TACO Hopes Outweigh Regional Bank Jitters

Pepperstone

Forex

Political

Economic

Summary:

A rather famous old market adage is ‘there's nothing like price to change sentiment'. I might change that a bid, to ‘there's nothing like a TACO to change sentiment'.

WHERE WE STAND – A rather famous old market adage is ‘there's nothing like price to change sentiment'. I might change that a bid, to ‘there's nothing like a TACO to change sentiment'.Yes, that's right, after participants spent the back end of Thursday brushing up on funding markets and fretting (unnecessarily) about the state of US regional banks, a couple of positive trade-related snippets from ‘The Donald', and signs of easing money market stress stateside, were good to spark a bout of optimism as we moved into the weekend.

Fine, conditions were still incredibly choppy, and yes it wasn't as if the risk-on vibe that took hold was the most convincing of things that you're ever going to see, but at least participants appear to no longer be pointlessly worrying about insignificant financial institutions that nobody has ever heard of, and re-focusing on what remains a constructive setup for risk assets as we move towards year-end.I'll get to that in a second, but first just want to touch on the banking sector. Last week's jitters appeared to stem from a couple of relatively small banks writing off bad loans – one of these was Zions Bancorp, who took a $50mln write-down on a fraudulent loan, but have a $90bln (with a ‘B'!) balance sheet, which at best makes that seem ‘small beer'.

In many ways, those jitters last week were a bit of a ‘perfect storm', with idiosyncratic loan write-downs coinciding with sizeable funding pressures stemming from the California tax filing deadline, as well as Treasury auction settlements, thus creating notable tightness in funding markets. Said tightness subsided on Friday, with no institutions tapping the Fed's SRF, while in any case the Fed are alert to the lack of ‘wriggle room' that they now have, with RRP usage basically zero, and Chair Powell having already flagged that balance sheet run-off will probably wrap up sooner rather than later. December is the base case on that front, though risks skew towards it happening sooner.

Anyway, markets already appeared on surer footing as those fears subsided, before we got a ‘TACO' for lunch to help steady things up even more. That, of course, came by virtue of comments from President Trump, who continued to dial down the rhetoric in terms of US-China trade tensions, confirming that he will be meeting President Xi in a fortnight, that high tariffs on Chinese goods are ‘not sustainable', and again noting that things will be ‘fine' with China in due course. Treasury Sec Bessent confirming he'll meet his Chinese counterpart this week provided a bit of a helping hand as well.

Given the above, equities on Wall St ended the week in the green, with this rally resulting in the major benchmarks notching a weekly gain, despite what was quite the rollercoaster ride over the last five days. Though conditions have clearly been turbulent, I remain an equity bull, with earnings growth solid, underlying economic growth resilient, the monetary backdrop becoming looser, the present round of trade tensions likely to soon be de-escalated, corporate buybacks being on the verge of resuming, as well as the typical FOMO/FOMU buying into year-end. All that feels like a very powerful force that I'd not want to fight.

Speaking of powerful forces, relentless selling pressure was felt across the precious metals complex as the week wrapped up, with spot gold falling back towards $4,200/oz, and spot silver notching its biggest one-day drop in half a year. It must be said that there wasn't anything especially obvious to drive these moves, besides perhaps a combination of fading haven demand coupled with an unwind of relatively fresh momentum-based longs, in a market that had undoubtedly come a very long way, in a very short space of time.

I'm not going to sit here and call a ‘top' in the complex, not least considering that the bull case which has underpinned a 60% YTD gain in gold, and near-80% YTD gain in silver, continues to hold water, amid the risk of inflation expectations un-anchoring, continued runaway DM fiscal spending and, most importantly, incredibly high levels of physical demand. That said, if Friday's moves were to prove the start of a pullback in this uptrend, you'd initially be looking for support at $4,000/oz in gold, and $50/oz in silver, where I'd be keen to buy into any dips – one to keep on the radar for the week ahead.

Speaking of buying dips, I was reassured by the way in which the dollar not only snapped a 3-day losing run as the week wrapped up, but how the DXY held above both the 50- and 100-day moving averages as well. Although conditions in the G10 FX space have become akin to watching paint dry in recent weeks, the Fed's ‘run it hot' approach skews risks towards us returning to the RHS of the ‘dollar smile' as risks to the US economic outlook increasingly tilt to the upside.

