Market Report.
🇨🇳 We start the week with data from the Chinese economy.
📉 China’s deflationary trend persists. The PPI index, published on Sunday, showed a decline of -2.1%, better than the expected -2.3%, though still in negative territory. Inflation was also expected to register 0%, but instead entered positive ground at 0.2%. At first glance, these results can be interpreted as somewhat positive, as they may indicate an improvement in economic activity.
🏦 However, the deflationary pressures on the Chinese economy are not yet over, and the government may need to implement additional demand-side policies to spur growth. Policymakers have refrained from aggressive stimulus so far, but analysts are divided on whether the central bank will implement further easing measures, such as interest rate cuts, by the end of the year.
💰 Bloomberg’s analysis of prices for 67 everyday items showed that 51 of them dropped in price over the past two years, indicating that official inflation measures may not fully capture the reality on the ground. The deflationary pressure is broad-based, with more than 25% of listed Chinese companies reporting losses in the first half of 2025 – the highest share in at least a quarter of a century.
🏭 Multinationals operating in China are also caught in the downdraft, with companies like Apple, Starbucks, Volkswagen, and luxury brands reporting sharp sales declines. China risks becoming mired in a Japan-like economic stagnation.
⚙️ China has suspended a ban on approving exports of certain “dual-use items” related to gallium, germanium, antimony and super-hard materials to the United States. The suspension takes effect from Sunday, November 7, 2025 until November 27, 2026. China had originally announced the ban on these exports in December 2024.
🤝 This move by China appears to be a concession to the U.S. government, potentially as part of ongoing negotiations or efforts to ease tensions between the two countries.
🔌 China’s commerce ministry has announced that it is granting exemptions to its export controls on chips produced by Nexperia for civilian applications. This move is intended to ease supply shortages faced by carmakers and automotive suppliers globally. These export curbs had been imposed following the Dutch government’s seizure of Nexperia on September 30, citing concerns that the Chinese owner, Wingtech, planned to move European production to China in a way that threatened European economic security.
🚚 Reports from manufacturers in Germany and Japan indicate chip shipments from Nexperia’s China production have recommenced. This development followed a high-level meeting between U.S. President Donald Trump and Chinese President Xi Jinping on October 30, after which China began accepting exemption requests.
🇺🇸 End of government shutdown in US? A group of moderate Senate Democrats have agreed to support a deal to reopen the record-breaking U.S. government shutdown, which is now nearing an end. The deal would provide full-year funding for the Departments of Agriculture, Veterans Affairs, and Congress, while funding other agencies through January 30.
📅 While this deal represents progress, it falls short of the goals of Democratic leaders, who had demanded an extension of expiring Obamacare subsidies and a repeal of Medicaid cuts. It remains to be seen whether Congress will come to a longer-term agreement on extending the Obamacare subsidies before they expire at the end of December.
🔄 The approaching resolution mirrors past government shutdown showdowns, where the party attempting to leverage the closure for policy wins ends up without a major victory. The shutdown has already cost the U.S. economy an estimated $18 billion and reduced the quarterly GDP growth rate by 1.5 percentage points.
📉 The government shutdown has resulted in a lack of official labor market data, so alternative data sources are the only way to gauge current conditions. Several metrics show the U.S. job market is slowly advancing, with a sharp slowdown in hiring and scattered signs of rising layoffs. ADP reported that companies added only 42,000 jobs in October, while Challenger, Gray & Christmas announced 153,074 job cuts – the highest October level in 22 years.
📊 The Indeed job postings index fell further last week to its lowest level since February 2021, and Homebase data showed a 2.9% decline in small business employment and hours worked.
⚖️ Policymakers like the Chicago Fed president see a fairly stable job market, though the lack of inflation data is complicating their decisions on further interest rate cuts.
🇲🇽 Mexico’s annual inflation decelerated in October, rising 3.57% compared to 3.76% in the previous month, roughly in line with economists’ forecasts. Despite inflation remaining within the central bank’s target range of 3% +/- 1 percentage point for the fourth consecutive month, analysts and policymakers have adopted a cautious tone.
📈 Analysts expect a rebound in annual inflation in early 2026 due to the effects of tax increases, including a planned 12% minimum wage increase and the imposition of tariffs on imports from non-FTA countries. The central bank (Banxico) lowered its benchmark interest rate by 25 basis points to 7.25% on Thursday, citing ongoing weakness in Mexico’s economy and expectations of moderate growth with persisting slack conditions.
