results were seen as underwhelming, with a disappointing outlook.
• Axon (AXON) sinks 9% after the maker of wearable video cameras for law enforcement gave a current-quarter forecast for adjusted Ebitda and revenue that fell short of analysts’ expectations.
• Cloudflare (NET) is up 18% after the software company raised its full-year forecast across key metrics.
• Dentsply Sirona (XRAY) slumps 14% after the dental equipment maker slashed its profit forecast for the full year. The guidance missed the average analyst estimate.
• DraftKings (DKNG) tumbles 20% after the sports-betting company’s 2027 adjusted Ebitda forecast missed the average analyst estimate.
• JFrog (FROG) climbs 23% after the digital security provider predicted its fastest revenue growth in four years.
• Guardant Health (GH) slumps 7% after the diagnostic test maker posted reported volume growth for its Shield cancer test that analysts found short of investor expectations.
• IonQ (IONQ) gains 8% after the quantum computing company’s results and forecast underlined positive demand trends.
• Lyft (LYFT) falls 7% after the ride-hailing company gave a current quarter ride bookings and earnings forecast that came in largely in line with expectations.
  Moderna (MRNA) rises 3% after the vaccinemaker boosted its revenue growth guidance for the full year.
• Monster Beverage (MNST) slides 6% as the energy drink distributor reported a miss on third-quarter gross margin.
• Natera (NTRA) sinks 14% after the cancer test maker said CEO Steve Chapman was stepping down effectively immediately and succeeded by Solomon Moshkevich. Analysts view the CEO change as a surprise that overshadows the firm’s third-quarter results.
• Under Armour (UAA) falls 13% after the athletic apparel and footwear company reduced its year gross margin forecast, citing higher costs.
• Workiva (WK) falls 18% after the software company’s results were seen as adding to concerns about its growth.

In other corporate news, Anthropic got some badly needed good press as the market frets over its IPO (and with it, default risk across its AI suppliers), with the WSJ reporting that its ARR topped $80 billion at the end of October versus some expectations in the mid-$70 billion range; Lam Research announced a $25 billion buyback, roughly 10% of its market cap; Tesla will wind down Cybertruck output to boost Cybercab production by mid-2027; Nvidia is boosting chip tracking in Southeast Asia to fight smuggling; Goldman and Apollo are in talks to sell SpaceX's $40 billion AI deal; Todd Boehly said he is weighing a bid for Lukoil's international assets; ING was the mystery seller of a roughly $500 million portfolio of data center loans, including a $25 million slice backing part of the Stargate site in New Mexico where Oracle sent the developer a force majeure notice (good luck); Apple raised $7.5 billion in a high-grade bond sale; Chesnara will buy MetLife UK; Sylvamo plans to sell its Europe business to Midas Atlantic Partners; and Ibiden aims to spend $13 billion by 2030 to meet AI chip demand.

Futures are showing signs of an early bounce, but the biggest rout in the Nasdaq 100 since the Covid pandemic has left investors wondering whether capitulation is already here or is still building. Thursday's selling pulled down everything from chipmakers to retailers, with 85% of S&P 500 members down on the day, but tech was the culprit: the SOX suffered a six-standard-deviation drop measured against moves over the past 20 years, a sign that investors are now cutting exposure at any cost after building oversized positions in anything AI-related. And while there was no obvious headline to trigger the crash, the catalyst is clear: data center opposition had been building one moratorium at a time, and the midterms tilted a broad swath of the regulatory map against the AI buildout (as we discussed in "Democrats Spent Year Demanding Data Center Moratoriums. They Own The Narrative. Will They Own The Fallout?").

“There’s a real sense of panic in the selling, and I suspect crowded positions, deleveraging and possibly forced liquidations are making things much worse,” said Dilin Wu, a strategist at Pepperstone Group. “This looks like more than just investors getting nervous about AI valuations.”

Semiconductor stocks in exceptional rout: such moves lower have happened only twice in the past 20 years.

Forced sellers may not be done. According to JPMorgan Market Intelligence, the move lower was "exacerbated by retail selling and forced liquidations", with retail sellers by over three standard deviations; levered ETFs are estimated to have sold $60 billion of equity exposure into the close, 90% of it tied to tech, and vol control funds still have about $50 billion to sell over the next few days (see also McElligott's "$47BN In Levered ETF Selling, $61BN In Vol Control"). Systematic funds are now short US equities, which means the good news, per the desk, is that positioning is a lot cleaner.

Volatility is off the highs, but Thursday's 11.6-point jump in the VIX to 28.18 was the third-largest one-day rise from a calm start since the index began in 1990, while the VVIX, the "vol of vol", jumped the most in eight years.

Only two VIX spikes have started calmer and gone further.

JPM's Market Intel desk under Andrew Tyler is sticking with its Tactically Bullish call, noting that when the NDX is within about 6% of all-time highs and drops 3.5% or more, the index tends to rebound about 3% the following week. JPM's Ron Adler, global co-head of equity HT cash trading, was more sober: "AI remains the fulcrum point of the market, and I think it's that straightforward," he wrote, adding that while a lot of the positioning pain has been taken, "right now, that's about all I have." Into payrolls, JPM's Michael Feroli sees 75k jobs vs a 65k Street estimate and the unemployment rate falling to 4.1%, but the desk warns that NFP may have asymmetric downside risk: a beat is fine but backward looking, while a miss will add to recession fears in a market now pricing "if AI fails or capex goes to zero."

