NEW YORK, Oct 16 (Reuters) - Making sense of the forces

driving global markets

By Alden Bentley, Editor in Charge, Americas Finance and Markets

Jamie is enjoying some well-deserved time-off, but the

Reuters markets team will still keep you up to date on what

markets were focused on today and why they took a breather. I'd

love to hear from you so please feel free to reach out at

Today's Key Reads

* U.S. judge blocks Trump's plan to lay off

thousands of

government workers

* Exclusive-Fed's Miran says he is not focused on

asset

price boom in push for lower rates

* Bank of Japan must tread carefully in normalizing

policy, central bank official says

* Wall Street drops as Zions sparks worries about

regional

banks

Today's Key Market Moves

* On Wall Street the S&P 500 was down about 1% in

late

afternoon trade and the Nasdaq was down 0.85%

* U.S. Treasury yields fell below 4%,

ending 7.4 basis points lower at 3.9707%

* The dollar index fell 0.35% and dollar/yen fell

0.46%

* U.S. crude oil fell 1.29% to $57.51 a barrel

* Gold bullion rose 2.03% to $4,292.79 an ounce

Today's Key Talking Points

Regionals spoil the banking party

Tumbling financial stocks stole the punchbowl from the S&P's

cautious recovery. Zions Bancorp disclosed a $50

million third-quarter loss on souring California loans, which

was enough to sap the remaining bullishness from strong earnings

reports from six of the nation's largest banks on Tuesday and

Wednesday. The S&P 500 Banks index fell 3.5%, more than

reversing a 1.2% gain the previous session. The KBW regional

bank index fell 7%.

Meanwhile, optimism about artificial intelligence was not

sufficient to hold the market together. An early rally by

chipmakers buoyed things after Taiwan's TSMC 2330.TW, the

world's largest maker of advanced semiconductors, raised its

full-year revenue forecast on a bullish outlook for AI spending.

The market was fragile given the recent downward spiral in

U.S.-China trade relations, even as the big banks provided

hopeful signs of economic resilience, at a time when economic

data, good or bad, is in short supply due to the ongoing

government shutdown.

Greenback in the red

The U.S. dollar logged its third consecutive down session

against major currencies including the euro, yen and Swiss franc

amid U.S.-China tensions. China accused the U.S. of stoking

panic over its rare earth controls and said Treasury Secretary

Scott Bessent had made "grossly distorted" remarks about a top

Chinese trade negotiator, rejecting a White House call to roll

back the curbs.

Dollar/yen extended its loss after U.S. midday after Seiichi

Shimizu, the Bank of Japan's assistant governor, said the

central bank must be careful when normalizing monetary policy

due to uncertainty about how the economy would react to a new

environment of positive interest rates. Fed Governor Christopher

Waller said he supported an additional interest rate cut in

October due to mixed readings on the state of the job market.

A parade of Fed speakers this week, including Chair Jerome

Powell, did not dampen conviction that the Fed policy meeting at

the end of the month will end with another rate cut. The

blackout period starts Saturday and the last speaker before

things go quiet is St. Louis Fed President Alberto Musalem on

Friday.

Stars aligned for gold

Gold hit a record high for the fourth straight session. The

venerated safe-haven metal has gained over 60% year-to-date,

driven by geopolitical tensions, aggressive rate-cut bets,

central bank buying, de-dollarization and robust ETF inflows.

What could move markets tomorrow?

* No major U.S. corporate earnings or economic data

* St. Louis Fed President Alberto Musalem speaks

Opinions expressed are those of the author. They do not

reflect the views of Reuters News, which, under the Trust

Principles, is committed to integrity, independence, and freedom

from bias.

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