Global Economy & Markets, Weekly Roundup 27/10/25
Trade developments remain front and center, with US equity markets (S&P500, Nasdaq) breaking records
The MSCI ACWI index increased by +1.8% wow (+19% yoy in USD terms) on the back of strong corporate earnings, expectations for an imminent loosening of US monetary policy and signs that an easing of US-China trade frictions is being paved.
US Treasury Secretary Bessent cited on Sunday October 26th that a framework agreement in principle has been agreed upon by respective delegations, to be discussed in the upcoming meeting on October 30th, between Presidents Trump and Xi Jinping. The non-implementation from the US of recently announced extra tariffs of 100% on goods imports from China, a deferral from China of recent more stringent controls on exports of rare earths and a revival of China’s imports of soybeans from the US, appear to be parts of the agreement.
The S&P500 increased by +1.9% wow and appeared poised for further gains on Monday October 27th, with the Q3:2025 earnings season proceeding on a strong note. Corporate results will gather extra attention in the current week, as five of the “Magnificent-7” or c. ¼ of the S&P500 capitalization report (Microsoft, Alphabet and Meta on October 29th as well as Apple and Amazon on October 30th).
On monetary policy, the Federal Reserve is expected to lower its policy rate by -25 bps to a target range of 3.75% - 4.00%. Attention will also turn to the forward guidance, both for the FFR and the Quantitative Tightening (QT) process, as Chair Powell has recently noted that QT is probably approaching its end in coming months.
September’s US CPI did not materially influence the outlook for the upcoming interest rate decision. Both the headline and the core US CPI came out at +3.0% yoy from 2.9% yoy & 3.1% yoy, respectively, in August, modestly below consensus estimates which pointed to +3.1% (for both). US Treasury yields were little changed after the CPI report (10-year: roughly stable on a weekly basis at 4.00%).
The ECB is expected to stand pat on October 30th (2.0%), as inflation is roughly in line with the official target. Note that October’s CPI is due on October 31st, with consensus expecting an increase of +2.1% yoy (NBG estimate: 2.0% yoy). At the same time, the first preliminary estimate for Q3:2025 real GDP, due on October 30th, with consensus for a muted growth of +0.1% qoq to be maintained (NBG estimate: 0.0% qoq).
Euro area PMIs entered Q4:2025 on a stronger than expected note, with the composite PMI rising by +1.0 pt to 52.2 in October, a joint-highest since May 2023. Output in both manufacturing (+0.2 pts to 51.1) and services (+1.3 pts to 52.6) stood clearly in expansionary territory. In addition, the relatively more forward-looking component of new orders led the improvement, at its highest since April 2023 at the composite level.
Notably, France substantially underperformed, with the composite PMI decreasing by -1.3 pts to 46.8, as political uncertainty weighed (German composite PMI: +1.8 pts to 53.8). On October 24th, Moody’s maintained its credit rating for France at Aa3, albeit changing the outlook to “negative” from “stable” previously, in view of the political situation casting doubt on the prospect of substantial fiscal consolidation. OAT-Bund yield spreads were roughly unfazed (80 bps at the 10-year tenor) by the latest credit rating action.
The MSCI ACWI index increased by +1.8% wow (+19% yoy in USD terms) on the back of strong corporate earnings, expectations for an imminent loosening of US monetary policy and signs that an easing of US-China trade frictions is being paved.
US Treasury Secretary Bessent cited on Sunday October 26th that a framework agreement in principle has been agreed upon by respective delegations, to be discussed in the upcoming meeting on October 30th, between Presidents Trump and Xi Jinping. The non-implementation from the US of recently announced extra tariffs of 100% on goods imports from China, a deferral from China of recent more stringent controls on exports of rare earths and a revival of China’s imports of soybeans from the US, appear to be parts of the agreement.
The S&P500 increased by +1.9% wow and appeared poised for further gains on Monday October 27th, with the Q3:2025 earnings season proceeding on a strong note. Corporate results will gather extra attention in the current week, as five of the “Magnificent-7” or c. ¼ of the S&P500 capitalization report (Microsoft, Alphabet and Meta on October 29th as well as Apple and Amazon on October 30th).
On monetary policy, the Federal Reserve is expected to lower its policy rate by -25 bps to a target range of 3.75% - 4.00%. Attention will also turn to the forward guidance, both for the FFR and the Quantitative Tightening (QT) process, as Chair Powell has recently noted that QT is probably approaching its end in coming months.
September’s US CPI did not materially influence the outlook for the upcoming interest rate decision. Both the headline and the core US CPI came out at +3.0% yoy from 2.9% yoy & 3.1% yoy, respectively, in August, modestly below consensus estimates which pointed to +3.1% (for both). US Treasury yields were little changed after the CPI report (10-year: roughly stable on a weekly basis at 4.00%).
The ECB is expected to stand pat on October 30th (2.0%), as inflation is roughly in line with the official target. Note that October’s CPI is due on October 31st, with consensus expecting an increase of +2.1% yoy (NBG estimate: 2.0% yoy). At the same time, the first preliminary estimate for Q3:2025 real GDP, due on October 30th, with consensus for a muted growth of +0.1% qoq to be maintained (NBG estimate: 0.0% qoq).
Euro area PMIs entered Q4:2025 on a stronger than expected note, with the composite PMI rising by +1.0 pt to 52.2 in October, a joint-highest since May 2023. Output in both manufacturing (+0.2 pts to 51.1) and services (+1.3 pts to 52.6) stood clearly in expansionary territory. In addition, the relatively more forward-looking component of new orders led the improvement, at its highest since April 2023 at the composite level.
Notably, France substantially underperformed, with the composite PMI decreasing by -1.3 pts to 46.8, as political uncertainty weighed (German composite PMI: +1.8 pts to 53.8). On October 24th, Moody’s maintained its credit rating for France at Aa3, albeit changing the outlook to “negative” from “stable” previously, in view of the political situation casting doubt on the prospect of substantial fiscal consolidation. OAT-Bund yield spreads were roughly unfazed (80 bps at the 10-year tenor) by the latest credit rating action.