The head of Goldman's Americas equities execution services summed up Thursday's floor: "Our phones are exploding with asks for color. Unfortunately we aren't seeing much." Over at Goldman's London desk, Rich Privorotsky called Thursday's session "a violent catch down" and asked the question everyone is asking: "Is this a 1998 style liquidity crisis and buying opportunity, or March 2000 and the beginning of a structural technology unwind? I lean toward 1998." GS derivatives strategist Lee Coppersmith notes the bank's Vol Panic Index surged to 9.57 out of 10, with Cboe trading more than 11 million puts, the largest put volume day on record; after the 15 prior signals above 9.5, the S&P averaged a 4.6% gain over the next three months. Meanwhile, Goldman's Ismail Abbas notes that "many of our AI related baskets just had their biggest down day since the launch of ChatGPT," and futures closed below the medium-term CTA threshold, with $7.5 billion of S&P for sale over the next week in a down tape. On the credit side, the most leveraged AI infrastructure bonds are now firmly distressed according to GS TMT sales, with CDS implying a more than 60% five-year default probability (as we previewed in "Blast Radius").

Bank of America's Michael Hartnett noted that through Wednesday, US equities had their biggest four-week inflows since June, with $92.3 billion pouring into US stock funds; the team remains "risk-off" until central-bank rate hikes end, the 10-year Treasury yield falls below 4.5%, and oil drops below $80. In politics, House Democratic leader Hakeem Jeffries promises to "stop the stupid Trump tariffs," incoming Senate Finance chair Ron Wyden says he will reassert congressional authority over trade, and Trump blamed "Dumocrats" for the hit to Americans' 401(k)s (because of course he did).

In Europe, the Stoxx 600 is down 1.3%, off the worst levels after sliding as much as 1.7% earlier, as the global selloff wipes out the weekly gain and every sector trades in the red; media shares are the worst performers while tech sits toward the top of the pile as the selloff stabilizes, with ASML up 3%. The DAX is down 2.1% and the FTSE 100 drops 2.0%, while Spain's IBEX holds up best. JPM's desk sees buyers of semis and renewables and covering in MidEast shorts, while software, defense and luxury are under pressure; Bloomberg notes that Europe's diversified market has suddenly become one of the most attractive trades around as global investors seek to shed AI exposure. Here are the biggest European movers:

• Coca-Cola HBC shares rise as much as 2.7% after the bottling company said it hasn’t received any notification from Russia about any changes to its operations in the country.
• Intercos shares rise as much as 7.7% in Milan after the company said it expects a strong start to 2027. The manufacturer of cosmetic products posted 3Q revenue, adjusted Ebitda that grew year-on-year.
• JOST Werke rises as much as 12% after the vehicle components manufacturer reported preliminary adjusted Ebit for the third quarter that beat the average analyst estimate.
• Teleperformance slumps as much as 22% after lowering its like-for-like sales growth guidance for the full year.
• Hannover Re, Munich Re fall as JPMorgan downgrades the reinsurers, citing a tougher outlook for the industry into 2027 which is “at odds with recent subsector strength.”
• Daimler Truck shares fall as much as 8.3% after the German company’s order intake disappointed, especially in North America.
• Genmab shares fall as much as 5.5% after the Danish biotech firm reported third-quarter revenues that were only in line with expectations and indicated 2027 costs can be higher than its own estimates.
• Aperam declines as much as 4.4% after third-quarter Ebitda came in below expectations and with the specialty steel company’s fourth-quarter guidance for a “slightly higher” figure implying significant cuts to consensus.

Asian stocks extended the global rout, with the MSCI Asia Pacific Index sliding as much as 5.3%, its steepest drop since March, and on course for its longest losing run since August 2023. Japan's Nikkei 225 tumbled 6% and is now more than 20% below its June record, officially in a bear market, with Tokyo Electron, SoftBank and Kioxia opening with double-digit losses. South Korea's Kospi plunged as much as 8.8%, triggering a 20-minute trading halt and briefly breaking below 5,000, before closing down about 6% as SK Hynix sank more than 10% and Samsung lost over 6%. Taiwan's Taiex tumbled as much as 9% and entered a bear market as TSMC slid 4.7%, prompting authorities to impose short-selling curbs and activate the national stabilization fund. China held up better, with the CSI 300 down about 1.6% and the Hang Seng off 1.3%, while the ASX 200 fell 0.5% thanks to its lack of tech names. Goldman's Asia desk says Taiwan was the most net sold market for a second week (-$1.2 billion) while China saw $815 million of net buying, adding that so far "the flow has been orderly, and we have not seen any significant signs of panic." Japan's GPIF reported a ¥5.25 trillion quarterly loss, its first in six quarters.

In FX, the Bloomberg Dollar Spot Index rose as much as 0.3% to a one-week high, with the greenback higher against all G10 peers as traders pivot back to treating it as a safety trade. Risk-sensitive currencies lead losses: USD/NOK is up 1%, the kiwi is down 0.9% and the Aussie fell 1% to 0.6862, its weakest since April. Cable dropped as much as 0.5% to 1.3382, its biggest drop since Oct. 14, a day after the BoE's hawkish hike, and EUR/USD slid to a 1.1167 low. The franc and yen are the most resilient, with USD/JPY around 157.8-158.3. Goldman's FX strategists note that "the broad Dollar has remained strikingly stable throughout the equity fluctuations of this week."

