Global markets spent the week juggling a live U.S. federal shutdown, a political shock in France, leadership turbulence in Japan, heavy travel-and-spend signals out of China’s Golden Week, and a clutch of European datapoints that kept recession chatter alive. Add a record-setting run in gold and a light-touch OPEC+ supply tweak, and you had a cross-asset tape driven more by policy and politics than by the usual data deluge.
Global picture — the dominant flows
- Haven bid, duration bid. Intensifying policy uncertainty and patchy U.S. data boosted demand for safe havens. Gold broke to fresh highs while long-end government bonds caught a supportive bid as markets nudged rate-cut odds higher for late Q4.
- Energy steadying, not spiking. OPEC+ opted for only a modest production increase for November. The message: a preference for balanced inventories into winter, not an aggressive pump that would upset prices.
- Trade and growth tone. Global trade watchers leaned cautious on 2026 after a front-loaded 2025, with AI-hardware demand cushioning near-term volumes but not fully offsetting cyclical softness elsewhere.
United States — shutdown mechanics and the Fed’s signal
- Shutdown weeks 2–3: The federal funding lapse kept distorting the calendar, delaying or limiting several releases and complicating nowcasts. The administration moved to ensure key federal pay streams continued, reducing immediate spillovers but not the headline risk.
- Labor and activity proxies: In the absence of a full data run, investors leaned on high-frequency series and private trackers, which suggested a mild softening in claims and activity.
- FOMC minutes (September): Published midweek, the minutes reinforced a cautious, data-contingent easing path. With CPI timing uncertain, markets treated the minutes as the primary policy anchor.
Europe — politics in France, hard data in Germany, mixed demand elsewhere
- France’s shock-and-rethink: A resignation and rapid re-appointment of the French prime minister early in the week widened OAT–Bund spreads and dented risk sentiment before stabilizing. The episode underscored fiscal and parliamentary fragilities into year-end.
- Germany’s industrial hiccup: August industrial production fell sharply, led by autos, while factory orders also declined. The combination pointed to a sticky capex and manufacturing drag into Q4.
- Eurozone consumption & sentiment: Retail sales showed a small month-on-month rise, enough to suggest stabilization rather than acceleration. The Sentix survey improved in October, hinting at calmer risk psychology despite U.S. headline noise.
- UK signals: Construction PMI remained in contraction territory, and house-price momentum cooled on the Halifax measure—consistent with tighter financing conditions and buyer caution.
Asia-Pacific — leadership volatility in Japan, China’s Golden Week, and an easing surprise
- Japan politics: Leadership developments inside the ruling party dominated the Monday open and injected a bout of volatility across JPY, JGBs, and equities as investors debated policy continuity and the reform pace.
- China’s Golden Week: Travel volumes were massive—hundreds of millions of trips—and total spend was strong, albeit with a value-conscious skew. September FX reserves rose, reinforcing currency-stability optics even as domestic demand remains two-speed.
- New Zealand’s dovish turn: The RBNZ surprised markets with a 50 bp rate cut and an explicit easing bias, putting smaller open economies on a faster-than-Fed trajectory and pressuring NZD and front-end rates.
Markets — how it translated
- Rates/FX: The U.S. curve bull-flattened at times as shutdown anxiety and dovish-lean minutes met thin data. In Europe, weak German prints supported duration; EUR traded on a tug-of-war between better sentiment surveys and softer hard data. JPY traded politics-to-policy headlines; Antipodean rates cheapened on the RBNZ pivot.
- Commodities: Gold set new records on the policy/politics trifecta. Oil steadied as OPEC+ signaled continuity rather than shock. Base metals took their cues from China’s travel-heavy, margin-light consumption mix.
- Credit & equities: Quality balance sheets and defensives outperformed late in the week. Cyclicals were sensitive to Germany’s hard data and China’s consumer mix, while AI-infrastructure beneficiaries continued to track the capex story rather than macro noise.
What mattered most (investor takeaways)
- Policy vacuum → haven premium. A live U.S. shutdown and European political jitters turbo-charged the bid for gold and high-quality duration.
- Germany’s industrial downdraft. Auto-led weakness in output and softer orders complicated the euro area’s Q4 growth map and capped EUR strength.
- China’s “busy but value-driven” demand. Golden Week proved mobility is back, but spending patterns stayed price-sensitive—good for volume plays, less so for premium discretionary.
- A dovish outlier emerges. The RBNZ’s 50 bp cut flagged that smaller open economies may ease earlier and faster, creating relative-value opportunities across DM rates and FX crosses.
FAQ
Did the U.S. publish all the usual data?
No. The shutdown disrupted parts of the official calendar. The FOMC minutes became the de facto policy guidepost for the week.
Was France’s political drama market-relevant?
Yes. It widened French spreads, hit local risk assets, and reminded investors that fiscal passage risks remain live into year-end.
How weak was Germany, exactly?
Industrial production posted a steep monthly fall, led by autos, and orders also slipped—signaling a tougher manufacturing backdrop into Q4.
Did China’s Golden Week rescue sentiment?
Partly. Mobility and total spend were strong, but behavior skewed value-conscious. It supports “volume over margin” narratives more than premium upgrades.
Any central-bank surprise?
Yes. The RBNZ’s larger-than-expected cut, alongside an easing bias, set a more dovish regional tone versus the Fed/ECB.
Conclusion
Last week was a policy-and-politics story first, a data story second. The U.S. shutdown and French political shockpulled capital into havens, Germany’s industrial slip reinforced a cautious European growth view, China’s Golden Week validated demand in volume terms, and the RBNZ reminded markets that easing cycles won’t be synchronized. Into mid-October, expect the tape to trade acutely around policy headlines and the handful of U.S. releases that still print on time.
Disclaimer
This publication is for information purposes only and does not constitute investment advice, an offer, or a solicitation to transact in any security, commodity, or derivative. Markets involve risk, including the potential loss of principal. Views reflect conditions as of October 12, 2025 (Europe/Berlin) and may change without notice.