That same approach, though, should tilt risks to Treasuries, especially at the long-end, to the downside as well, however that's not a call I'd have especially much conviction in for the time being, not least until we can be confident that sentiment is on much steadier footing.

LOOK AHEAD – As the US government shutdown rolls on, the economic calendar remains something of a mess, with market participants continuing, by and large, to operate in a data vacuum.

That said, we will at least get the September US CPI figures this week, with that print on Friday highlighting the data docket. Both headline and core CPI are seen having risen by 3.1% YoY last month, as tariff-induced price pressures continue to make themselves known, though it's very tough indeed to imagine the data materially altering the Fed policy outlook, with 25bp cuts this month, and in December, effectively locked in amid mounting downside labour market risks.For those curious, the CPI data is being released due to it being required in calculating the annual Social Security cost of living adjustment, no other BLS-calculated figures will be released until the shutdown comes to an end.

Elsewhere, we also get inflation figures from here in the UK this week, with headline CPI seen having risen to 4.0% YoY in September, and services CPI pushing 5.0% YoY once more. The BoE expect that this will be the peak in price pressures this cycle, though are unlikely to take any more steps to remove policy restriction until they are sure of that fact, meaning my base case is now that the ‘Old Lady' stands pat until delivering a 25bp cut next February. Meanwhile, ‘flash' PMIs from pretty much every major economy, as well as Canadian inflation, and US consumer sentiment are also due.

From a policy perspective, the FOMC are now (mercifully!!) in the pre-meeting ‘blackout' period, though plenty of ECB speakers will fill that particular void. We also receive the first ever set of minutes from an SNB decision this week, where comments on the valuation of the CHF are likely to be of particular interest.Earnings season also steps up a gear this week, with 90 S&P 500 set to report this week, including notable releases from the likes of Netflix (NFLX), Tesla (TSLA), and Intel (INTC).Finally, focus will of course also remain on incoming trade and tariff news flow, especially with Treasury Secretary Bessent meeting his Chinese opposite number in Malaysia at some point this week.

As always, the full week ahead calendar is below.

Source: Pepperstone

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Gerik

Economic

India Emerges as Safe Haven for Global Financial Investment

A new wave of foreign capital is targeting India’s banking sector, with recent billion-dollar deals highlighting the country’s rising appeal as a financial growth hub. Emirates NBD’s $3 billion investment in RBL Bank Ltd. marks the largest foreign infusion into India’s banking space to date. It follows earlier moves such as Abu Dhabi’s International Holding Co.’s $1 billion investment in Sammaan Capital Ltd. and Sumitomo Mitsui’s $1.6 billion acquisition of a 20% stake in Yes Bank Ltd.

Altogether, foreign-led deals in India’s financial services industry have reached $15 billion this year, signaling sustained investor interest even as the global backdrop grows increasingly unstable. These flows stand in stark contrast to rising fears in the U.S. credit market, where recent collapses at Tricolor Holdings and First Brands Group have rattled confidence.

India’s Financial Reforms Attract Capital Amid Global Uncertainty

India’s appeal is underpinned by more than just growth momentum. Regulatory reforms, improved credit discipline, and structural overhauls have strengthened the country’s financial sector since the shadow bank crisis that shook markets seven years ago. The Reserve Bank of India (RBI) has tightened oversight, discouraged excessive risk-taking, and pushed for better capital adequacy across lenders. These changes appear to have had a causal impact on investor confidence, reinforcing India’s credibility as a long-term investment destination.

Foreign investors, particularly those from Japan, the Middle East, and Europe, are increasingly drawn to India’s under-banked population, digital banking adoption, and consumption-led economy. As global capital searches for yield in a high-risk environment, India’s relative insulation from external volatility enhances its attractiveness. According to Vivek Ramji Iyer of Grant Thornton Bharat, India’s domestic focus and low correlation with global financial cycles make it an ideal entry point for long-horizon capital.

Skepticism Remains Over Execution Risks and Competition

Despite the influx of capital, historical performance raises questions about the profitability of foreign ownership in Indian banks. Independent analyst Hemindra Hazari notes that past acquisitions have rarely translated into outsized profit or revenue growth, largely due to entrenched competition and regulatory complexities. The intense retail competition and dominance of domestic players mean that capital alone may not guarantee market share or operational success.

Nonetheless, the scale of current deals shows renewed confidence in India’s long-term trajectory. CEO of RBL Bank, R. Subramaniakumar, emphasized India’s stable financial system and regulatory robustness as key selling points to global investors.