In rates, Treasuries hold modest losses, with yields 2-3bps cheaper across the curve and the 10Y around 4.86%, near the session high, after Thursday's haven rally sent the 2Y down 12bps to 4.46% and the 10Y down 5bps to 4.835%; ahead of payrolls, bond traders are positioned for further gains as expectations for more Fed rate hikes continue to fade, with swaps pricing about 18bps of tightening for December, or a 72% chance of a hike, down from 82% on Wednesday; the Bloomberg crowd-sourced whisper number for payrolls is 81k vs the 70k median estimate. Bloomberg's Ven Ram notes that haven flows into bonds "haven’t held up": German bunds gave up an early rally that pushed the 2Y yield down 5bps to 2.93%, its lowest since Aug. 31, with the 10Y Bund little changed at 3.24%, while gilts lag Treasuries by about 2bps as the market digests a BoE that was far more hawkish than expected and Bailey's warning that another hike is likely if energy prices stay high. The OAT-Bund spread stands at 154bps after widening almost 4bps on Thursday. Goldman's Arvind Giridhar thinks the asymmetry in reaction to NFP is to a miss rather than a beat, so "the front end remains a buy on dips." The IG dollar slate is empty so far after eleven names priced almost $22 billion on Thursday, pushing weekly supply above $74 billion, the fourth largest this year; Alphabet plans Hong Kong and Singapore dollar bonds after Apple raised $7.5 billion (at this point, a hyperscaler not selling bonds would be news).

“AI is mainly a US story. We shouldn’t see a 1-1 spillover to Bunds and other EGBs,” said Larissa de Barros Fritz, senior rates strategist at ABN Amro. “The theme for EGBs will remain sovereign risks, and we see AI themes as mainly a driver for UST into the year-end.”

In commodities, crude benchmarks pared the week's rebound, with Brent Jan futures slipping back toward $98 after peaking at $100.83 and WTI Dec up 0.5% at $90.94 after a $92.53 high, as markets digest a call between Qatar's Emir and Trump on de-escalating tensions in the region. That followed a morning in which the geopolitical premium had been building, with Iran claiming two tankers hit mines in the Strait of Hormuz and an Iranian MP warning a US attack could send oil above $150; meanwhile, Kyiv hit a sixth Russian oil plant in a week, halting the Yanos refinery, and Aramco cut its prices. Dutch TTF is well off its highs. Spot gold falls 0.5% to around $4,069/oz but remains on track for its biggest weekly gain since August, even as Goldman cut its end-2026 forecast to $4,150/oz and end-2027 to $4,800/oz; silver rises 0.4% to $52 and LME copper is lower in a $13.64k-13.83k range.

US economic data slate includes October nonfarm payrolls, unemployment rate and average hourly earnings (8:30am), November preliminary University of Michigan sentiment (10am) and September consumer credit (3pm). Fed speaker slate includes Musalem (9:10am), Bowman (12:15pm) and Daly (1pm). On the corporate front, Humana, Moderna, Charter, Vistra and Warner Bros Discovery are among those reporting before the bell.

Market Snapshot

Top Overnight News

• The Nikkei 225 plunged 6%, down 20% from a June peak and entering a technical bear market as investors unwound AI trades. BBG
• A market rout in October walloped hedge funds, forcing them to unwind positions at the highest rate in years and cut staff. The pain left many nursing deep losses even before the stock selloff intensified Thursday. WSJ
• Wall Street peers into abyss of AI trade as midterms expose risk; tech stocks wiped out $2.3 trillion in market value in Thursday’s rout. BBG
• Taiwan imposed a short-selling limit to support its stock market, and its national fund will activate market stabilization measures after the Taiex tumbled as much as 9%. BBG
• South Korean finance minister said the government will take necessary measures to prevent the stock market from overreacting and materially deviating from fundamentals: Newsquawk
• Europe’s diversified stock market has suddenly become one of the most attractive trades around, as global investors seek to shed artificial intelligence exposure. BBG
• Money market funds drew $140.4b in the week ended Nov. 4 while global stocks had the biggest four-week inflows on record, BofA says citing EPFR. BBG
• Anthropic’s ARR topped USD 80bln at the end of October, vs some expectations of mid-70bln: WSJ
• ING was the mystery seller of a roughly $500 million portfolio of data center loans all at once, as the midterms tilt the regulatory map against the AI buildout. BBG
• October Payrolls Preview: We estimate nonfarm payrolls rose by 75k in October, somewhat above consensus of +65k and the three-month average of +51k, reflecting the low level of layoffs and a solid signal from big data indicators of job growth. We forecast a 0.3% month-over-month increase in average hourly earnings, in line with consensus, reflecting neutral calendar effects. Goldman
• Qatar’s Emir spoke with Donald Trump about de-escalating the Iran war, fueling hopes for a resolution. Oil wavered. BBG
• Iran says ships from China, India, Iraq, and Qatar are able to pass through Hormuz without any restrictions. SCMP
• Iran claims 2 oil tankers hit mines in the Strait of Hormuz; says tankers were trying to leave the Strait with US help: Fars via BBG
• The US administration is reviewing plans to resume military operations against Iran: The Hill
• Kyiv hit a sixth Russian oil plant in a week; Russia’s Yanos refinery halted operations after a Nov. 3 attack. BBG
• Democrats are eyeing President Trump’s trade war with Canada as the first target in a campaign to roll back his administration’s tariff agenda, according to the party’s senior trade lawmaker in the Senate. WSJ
• Democrats plan to launch an aggressive wave of investigations against companies that aligned themselves w/Trump, and are “zeroing in on Apple, Meta, and the companies led by Musk.” WaPo
• Secretary of State Marco Rubio dismissed reports he may leave the Trump administration, telling the NYT that working for the president until the end of this term has “always been my plan.” NYT
• US President Trump said he was not on the ballot in the midterm elections and claims Republicans would have won in a landslide if he had been: Newsquawk
• US Secretary of War Hegseth is reportedly not currently being considered for the Tennessee Senate seat: AP
• Japan’s Sanae Takaichi wants additional proceeds from the BOJ’s accelerated ETF sales to fund investments in sectors critical to economic security. Faster sales may boost annual funding by about $5 billion. BBG
• BoE’s Bailey: if energy prices remain high, another hike possible; “I don’t agree we have got endemic inflation.” BBG

