Rise and shine everyone.

Happy Monday! It’s the start of a shortened week and liquidity may thin out towards the end of the week, making the markets slightly more volatile with sharper moves.

Equities are moving higher this morning after Scott Bessent was picked for US Treasury Secretary. The 10-year UST yield dropped as Bessent’s proposed “3-3-3” policy—targeting 3% GDP growth, cutting the deficit to 3% of GDP by 2028, and boosting oil output by 3M barrels/day—reassured investors. In a Wall Street Journal interview, he emphasized preserving the dollar’s global reserve status, implementing tax cuts, and defending tariffs as strategic economic tools.

Risk sentiment improved globally. U.S. equity futures held gains, with the Nikkei leading Asia. European currencies rallied sharply, with EUR/USD recovering from Friday’s two-year low which followed weak PMIs. ECB rate cut odds for December jumped to 50%, from 20% last week, as dovish comments continued from ECB officials, who discussed cuts independent of what the Fed would do.

China’s PBOC left its MLF one-year rate unchanged at 2.00%, in line with expectations. Meanwhile, late Friday, the European Parliament’s International Trade Committee signaled progress in talks with China to abolish EV tariffs. In exchange, China could commit to setting a minimum price for EVs sold in the EU, providing potential relief to the trade-sensitive auto sector. This could provide a boost to EV stocks.

Commodities were weaker. Gold and oil pulled back from last week’s highs amid reports of a potential ceasefire deal between Israel and Lebanon, easing geopolitical risks in the Middle East.

Chart of the Day

US Households Remain robust, particularly when compared to other major economies.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)