Policy and Market Signals Point to Further Deal Activity

With record-high performance from key banks like HDFC and ICICI, and the Nifty Bank Index surging over 13% year-to-date, investor sentiment continues to build. Policymakers are reportedly evaluating proposals to simplify foreign ownership norms in public sector banks and possibly extend banking licenses to large corporations both of which could unleash further waves of foreign deal activity.

Meanwhile, Mitsubishi UFJ Financial Group is actively scouting targets and is in advanced discussions to acquire a stake in Shriram Finance Ltd., while a forthcoming government stake sale in IDBI Bank Ltd. is expected to attract multi-billion dollar bids.

These developments suggest that foreign investors are not simply responding to short-term dislocations but are placing strategic bets on India’s evolving financial architecture.

In an era marked by geopolitical tensions, credit fragility, and uncertain monetary policy across developed economies, India’s financial sector has become a beacon for global capital. Recent billion-dollar investments are not only a testament to India’s growth story but also a reflection of investor demand for structural safety, regulatory clarity, and long-term opportunity. While execution risks remain high in a fiercely competitive banking environment, the scale and pace of foreign inflows indicate a broader recalibration of global investment priorities with India now firmly at the center.

Source: Bloomberg

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Samantha Luan

Stocks

Forex

Economic

Renewables specialist FairWind is set to boost its Asia-Pacific (APAC) presence and accelerate global growth by reaching agreement to acquire Cosmic Group, a leading Australian wind installation and maintenance provider.This strategic acquisition reinforces the company's existing presence in Australia and expands its footprint into New Zealand and Japan. The transaction is expected to close in Q4 subject customary regulatory approval, and will see the Brisbane-based business and its team of 100 technicians become part of FairWind.

Together with Cosmic, FairWind will be able to leverage local expertise while aligning the team with its global systems, standards, and strategic direction. The business will become the regional hub for FairWind's APAC operations with one of its founders, Matt Crossan, appointed as Regional Director. Cosmic, will continue to operate under the Cosmic name - ensuring continuity for its existing projects and clients.Stewart Mitchell CEO FairWind said: "This collaboration with Cosmic is a significant step in our growth strategy. There are great synergies between the two organisations, with shared values and unwavering commitment to safety. By joining forces with a team known for delivering to the highest standards, we're extending our geographic reach while strengthening our capability to support customers wherever they operate.

"Together, our deep technical expertise and track record in onshore and offshore wind create a powerful platform in our mission to help advance the global energy transition. We look forward to working closely together and unlocking new opportunities across the region's renewables landscape."Matt Crossan commented: "With the installed turbine base set to continue to increase and the next generation of wind turbines being introduced to the region by our customers, there is significant potential for growth across Asia Pacific.

"We are proud of what we have built at Cosmic to become one of the leading wind services providers, by joining FairWind we have a partner who enhances our existing capability and we are excited for the next phase of the business."FairWind has a workforce of more than 2,000 people in more than 40 countries across Europe, North America, South America, Asia, and Oceania. The business provides complete lifecycle solutions for the installation and maintenance of onshore and offshore wind turbines around the world.

Source: TradingView

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Gerik

Economic

Growth Slows to Lowest Pace Since Q3 2024

China’s GDP growth decelerated to 4.8% year-on-year in the third quarter of 2025, marking the weakest expansion since the same period in 2024, according to official data released Monday. This follows a 5.2% annual growth rate in the second quarter and signals mounting challenges for the world’s second-largest economy as it grapples with both external and internal pressures.

The slowdown is driven by a combination of intensifying trade friction with the United States particularly after President Donald Trump’s imposition of new tariffs and persistent weakness in domestic demand. Despite these headwinds, cumulative growth for the first nine months of 2025 remained at a relatively stable 5.2% pace, bolstered by earlier quarters.

Trade Holds Up, But Demand Falters

While U.S.-China relations have become increasingly strained in recent months, China’s export sector has shown notable resilience. Exporters have managed to partially offset U.S. market losses by redirecting goods to alternative destinations, helping to stabilize the country’s external performance. This development reflects a shift in trade dynamics rather than a full substitution of lost U.S. demand, highlighting the adaptability of Chinese supply chains.

However, on the domestic front, consumption and investment have remained lackluster. Retail sales and fixed-asset investment figures have shown only marginal improvement, if any, indicating that household confidence and private-sector investment are still under pressure. The causal relationship between consumer weakness and slowing GDP growth is particularly evident this quarter, as lackluster domestic demand directly weighs on output and services activity.