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks were lower across the board, with the ASX 200 helped by the lack of tech names. However, the focus remained on semiconductor names and those that are key to the AI buildout, given the blue wave in the US midterms. The selloff appeared to reflect fears of an AI slowdown following the Democratic sweep in the midterms. ASX 200 printed losses but to a lesser degree, as its composition lacks tech names. Macquarie reported net profit that slightly beat estimates; however, losses were seen following news that the prudential regulator found a breach of the group’s non-bank businesses and will further review Macquarie’s capital settings. Nikkei 225 tracked the broader market lower, with its main tech names opening with double-digit losses (Tokyo Electron -13%, SoftBank -14%, Kioxia -14%). Sony was initially positive after its operating profit beat estimates and it raised its FY guidance, but succumbed to the broader risk tone (-1.3%). Outside of the tech giants, Japan Tobacco tumbled after four of its Russian units were placed under temporary administration. KOSPI was amongst the hardest hit, triggering multiple sidecars as SK Hynix and Samsung Electronics dragged the index lower. South Korean finance minister said the government will take necessary measures to prevent the stock market from overreacting and materially deviating from fundamentals. Hang Seng and Shanghai Comp followed their Asian peers lower. The PBoC injected CNY 226bln via overnight reverse repos for a CNY 52bln net drain, with the rate at 1.25%.

Top Asian News

• Indonesia's Coordinating Minister for Economic Affairs said authorities are considering removing the cap on IDR conversion under foreign exchange retention rules.
• Japan's Chief Cabinet Secretary Kihara said markets are determined by various factors and declines to comment on market developments.
• Japanese parties agree to vote on tax cut and cash benefit bills later on Friday, Kyodo reported.
• MSCI Chairman said the implementation of South Korea’s regulatory reforms is essential for its developed-market reclassification.
• Japanese PM Takaichi said proceeds from the BoJ ETF sales reflects Japan's economic growth and should be used to promote further growth and a virtuous economic cycle.
• Japanese PM Takaichi said market volatility is affecting global markets and is watching developments carefully.
• Japan's PM Takaichi said the government is considering support payments for over 30% of workers, with eligibility potentially expanded beyond the JPY 3.5mln annual income threshold.
• Japan approves JPY 10bln reserve fund use for cybersecurity.
• Taiwan's national fund to activate market stabilisation measures.

European bourses (STOXX 600 -1.3%) are in the red, but off worst levels as the AI/tech sell-off stabilises in Europe; ASML (+3%). Major indices are currently lower by between 0.4-1.6%, with the IBEX 35 faring a little better vs peers, whilst the SMI is the laggard. European sectors are entirely in the red. Focus of course is on Tech, which sits towards the top of the pile, as the sector attempts to stabilise in Europe/US. Overnight action saw memory giants SK Hynix (-10.3%) and Samsung (-6.3%) extend lower, which weighed on the KOSPI, which closed with losses of c. 6%. Over in Japan, Kioxia (-8.7%) also traded in the red, bringing its WTD losses to 36.7%. The US session is yet to get underway, but the Roundhill Memory ETF (DRAM) has fallen just shy of 25% this week. As mentioned in yesterday’s piece, losses were sparked in the aftermath of the US Democratic sweep, with traders fearing heightened AI regulation. Nonetheless, the memory environment remains incredibly tight, with several companies noting strong demand into 2029, and LTAs. Further adding to this trend, TrendForce (written 5th Nov), wrote that the tight supply situation will continue into 2027; “overall DRAM bit supply will slow to 24% in 2027”. Balancing the debate is a recent post from Citrini’s Jukan. He recently posted on X, following conversations with veteran investors, that memory LTAs are “meaningless”. The investor opined that once prices fall, customers “gladly forfeit prepayments” and walk away from their agreements. US equity futures are mixed; the ES and NQ attempt to reclaim some of the hefty losses seen on Thursday, which saw the Nasdaq close with losses in excess of 6%. The RTY is essentially flat whilst the YM trades lower; a reversal of the rotation out of tech is seen so far. Aside from what is likely just a bounce from recent losses, the WSJ reported that Anthropic’s ARR topped USD 80bln at the end of October, vs some expectations of mid-70bln. In pre-market trade, NVDA (+3.8%) and SanDisk (+8.2%) both rebound off near-term lows; it remains to be seen whether this is sustained into the open, and throughout the US session. A clear sentiment changer comes in the form of the US NFP report, whereby the US economy is expected to add 65k nonfarm payrolls in October; the unemployment rate is expected to hold at 4.2%.

