Asia open: A spooky calm

As investors make their final adjustments before the U.S. presidential election, a spooky calm blankets global markets—a haunting stillness that feels like the calm before a storm. World stocks held steady on Monday, Wall Street gave back some of Friday’s gains, Treasury yields edged lower, and U.S. bond market volatility pulled back from Friday’s one-year high. It’s a deceptive quiet, with traders seemingly holding their breath as the election’s high-stakes drama looms large. Buckle up; the storm is on its way, and it promises to be anything but ordinary.

With positions locked and loaded, it’s time to hit pause on the opinion polls, grab some popcorn, and settle in for an Election Day thriller. This race is charging full speed to the Pennsylvania finish line, with RealClearPolitics showing Trump and Harris neck and neck. But Trump has a minuscule lead in the Keystone state, and the stakes couldn’t be higher—get ready for a nail-biter that promises to keep global markets on the edge of their seats.

With Japanese markets back in action after Monday’s Culture Day holiday, yen trading should get a much-needed liquidity injection. The U.S. dollar took a dip, sliding as low as 151.50 yen before rebounding.  Treasury yields retraced some of last week’s surge. Investors have also been unwinding their ‘Trump trades,’ adding to the dollar’s decline against the yen. The 10-year Treasury yield eased to 4.309% from 4.361%, signalling a cautious mood as markets brace for the U.S. election showdown. All eyes are on the next moves, with traders navigating this high-stakes week on full alert.

Meanwhile, crude oil is riding a two-day rally, fueled by escalating tensions in the Middle East. Israeli intelligence reportedly suggests Iran is gearing up to attack from Iraqi territory, potentially even before the U.S. election, according to Axios. Despite Israel’s signal that it’s open to ending the conflict in Lebanon, violence continues to escalate.

Earlier in the session, oil prices were under pressure after the EIA reported U.S. crude output hit a record high in August, climbing 1.5% to 13.4 million barrels per day.

As tensions rise in both geopolitical and political arenas, tomorrow's Asia session is shaping up to be one to watch. Expect the unexpected as markets prepare for a high-voltage Election Day showdown.