• US President Trump said they are in a trade war with China, and if the US don't have tariffs, they don't have national security, while he stated that tariffs are a very important tool for defence.
• The US Senate is set to leave for the week on Thursday and is nowhere near ending the shutdown, according to a journalist.
• BoJ’s Tamura said the BoJ should push rates closer towards levels deemed neutral, but does not need to raise rates sharply or tighten monetary policy now, given both upside and downside risks.
• US President Trump said Israeli forces could resume fighting in Gaza as soon as he gives the word if Hamas doesn't uphold the ceasefire deal, according to CNN.
• APAC stocks took impetus from the positive handover from Wall Street, where most major indices ultimately gained; European equity futures indicate a lower cash market open.
• Looking ahead, highlights include UK GDP (Aug), EZ Trade Balance (Aug), Philly Fed (Oct), Atlanta Fed GDP, Comments from Fedʼs Waller, Barkin, Barr, Miran, Bowman & Kashkari, ECBʼs Lane & Lagarde, BoCʼs Macklem, BoEʼs Greene & Mann, Supply from Spain & France, Earnings from TSMC, Bank of New York Mellon, KeyCorp, Charles Schwab, United Airlines, ABB & Bankinter. 
• Suspended Releases: US Weekly Claims, PPI (Sep), Retail Sales (Sep). 

SNAPSHOT

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• Click for the Newsquawk Week Ahead.

US TRADE

EQUITIES

• US stocks finished mostly higher although price action was choppy in which equities bottomed out after Europe left for the day with a trough seen as Tech stocks took a hit, namely NVIDIA (NVDA), seemingly in response to a Reuters article that Anthropic updated its smallest AI model, which is much cheaper than its more expensive models, and performs as well or better.
• The news revived fears that tech names could be overpaying for AI chips from NVDA when the power needed may not be as much as initially thought - a similar reaction to the DeepSeek fears. Nonetheless, stocks then rebounded off lows, while there was also a lot of focus on US/China relations, with Bessent and Greer noting that the recent export controls are a global supply chain power grab and act of economic coercion, although Greer suggested there is room for positive relations with China, and he expects restrictions will not be implemented.
• SPX +0.41% at 6,672, NDX +0.68% at 24,745, DJI -0.04% at 46,253, RUT +0.89% at 2,518.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said they are in a trade war with China, and if the US don't have tariffs, they don't have national security, while he stated that tariffs are a very important tool for defence.
• US President Trump claimed that South Korea signed a deal to make an "upfront" payment of USD 350bln to invest in the US, while it was also reported that Treasury Secretary Bessent said that South Korea and the US can resolve their differences over how to implement Seoul's USD 350bln investment pledge, and that he expects "something" to come "in the next 10 days", according to Yonhap.
• South Korean Presidential Policy Chief noted optimism when asked about tariff talks with the US, while South Korea's Finance Minister said the US may accept South Korea's proposal in tariff talks, according to Yonhap
• Mexican Economy Minister Ebrard said Mexico is in talks with the US to discount tariffs on heavy truck parts.
• Federal officials said they have found no evidence of widespread undervaluing of imported appliances after Whirlpool (WHR) last month accused its rivals of possible tariff evasion, according to WSJ.

NOTABLE HEADLINES

• Fed’s Miran (voter) said AI investment could lead to a higher neutral interest rate and that recent policy changes, including immigration, have produced fast changes in the neutral rate. Miran also said Fed policy is more restrictive than people think because the neutral rate has fallen, while he puts less weight on the value of changing policy gradually and does not think moving by more than 50bps cuts is necessary.
• Fed’s Waller (voter) said AI is moving so fast that they will see job losses before they see new jobs, while it may be a couple more years before they see new jobs from AI replacing the old jobs.
• Fed Beige Book stated that employment levels were largely stable in recent weeks, and demand for labour was generally muted across Districts and sectors. It also stated that economic activity changed little on balance since the previous report, with three Districts reporting slight to modest growth in activity, five reporting no change, and four noting a slight softening. Overall consumer spending, particularly on retail goods, inched down in recent weeks, although auto sales were boosted in some Districts by strong demand for electric vehicles ahead of the expiration of a federal tax credit at the end of September.
• US Treasury Secretary Bessent said the US investment boom is sustainable and just getting started, while he stated there is pent-up demand and America is open for business, according to CNBC. Bessent said the only thing slowing the US and President Trump down is the government shutdown, and he has seen numbers that the shutdown is hurting the economy by up to USD 15bln a day. Furthermore, he is not advocating that the Fed shrink its balance sheet or move away from an ample reserves system and said the Fed should use QE sparingly, like antibiotics, while he added that QE reform is an important consideration for the next Fed Chair choice.
• US Treasury official said the government shutdown could cost the US economy USD 15bln per week, correcting Treasury Secretary Bessent's recent comments that estimated USD 15bln of costs per day.
• US Senate is set to leave for the week on Thursday and is nowhere near ending the shutdown, according to a journalist.
• US Budget Director Vought said they are definitely talking about thousands of people regarding government layoffs and could be more than 10k.
• US judge blocked the Trump administration from laying off workers at more than 30 agencies amid the shutdown.
• US regulators are poised to offer capital relief to community banks, according to Bloomberg.

APAC TRADE

EQUITIES

• APAC stocks took impetus from the positive handover from Wall Street, where most major indices ultimately gained despite a choppy performance as US-China frictions remained in focus.
• ASX 200 printed a record high with most sectors in the green amid a softer yield environment, which was facilitated by a rise in unemployment.
• Nikkei 225 climbed higher and was unfazed by disappointing Machinery Orders and comments from BoJ hawk Tamura.
• Hang Seng and Shanghai Comp lagged behind regional peers amid US-China frictions, and with the Hong Kong benchmark underperforming amid weakness in Chinese tech stocks, while it was also reported that the FCC is to expel Hong Kong Telecom from US networks.
• US equity futures were little changed following yesterday's choppy mood and as participants await earnings releases and several Fed speakers.
• European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.4% after the cash market closed with gains of 1.0% on Wednesday.

FX

• DXY remained pressured after retreating yesterday amid the backdrop of US-China trade frictions, with President Trump acknowledging that they are in a trade war with China, and if the US don't have tariffs, they don't have national security. Participants also digested the latest rhetoric from the Fed including from Governor Miran who stated there is more downside risk than a week ago, and with the change in the balance of risk, it is more urgent to get to a more neutral policy quickly, while the latest Fed Beige Book noted employment levels were largely stable in recent weeks and that demand for labour was generally muted across Districts and sectors.
• EUR/USD benefitted from the weaker buck and extended on the prior day's gradual advances, with some encouragement from recent optimism by ECB officials regarding the economy and after better-than-expected Industrial Production data.
• GBP/USD returned to above the 1.3400 level following recent outperformance and as Chancellor Reeves flagged higher taxes on the wealthy, while participants await the incoming UK monthly GDP and output data scheduled later.
• USD/JPY initially trickled lower amid the softer dollar and recent comments from hawkish BoJ board member Tamura, who stated the BoJ should push up rates closer toward neutral to avoid being forced