FX

• The dollar is firmer against all of its major peers, with the Antipodeans the clear laggards and the CHF and JPY the most resilient. Focus remains squarely on the US Jobs Report, with non-farm payrolls expected to rise to 65K for October from the prior 29K, and the unemployment rate expected to hold steady at 4.2%. DXY currently resides towards the top of a 101.45-102.04 range.
• EUR has broken beneath Thursday’s 1.1203 base, extending to a 1.1167 trough in the European morning from a 1.1235 peak. The morning’s European data has done little for the single currency, with German Industrial Production beating at 0.7% M/M (exp. 0.0%, prev. 2.0%), the French Trade Balance printing a wider-than-expected deficit of EUR 7.3bln (exp. 5.8bln, prev. 6.0bln), and Spanish Industrial Production at 2.0% Y/Y (prev. 1.3%). Price action is largely driven by the USD.
• GBP is softer and has also printed fresh lows this morning, in a 1.3385-1.3464 band, while EUR/GBP continues to hold beneath the 0.8350 mark following Thursday’s hawkish BoE hike. BoE Governor Bailey has since said he does not agree that the UK has endemic inflation, while adding that if energy prices remain high there is a chance of another hike. Elsewhere, the Lloyds House Price Index was soft at -0.6% M/M (exp. 0.1%, prev. -0.1%) and -1.2% Y/Y (exp. -0.3%, prev. -0.1%). BoE’s Pill is due later at 12:15 GMT.
• JPY marginally softer with USDJPY towards the upper end of a 157.26-158.36 range, again a USD story, holding the bulk of its overnight recovery. Japan’s Chief Cabinet Secretary Kihara declined to comment on market developments, noting markets are determined by various factors, while GPIF posted a quarterly loss of JPY 5.3tln, its first in six quarters. CHF has held up better than most amid its haven properties and despite a sizeable miss in Swiss Consumer Confidence at -45 (exp. -35, prev. -36). Swiss FX reserves fell to CHF 758.5bln (prev. 770.3bln).
• Antipodeans lag amid the risk aversion that reverberated from APAC into Europe. The antipodeans are also hit by the losses across metals.

Central Banks

• Fed's Williams (voter) said the US economy has been remarkably resilient amid recent shocks, growth has strengthened. Inflation has been too high for too long. Energy price pressures are showing up in the expected areas.
• ECB's Lane said inflation needs to be back to target in a year or two. Fiscal policy has been more expansionary than expected this year, but is expected to be less so in the next years. Referencing December, says now is the time to gather information
• Goldman Sachs expects Fed rate cuts from late 2027 through early 2028.
• BoE Governor Bailey said "I don't agree we have got endemic inflation", adding that if energy prices remain high, there is a chance of another hike. Private wages at upper end range for inflation target. "If we get no resolution of this problem in the Middle East and energy prices continue to be at the high level we have seen them then I think the probability of us having to increase interest rates at least once more is probably reasonably high".
• PBoC injected CNY 226bln via overnight reverse repos for a CNY 52bln net drain with the rate at 1.25%.
• PBoC set USD/CNY midpoint at 6.7168 vs exp. 6.6762 (prev. 6.7156).
• BoC and Canadian Finance Ministry said Canada’s inflation target will remain 2%, the midpoint of the 1-3% control range, measured as the 12-month rate of change in CPI.

Fixed Income

• A modestly firmer start to the final session of a pivotal week for fixed income. USTs bid by a handful of ticks at most, after rallying over the last two sessions given the US midterms and the AI/tech selloff that ultimately followed. Currently, matching the 107-16 WTD peak from Thursday, and back to levels from mid-September.
• For yields, the week has seen pressure across the curve. The short/medium buckets hit by the energy pullback, paring of global central bank tightening expectations and the near term read across from the stock selloff and associated growth implications, with a deadlocked US government given a Dem. Congress and Rep. President also factoring. Further out, the same points are an influence, in addition to the hints in the QRA toward a move away from the long-end, continuing a global trend.
• Of course, it is premature to assess the week as a whole, with the October NFP report due in the next few hours; full Newsquawk preview available.
• Bunds about 20 ticks firmer, with the narrative much the same as that outlined for USTs. Benefitting today from the ongoing modest energy pullback we are seeing globally, and particularly within Europe where Dutch TTF is lower by nearly EUR 3/MWh as it stands. Currently, in the upper half of 123.06-53 parameters.
• Gilts were initially in-line with peers, but now flat. For the most part, participants have been digesting a BoE that was much more hawkish than expected on face value, and has a clear bias towards further tightening; however, Bailey made very clear that this could be reassessed depending on the Middle East/energy situation. Though, pipeline price pressures mean another hike is likely the base case, with the debate now between a back-to-back in December, or waiting until February’s forecast gathering.
• Alphabet (GOOG) plans Hong Kong and Singapore USD bonds, IFR reported.
• Australia sold AUD 800mln 3.25% 2039 AGB: b/c 2.56x (prev. 3.26x), average yield 5.1074% (prev. 4.5113%).
• Apple (AAPL) targets USD 7.5bln in its seven-parter USD-denominated bond sale, according to a term sheet.

