Market Report.
🇺🇸 With the U.S. government shutdown, there will be no release of the closely watched nonfarm payrolls or JOLTS job openings data this week. Instead, investors will turn to the private employment report from ADP as a proxy to gauge the direction of U.S. monetary policy.
⚙️ The shutdown has disrupted the normal flow of economic data, leaving investors to rely more heavily on private sector indicators like the ADP report to inform their views on the economy and the Fed’s policy decisions.
📊 The ADP private employment data is due to be released later this week, providing an alternative indicator of the labor market’s health.
🏭 Private-sector purchasing managers’ indexes (PMIs) showed manufacturing activity growing at a slower pace in China and falling in South Korea, with export orders declining in both countries. China’s official PMI survey confirmed that the earlier export rush to get ahead of U.S. tariffs has ended, with the country’s factory activity falling for the seventh straight month.
🌏 Experts say the weakness in China’s economy may persist despite any modest boost to exports from the latest U.S.-China trade deal. While Trump and Xi agreed to de-escalate trade tensions, the deal does little to address the deeper divide between the two superpowers.
🇮🇳 In contrast, India’s factory activity sped up, helped by brisk domestic demand that offset the hit to exports.
🧸 A small toy company is taking on the president’s signature economic policy at the highest court, arguing the tariffs have severely disrupted their business operations. A Chicago-area toy company, Learning Resources Inc. and hand2mind Inc., is challenging President Trump’s tariffs at the U.S. Supreme Court.
⚖️ While major importers like Walmart have stayed out of the case, smaller companies like Woldenberg’s are taking the lead, arguing the tariffs have imposed significant costs on their businesses. A ruling against Trump could mean refunds exceeding $100 billion and undercut his ability to use tariffs as a tool to extract concessions from trading partners.
🏛️ The White House defends the tariffs, saying they have helped secure trade deals and investments in America. But Woldenberg argues his company’s overseas manufacturing reflects industry realities, not a lack of investment in the U.S.
💶 According to Bloomberg, European companies are navigating US tariffs better than anticipated. Several European companies, from luxury brands to consumer goods and pharma, credited strong sales growth in the US market for their ability to beat analysts’ estimates and raise outlooks. A Goldman Sachs basket of European stocks most exposed to tariffs outperformed the broader market in October, rallying about 6% as the earnings season unfolded.
📈 Companies have been able to adapt to the tariffs by trimming expenses, shifting production, and negotiating with the US government, causing the tariff issue to drop off the radar on earnings calls.
⚠️ However, some caution that it’s still too soon to fully assess the long-term impact, with the foreign exchange impact on earnings yet to fully percolate through.
🇫🇷 The French government is engaged in closed-door talks with lawmakers this week in a bid to salvage the 2026 budget, which is facing a bitter, slow-moving parliamentary debate that risks toppling Prime Minister Sebastien Lecornu.
🧾 The budget process is particularly tenuous as Lecornu has given in to opposition demands not to use Article 49.3 of the constitution, which previous governments have relied on to pass legislation without a vote. After two weeks of deliberations, the budget bill has been significantly transformed, with over 2,000 amendments and tax increases that the government opposes.
📅 The delays mean a vote on the revenue chapter of the budget won’t be possible by the initial deadline, raising the risk of a government collapse and snap elections. The government has made concessions like suspending pension reforms and introducing its own amendment to raise corporate taxes. The instability has rattled bond markets, driving up France’s borrowing costs compared to its peers.
🏠 U.S. Treasury Secretary Scott Bessent said parts of the U.S. economy, particularly housing, may already be in recession due to high interest rates. Federal Reserve Governor Stephen Miran, who is on leave from the White House Council of Economic Advisers, also criticized the Fed’s policy, saying it risks inducing a recession if it does not swiftly lower interest rates.
💵 Bessent echoed Miran’s view, arguing that the Trump administration’s spending cuts have helped lower the deficit-to-GDP ratio, and the Fed should continue cutting rates to support the economy.