The 4.8% GDP growth in Q3 confirms that China’s post-pandemic recovery is losing momentum under the strain of geopolitical risk and insufficient internal demand. While export resilience offers some relief, the underlying fragility in household consumption and business investment suggests deeper structural issues. As Beijing continues to navigate its economic challenges amid a contentious global environment, the focus now shifts to whether more aggressive fiscal or monetary support will be deployed to bolster growth in the final quarter of 2025.

Source: AP

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Gerik

Economic

Sharp Drop in Futures Reflects Renewed Investor Caution

French 10-year bond futures fell by 35 ticks to 122.80 during early Asia trading, reacting to S&P Global Ratings’ unexpected downgrade of France’s credit rating from AA- to A+. This unscheduled decision followed a prior downgrade by Fitch in September and now places France below the double-A threshold used by many conservative funds to guide investment. Although the euro remained stable, the bond market's pronounced move contrasted with a more restrained reaction in German securities, highlighting country-specific investor anxiety.

The downgrade comes at a time when France is already under financial market scrutiny. By losing its AA status at two of the three major agencies in under two months, France risks triggering rebalancing activity in portfolios bound by minimum average credit quality requirements.

Political Gridlock and Budget Fragility Erode Fiscal Credibility

S&P’s downgrade underscores growing doubts over France’s fiscal management capacity as Prime Minister Sébastien Lecornu attempts to advance the 2026 budget through a fractured National Assembly. His political survival last week came at the cost of suspending President Emmanuel Macron’s flagship pension reform — a reform viewed as essential to strengthening long-term public finances.

This compromise provided temporary political stability but introduced a clear fiscal cost. The rating agency explicitly cited the pension reform’s suspension as a contributing factor to the downgrade, reflecting a causal link between political concessions and weakened consolidation efforts. This political backdrop has become a central risk driver for French debt markets.

According to S&P, France is now experiencing its deepest political instability since the birth of the Fifth Republic in 1958. The lack of clarity on long-term fiscal policy, especially ahead of the 2027 presidential elections, is creating uncertainty that could further pressure borrowing costs and deter investment.

Widening Risk Premium and Yield Spread Pressures

The downgrade has also intensified structural pressures on French yields. The spread between 10-year French and German bonds — a key risk barometer in the eurozone has widened from under 50 basis points before the 2024 snap elections to nearly 90 basis points earlier this month. Although the spread narrowed slightly to 78 basis points last Friday, it remains elevated and reflects lingering concerns over France’s creditworthiness relative to peers.

French bonds now yield more than those of some lower-rated eurozone nations, such as Greece and Portugal — a sign that investors are pricing in political and fiscal risks over pure credit metrics. Former PIMCO CEO Mohamed El-Erian warned that the downgrade could place upward pressure on these spreads and undermine regional confidence at a time when the euro area needs deeper reform and cohesion.

Implications for Institutional Investors and Market Liquidity

The downgrade presents a risk of partial disinvestment by highly conservative funds, including central banks, reserve managers, and pension funds that manage products benchmarked to double-A ratings. Institutions such as BlackRock, Vanguard, and Legal & General operate products with mandates to maintain specific credit quality averages, and France’s fall below AA at two major agencies may force asset reallocation, even though French bonds remain investment-grade.

This potential for forced selling is more than symbolic. While the majority of institutional holders are likely to retain exposure, rebalancing flows could still dent liquidity and exacerbate price volatility. The broader reputational effect of a second major downgrade could also weigh on foreign demand.

Budget Process and Moody’s Verdict Now in Focus

Looking ahead, market attention will shift to the upcoming budget negotiations. Prime Minister Lecornu has for now abandoned the use of Article 49.3 — a constitutional mechanism that allows budgets to pass without parliamentary votes. This decision, while intended to respect democratic norms, raises the risk that the 2026 budget may fail to pass, particularly amid a divided legislature.

The other critical juncture will be Moody’s credit review on Friday. Moody’s currently rates France at Aa3 — the lowest tier of the double-A category. If it joins S&P and Fitch in downgrading France, the move would cement a broader consensus of deteriorating credit quality, increasing the likelihood of substantial reallocation by rating-sensitive funds.