Commodities

• Crude benchmarks have pared the week’s rebound, with WTI Dec’26 and Brent Jan’27 slipping, having earlier printed peaks of USD 92.53/bbl and USD 100.83/bbl. Dutch TTF is also well off its highs within a EUR 89.97-94.83/MWh range. The move lower comes as markets digest a phone call between Qatar’s Emir and US President Trump, in which the pair discussed diplomatic efforts aimed at de-escalating tensions in the region.
• That followed a morning in which the geopolitical premium had been building. Iran continues to reiterate that the reopening of the Strait of Hormuz will be contingent on the US accepting its seven conditions. Sabereen reported two oil tankers on fire in the Strait of Hormuz, while explosions were reported in Najran in southern Saudi Arabia, with damage attributed to debris from a missile interception. Separately, IRGC Ground Forces commander Karami said Iran’s armed forces are fully prepared to deliver a decisive response to any hostile action, while the FT reported at least four Iranian vessels hovering over subsea cables in the Gulf of Oman. Further, Tasnim, citing an Iranian MP, suggested that Iran's response to any US aggression will include Europe, adding that the response could lead to oil crossing the USD 150 mark.
• Spot gold remains on track to end the week with its biggest gains since August, though it trades lower on the day in a USD 4,035.92-4,107.00/oz band, having pared some of its earlier downside as the European session got underway, in tandem with DXY rising in early European trade. Traders look ahead to the US jobs report later today (Full Newsquawk preview available). Elsewhere in precious metals, palladium lags while platinum is marginally firmer; some suggest industrial consumers and jewellery fabricators are taking advantage of this week's cheap entry points.
• Base metals are also softer amidst the broader risk tone. 3M LME copper is lower in a USD 13.64k-13.83k/t range. The red metal has not benefited from the Democratic win, as it removes two key bullish catalysts: the rapid buildout of AI infrastructure and the risk of US import tariffs on the metal.
• Energy Aspects cuts its forecasts for diesel shipments in November from Chinese state-run refiners to 580k tonnes (prev. 980k tonnes), Bloomberg writes.
• Chinese official said they are to strengthen ties with overseas oil-producing regions and diversify oil and gas supply sources.
• Goldman Sachs lowers end-2026 gold price forecast to USD 4,150/oz and end-2027 forecast to USD 4,800/oz.

Trade/Tariffs

• China's MOFCOM initiates an anti-dumping investigation into imports of para-aramid filament yarn from the EU.
• China and the Netherlands held export control talks in Shenzhen on November 5, according to China's Commerce Ministry.
• US Democrats are targeting President Trump's tariffs on Canada as the first step in a broader effort to roll back his administration's trade policies, WSJ reported. Senator Wyden (D) said there is overwhelming support for repealing the tariffs on Canadian products.
• US House Democrats are reportedly mulling the future of the select panel on US-China competition, Semafor reports citing sources; focus could now broaden to other foreign actors.

Geopolitics: Iran

• US President Trump said Iran is not doing anything without US approval; Need to decide whether to go further or "certify it"; would rather not destroy the rest of Iran if possible, but maybe will have to. Regarding the Russian diesel tanker, said they are looking into the law that forbids it.
• Iranian lawmaker warns that Iran's response to America will include Europe, Tasnim reported; the response could lead to oil crossing the USD 150 mark. In the event of US-Israeli action, Iran's response will be such that the range of the responding missiles will include Europe, and this will lead to the price of oil crossing the USD 150 mark. The Islamic Republic of Iran is adopting a "strategic response". This means that Iran's response will not be simply proportional to the volume or location of the enemy's attacks, but will be a large-scale, multi-pronged, and strategic response that will be implemented without taking into account geographical considerations. The naval blockade of Iran has occurred hundreds of miles away, but this action is considered a form of war against the country, and at the appropriate time and using prepared weapons, the enemy will be attacked.
• Two oil tankers are said to be on fire in the Strait of Hormuz, Sabereen reported. IRGC adds "Two offending tankers, one in the eastern part of the Strait of Hormuz and the other in the Strait itself, intended to pass through an illegal route; the two ships were stopped and detained in the territorial waters of the Strait of Hormuz.".
• Iran's IRGC Ground Forces commander Karami said its armed forces are fully prepared to deliver a decisive response to any hostile action, Press TV reported.
• At least four Iranian vessels have been hovering over subsea cables in the Gulf of Oman, the FT reported citing data from Windward. Comes after Iran warned of disruption to digital infrastructure if the US escalated the conflict.
• Hezbollah may open an additional front in the event of a confrontation with Iran, Sabereen reported citing Israeli press.
• Iran's IRGC said that its aerospace forces grounded two more US MQM-170 reconnaissance drones over the southern Qeshm Island, Press TV reported.
• Iran has sent a new response regarding the nuclear file to the US through mediators, according to Journalist Mallick.
• Iran's response to Qatar's proposal regarding its nuclear capabilities remains pending, with the next step in negotiations dependent on Tehran's decision, Arabic TV reported citing Al Arabiya sources.
• The US administration is reviewing plans to resume military operations against Iran, The Hill reported citing sources.
• US President Trump reportedly met with the national security team before his comments on Iran in the Oval Office, Axios reported. Source added that CENTCOM is finalising preparations to potentially resume major combat operations in Iran, but has not received a new directive.
• Iraqi foreign minister said that a return of military operations between the US and Iran is likely and is no longer a secret, Al Hadath reported.
• Qatar Emir held a phone call with US President Trump; discussed diplomatic efforts aimed at de-escalating tensions in the region. "During the call, they reviewed the strategic relations between the two countries and ways to support and strengthen them. They also discussed the latest regional developments, particularly the diplomatic efforts aimed at de-escalating tensions in the region". "His Highness emphasized the importance of continuing dialogue and adopting diplomatic means to resolve disputes, prevent further escalation in the region, and ensure freedom of navigation and the security of energy supplies".