🇬🇧 The UK bond market had an unusually good performance in October, with gilts posting their best monthly gains in almost two years. The recent rally has been driven by softening inflation data and increased bets on rate cuts, with money markets pricing in 60 basis points of reductions over the next year.
📉 The upcoming November budget is also helping gilts, as expectations of potential tax hikes and spending cuts fuel bets that it will hurt economic growth.
📊 However, UK bond yields follow a similar graphical pattern to those of France and Germany, indicating a clear over-heating since 2022, which if continued could bring us to levels similar to those of the 2012 debt crises that hit Europe. The graphical patterns for US bonds are different.
🔥 New waves of inflation would eventually trigger these upward movements in yields, making bonds less attractive, given the need for higher rates. According to The Telegraph, the UK’s national debt has grown at the fastest rate of any advanced economy and now stands at nearly £3 trillion, equivalent to 100% of GDP. The surge highlights mounting fiscal pressures amid high borrowing costs and slowing economic growth.
🏦 The BoE’s most recent rate cut in August only passed by a 5-4 margin, indicating growing divisions on the Monetary Policy Committee. While some analysts now expect a rate cut due to softer inflation and wage data, a narrow majority of economists polled do not expect the BoE to move before 2026.
🥇 Gold prices dropped below $4,000 an ounce after China announced changes to its tax rebate policy for some gold retailers. China will no longer allow some retailers to offset a value-added tax when selling gold they bought from the Shanghai Gold Exchange and Shanghai Futures Exchange.
💰 The tax changes in China, gold’s heaviest consumer nation, will dent global sentiment and could lead to a deeper correction in gold prices after last month’s spike. Under the new policy, only major banks, refineries and fabricators who are members of the Shanghai exchanges can fully offset the value-added tax when selling gold as investment products.
🌍 Geopolitics.
🛢️ China would be taking the energy surpluses that the European market can no longer buy from Russia under US sanctions. Russia’s LNG exports in January-October 2025 fell by 3.4% from the same period in 2024, reaching 25.2 million metric tons (mmt). However, exports jumped 21% to record levels in October 2025, driven by the launch of supplies from the Arctic LNG 2 project.
🚢 Exports from Novatek’s Yamal LNG plant grew by 8% in October 2025 compared to the prior year, and were up 17% from the previous month, though year-to-date volumes were down 6%. The Sakhalin-2 project, controlled by Gazprom, increased exports by 10% year-on-year in October 2025 to 0.98 mmt.
⚔️ Donald Trump warned that there could be U.S. airstrikes and military boots on the ground in Nigeria, citing the killing of Christians in the country. He stated, “Record numbers of Christians in Nigeria are being killed. There are other very bad countries in that part of the world where they’re killing Christians in very large numbers. We’re not going to allow that to happen.” His remarks suggest possible U.S. military involvement to address religious persecution in the region.
📊 Market View.
📉 Markets are retreating slightly from last week’s highs. Mini S&P 500 futures are trading around 6,875 points, near the all-time highs reached on Wednesday. Nasdaq 100 futures remain above 26,000 points.
💵 The DXY dollar index has surpassed 99.50 and now stands at 99.75, heading toward the 100-point mark. This is weakening other currencies against the dollar, with EUR/USD trading below 1.1550, currently at 1.1537.
🇪🇺 In Europe, DAX 40 futures continue to show weakness, trading at 24,065 points, while EuroStoxx 50 futures have pulled back since last Wednesday but maintain an upward trend, currently at 5,670 points.
🛢️ Crude oil appears to be returning to pre-October volatility levels, with Brent crude trading above $65 per barrel.
🥇 Gold has reclaimed the $4,000 per ounce level and is rising toward new resistance around $4,035.
💻 Bitcoin is retreating again toward the $107,500 zone, closing out October with no net progress.