💵 Banxico is expected to match the U.S. Federal Reserve’s interest rate actions, taking the reference rate to 7.00% by the end of 2025 and then to 6.50% by the end of 2026.
🌍 Geopolitics.
📺 In response to accusations that the national broadcaster deceived viewers by altering Donald Trump’s comments in a documentary last year, BBC Director-General Tim Davie is leaving the organisation. Deborah Turness, the head of news, also resigned, and the BBC is anticipated to issue an apology today for the deceptive film.
🇭🇺 Hungarian Prime Minister Viktor Orban claimed he reached an agreement with US President Donald Trump to provide a “financial shield” to protect Hungary’s economy if it comes under speculative attack. However, a US fact sheet about the meeting did not mention any such promise, and White House officials did not immediately respond to requests for comment.
💬 Orban portrayed Hungary as potentially at risk, despite the Hungarian forint trading at its highest level against the euro since May 2024 and the opposition Tisza party holding a double-digit lead in some polls. The opposition Tisza party has vowed to roll back Orban’s nationalist policies and access frozen EU funds if elected, amid a stagnant economy, corruption allegations, and a cost-of-living crisis in Hungary.
🏛️ Orban insists that the EU is using the funding freeze to punish Hungary for its political stance, including opposition to sending of billions of European funds to finance the war in Ukraine. He has been the only leader in Europe to launch a tour with visits to the US and Russia to achieve an end to the conflict. Ukraine has attacked energy infrastructures in Hungary and Slovenia, but the EU has not spoken out on this, despite being full members of the EU.
🇪🇺 Europe faces a choice driven by its war policy against Russia: push toward a centralized EU with risk of mass Eurexit, or delay crisis via schemes that will harm the economy and society. The EU must decide whether to use frozen Russian sovereign assets as collateral for a €140 billion “reparation” loan for Ukraine, or issue joint Eurobond debt.
⚖️ Both options carry major legal risks and costs: using Russian assets exposes EU states to lawsuits and retaliation; Eurobonds impose immediate taxes and austerity, risking political unrest and breaching EU treaties.
💣 The SAFE defense loan program, worth €150 billion, was approved without full European Parliament input, leading to legal and political challenges. The Commission is accused of broadening its powers under Article 122 TFEU to push through these financial schemes, raising fears of a “structural coup” and threatening constitutional order in the EU.
📘 Issuing Eurobonds without unanimous member state approval would violate treaties, threaten sovereignty, and force unpopular fiscal burdens on citizens.
🕊️ Syrian president Ahmad al-Sharaa, former ISIS and Al-Qaeda commander arrives in the United States, set to be the first time a Syrian president visits the White House. Believe it or not, the man who once had a $10 million bounty on his head for crimes ended up playing basketball with US officials.
📜 Jeffrey Epstein played a documented role in brokering talks and arranging meetings between the Israeli government and Côte d’Ivoire, ultimately contributing to the signing of a formal defense agreement in 2014. Leaked emails—disclosed by the hacking group Handala and published by Drop Site News—show Epstein acted alongside former Israeli Prime Minister and Defense Minister Ehud Barak as a conduit for Israeli intelligence-linked firms to engage with Ivorian leaders.
📈 Market View.
📊 The US market manages to maintain the upward trend established since the summer, despite last week’s declines. S&P 500 futures are attempting to recover levels above 6,800 points, while Nasdaq 100 futures are trying to reach 25,500 points.
💵 The DXY dollar index has retreated from last week’s high of over 100.30 to its current level of 99.55. This has given some relief to pairs such as EUR/USD, which has recovered to 1.1550 and is currently trading at 1.1572.
📈 In Europe, futures have opened in positive territory. DAX 40 futures are rising toward 24,000 points, currently trading at 23,975, while EuroStoxx 50 futures have moved above 5,650 with marked optimism, posting gains of more than 1.5% at the moment.
🛢️ In the crude oil market, there have been no major moves, with Brent crude trading around $64.15, close to last week’s levels.
🥇 Gold starts the week with strong gains, trading above $4,080 per ounce—surpassing the highs of the past two weeks.
🪙 Bitcoin is also rising in this wave of optimism, moving away from the key $100,000 level and climbing to $106,450 at present.