Geopolitics: Ukraine

• Russia's Afipsky oil refinery caught fire following a drone strike by Ukraine, Sabereen reported.
• Russia's Defense Ministry said they hit an energy facility in Ukraine's Kiev region and a cargo vessel in the Odessa port, IFX reported.
• Russia's Defence Ministry said its Air Forces hit an electric substation near Ukraine's Sumy, TASS reported.
• US Envoy Kushner said the US held productive and substantive discussions with Ukraine, NATO and European partners, covering security guarantees for Ukraine and a broader European security architecture.
• US President Trump said he met with Russian Envoy Dmitriev and that they are close to settling the Russia-Ukraine war, going to be a big agreement and will involve more than Ukraine and all of Europe. Did not meet with the Ukrainian delegation.

Geopolitics: Other

• Saudi strike on water facilities within Al-Shamaytan, Yemen.
• The Pakistani army has launched an attack on a border point in Afghanistan, Naya reported.
• Turkish parliament has ratified the defence pact with Saudi Arabia and Pakistan, AA reported.

Crypto

• Bitcoin is on the backfoot and trades just above the USD 76k mark, with Ethereum also on the backfoot and holding around USD 2.2k.

US Event Calendar

• 8:30am: Oct Change in Nonfarm Payrolls, est. 70k, prior 29k
• 8:30am: Oct Change in Private Payrolls, est. 65k, prior 46k
• 8:30am: Oct Change in Manufact. Payrolls, est. 6.5k, prior 9k
• 8:30am: Oct Unemployment Rate, est. 4.2%, prior 4.2%
• 8:30am: Oct Average Hourly Earnings MoM, est. 0.3%, prior 0.1%
• 8:30am: Oct Average Hourly Earnings YoY, est. 2.9%, prior 3.0%
• 10:00am: Nov P U. of Mich. Sentiment, est. 48.0, prior 48.0
• 3:00pm: Sept Consumer Credit, est. $13.800b, prior $8.281b

Central Bank Speakers

• 9:10am: Fed’s Musalem Speaks at Greater St. Louis, Inc.
• 12:15pm: Fed’s Bowman in Moderated Conversation
• 1:00pm: Fed’s Daly Speaks in CNBC Interview

DB's Jim Reid concludes the overnight wrap

What a week it's been. I'm not sure whether watching the last episode of Slow Horses last night or watching markets yesterday left me more exhausted after a huge slump in the most AI-exposed parts of the market. In fact, the scale of the moves ranked among the biggest in years, and the Philly semiconductor index (-12.25%) had its worst day since the pandemic slump in March 2020. And in turn, that cascaded elsewhere, with the S&P 500 (-4.36%) posting its biggest slump since the Liberation Day volatility in April 2025. So that drove a huge surge in the VIX index (+11.6pts), which also saw its biggest daily jump since the Liberation Day period, ending the session at 28.2pts, its highest since March. Meanwhile, several other points of recent stress crept back in, with Brent crude oil prices (+3.88%) paring a little of their losses from earlier in the week, whilst the Franco-German 10yr spread (+3.8bps) also widened again. So the risk-off tone was undoubtedly back.

The sell-off has spread to Asia but Nasdaq futures (+0.77%) are edging back up a bit after the -5.52% slump yesterday. However that hasn't saved Asia with the Nikkei (-6.28%) now more than -20% below its June record high and into bear-market territory. Elsewhere, South Korea's KOSPI (-4.39%) is also sharply lower after plunging as much as -8.8% in early trading, its lowest level since early February. The index was up more than +116% in late June and it's now up "only" just over +22%. The Korean Exchange temporarily halted stock and derivatives trading for 20 minutes earlier after the benchmark dropped -8%, triggering a circuit breaker. Meanwhile, losses elsewhere in the region have been more contained, with the Shanghai Composite (-1.27%), Hang Seng (-1.29%), CSI 300 (-1.58%) and ASX (-0.49%) all trading lower but not slumping. S&P futures are down around a tenth of a percent with Stoxx futures down around a percent having closed before the last leg of the US sell off last night.

These moves have come as investors continue to ponder the likelihood of tougher AI regulation after the midterms, with the most exposed stocks seeing a big impact. Indeed, the decline in the Philly semiconductor index now leaves it more than -38% beneath its peak back in June. And several names saw even bigger losses, with CoreWeave (-9.83%) falling to its lowest level since April 2025, with its 5yr CDS widening another +127bps to 1289bps. Meanwhile, Nvidia (-9.26%) had its biggest drop since January 2025 and is now slightly lower YTD, whilst Tesla (-10.77%) had its biggest drop since July.