France’s latest credit downgrade by S&P marks a pivotal moment in the nation’s fiscal narrative, shifting focus from market-friendly reforms to short-term political survival. As the suspension of pension reform derails fiscal consolidation, bond markets are responding with spread widening and elevated risk premiums. Although France’s debt remains investment-grade, its appeal to the most risk-averse investors is diminishing. With a volatile budget season ahead and Moody’s review on the horizon, the coming weeks may determine whether France can regain control of its fiscal path or face deeper market dislocation.

Source: Bloomberg

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Samantha Luan

Forex

Political

China–U.S. Trade War

Economic

China imported no soybeans from the U.S. in September, the first time since November 2018 that shipments fell to zero, while South American shipments surged from a year earlier, as buyers shunned American cargoes during the ongoing trade dispute between the world's two largest economies.Imports last month from the U.S. fell to zero from 1.7 million metric tons a year earlier, data from China's General Administration of Customs showed on Monday.Shipments fell because of the high tariffs China has imposed on U.S. imports and as previously harvested U.S. supplies, known as old-crop beans, have already been traded. China is the world's biggest soybean importer.

"This is mainly due to tariffs. In a typical year, some old-crop beans would still enter the market," said Wan Chengzhi, an analyst at Capital Jingdu Futures.Brazil arrivals last month jumped 29.9% year-on-year to 10.96 million tons, accounting for 85.2% of China's total imports of the oilseed, customs data showed, while shipments from Argentina rose 91.5% to 1.17 million tons, or 9% of the total.China's soybean imports reached 12.87 million metric tons in September, the second-highest level on record.

China has not purchased any U.S. soybean cargoes from this autumn's harvest. The window for U.S. soybean purchases is rapidly closing as buyers secure shipments through November, largely from Brazil and Argentina, helped by Argentina's brief tax holiday.Without a breakthrough in trade talks, U.S. farmers could face billions in losses as Chinese crushers continue sourcing from South America. Beijing, however, may also face a potential supply crunch early next year before Brazil's new crops hit the market."A soybean supply gap may emerge in China between February and April next year if there's no trade deal in place. Brazil has already shipped a huge volume, and no one knows how much old-crop stock remains," said Johnny Xiang, founder of Beijing-based AgRadar Consulting.

Trade negotiations between Beijing and Washington appear to be regaining momentum after weeks of fresh tariff threats and export controls. U.S. President Donald Trump said on Sunday he believed a soybean deal would be reached.For the January-September period, China imported 63.7 million tons from Brazil, up 2.4% year-on-year, and 2.9 million tons from Argentina, up 31.8% year-on-year.Even as Chinese buyers are shunning this year's U.S. harvest, purchases earlier in 2025 mean that year-to-date imports of American beans have totalled 16.8 million tons, up 15.5%, data showed.

Source: Yahoo Finance

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Samantha Luan

Forex

Economic

Stocks

Masan Group is in talks with Costco Wholesale Corp. to sell its branded noodles, fish sauce and coffee in the retailer’s US stores as the Vietnamese conglomerate accelerates its global expansion.“Our leading products such as fish sauce, chili sauce, and noodles have already entered Costco’s hypermarket system in South Korea, and will soon be available in Costco in the US,” said Le Thi Nga, deputy chief executive officer of Masan Consumer, the group’s unit.

Some of its products are now being offered in a limited number of Costco stores on a trial basis, according to Masan Consumer.Representatives for Costco didn’t immediately respond to requests for comment.The Ho Chi Minh City-based company is also in discussions with Walmart Inc. to put some of its branded products on the retail giant’s shelves, Nga said.Representatives for Walmart didn’t immediately respond to requests for comment outside regular business hours.

Masan Consumer produces a range of food and beverages, including sauces, noodles, cereals, instant coffee and beer. It aims for 15% of its revenue to come from abroad “in the next few years,” up from about 5% now, Nga said.In particular, it seeks to ramp up global sales of its Chin-su seasoning products, Omachi noodles and Vinacafe instant coffee.The company says it sells goods in regions including North America, Europe, New Zealand, the UK, South Korea, Japan, and China.

Masan Consumer is making a major push to form more US partnerships, said Nga, who oversees the unit’s research and development.“Masan is pursuing a strategy to bring Vietnamese cuisine and products to the world, and we are taking our first firm steps in that direction,” she said.Masan Group is planning an initial public offering of the unit, which could raise as much as $1.5 billion.

The conglomerate reported second-quarter net income of 1.03 trillion dong ($39.1 million), up from 503 billion dong in the same year-ago period. Revenue was at 18.32 trillion dong.