What was striking about yesterday’s moves was there wasn’t a particular catalyst driving them. Of course, the midterm results were in focus, but these were already known the previous day, after which US equities saw a huge rally. While initially some more defensive portions of the market held in better, by the close only 73 members of the S&P 500 were higher on the day. This is broadly consistent with the last time the S&P 500 was down this much on 10 April 2025, when just 75 companies in the index were up on the day. So while the equal weight index (-2.89%) outperformed it clearly also suffered.

However the rotation trade over the last month has had a profound impact with S&P’s information technology (-15.89%) and communication services (-13.43%) posting sharp losses, whereas consumer staples (+13.96%) and healthcare (+11.24%) have posted equally sharp gains. But even though more than two-thirds of the index’s members have moved higher in the last month, the sheer weight of tech has dragged down the broader index.

With AI fears gathering pace again, that led to a fresh round of question marks as to whether the Fed would hike again in December. For now it’s still considered likely, but market pricing came down from 82% on Wednesday to 68% by last night’s close. And in turn, there was a strong rally for US Treasuries, with the 2yr yield (-11.9bps) down to 4.46%, whilst the 10yr yield (-5.3bps) fell to 4.835%.

Notably, all those moves came in spite of another very strong batch of US data. For instance, the weekly initial jobless claims fell to just 189k in the week ending October 31 (vs. 196k expected). And in turn, that took the 4-week moving average down to its lowest since 1969, at just 194.75k. Meanwhile, nonfarm productivity was also stronger than expected in Q3, growing by an annualised +3.6% (vs. +2.7% expected), whilst the Q2 number was revised up from +1.4% to an annualised +2.1% pace. So there was good news on both the labour market and on productivity, which sets the backdrop for the October jobs report at 13:30 London time. As a reminder, our US economists expect nonfarm payrolls to rise by +55k in October, with the unemployment rate remaining at 4.2%. But the next FOMC meeting isn’t until December 9, so there’s still another jobs report after this one before the Fed’s next decision.

As all that was going on, matters weren’t helped by a fresh rise in energy prices, with Brent crude (+3.88%) closing at $98.29/bbl. It moved back above $100 this morning but is just below again as I type. Clearly it was a lot higher last week, but given that the active contract was down over -16% over the first three days of the week, it was a reminder that positive headlines could only take prices down so far without a proper resolution in the conflict. That said, we did get a New York Times headline yesterday which said that Iran was reviewing a set of proposals from mediators, and they were willing to re-engage on nuclear talks.

Earlier in Europe, markets put in a comparatively resilient performance, reflecting the continent’s more limited exposure to AI and the fact that it closed before the last leg of the slump. For instance, the STOXX 600 was on course for a record high at one point, before it ultimately closed -0.38% lower. Clearly that wasn’t great, but compared to the slump in the S&P 500, it showed how tech was such a big driver of yesterday’s moves. Indeed, several European indices even managed to post gains yesterday, including France’s CAC 40 (+0.34%) and Spain’s IBEX 35 (+0.59%). Futures point to a weaker open but still notable outperformance in the last 24 hours.

The other big story in Europe yesterday was the unexpectedly hawkish hike from the Bank of England. The 25bp hike to 4% was widely expected, but the decision to hike was unanimous, and the one dissenter actually wanted a larger 50bp hike instead. Looking forward, Governor Bailey also signalled further hikes ahead, saying that “Unless progress towards resolving the conflict is made, or there is other news which softens the risk to inflationary pressures, a further increase in bank rate may be warranted”. Moreover, their latest inflation forecasts now saw CPI rising to +4.9% in Q2 2027. Our economists believe a December rate hike is now finely balanced. But given recent positive developments in the Middle East and the Bank’s near-term projections, they think a February rate hike is marginally more likely (with December likely delivering a 5-4 hold) but much can happen between now and then. For now they retain their view for one more hike with Bank Rate peaking at 4.25%. See their review piece here

10yr gilt yields were -2.6bp lower on the day before the announcement but then rose +6.8bps intraday as the market absorbed the hawkish messaging before a late flight to quality trade left benchmark yields little changed (+0.2bps).

For European bonds, there was more of a classic risk-off move, with 10yr bund yields (-2.2bps) falling back, in contrast to those on 10yr OATs (+0.7bps) and BTPs (+2.5bps). So that meant the 10yr Franco-German spread was back up +3.8bps to 154bps, slightly unwinding its big move lower the previous day. But unlike in the US, there wasn’t much of a shift in ECB pricing for December, with investors still pricing a 76% chance of a rate hike by the close, broadly unchanged from the 79% at Wednesday’s close.

Finally, COP31 (the UN’s Climate Change Conference) kicks off on Monday, and our analysts have written a preview on it for the DB Research Institute (link here). Among others, they expect AI’s climate potential and rising electricity demand to feature prominently in discussions, with a focus on clean-energy expansion to support its growing power needs.

Looking at the day ahead now, the main data highlight will be the US jobs report. Otherwise, we’ll get German industrial production and Euro Area retail sales for September, and the University of Michigan’s preliminary consumer sentiment index for November. From central banks, we’ll hear from the Fed’s Williams, Musalem and Bowman, along with the ECB’s Lane and the BoE’s Pill.