Key focus this week is on the Fed (Wed), ECB (Thu) and BoJ (Thu) meetings. US-China trade relations will be closely followed with the nations’ leaders meeting this week, and we have a bumper week for tech earnings (Meta, Alphabet and Microsoft (Wed), and Apple and Amazon (Thu).
Today we have Germany IFO business climate and the US Dallas Fed manufacturing print. US consumer confidence and the Richmond Fed manufacturing are due on Tuesday. US pending home sales and the Fed’s expected 25bps cut follow on Wednesday. The ECB is expected to keep rates on hold, on Thursday. ECB President Lagarde’s press conference, eurozone GDP and unemployment figures will therefore garner market focus. China’s official manufacturing and non-manufacturing PMI’s hit the screens on Friday, and we also have eurozone CPI.
Amid a dearth of US economic data, and Fed blackout, markets tiptoed around corporate earnings reports, easing US-China trade tensions, and rhetoric from government policymakers. We ended the week with the US September CPI prints which surprised to the downside, underscoring the 25bps cut expected this week. Later the stronger-than-expected S&P Global PMI readings and the disappointing University of Michigan sentiment prints gave markets a bit to chew on.
Closer to home, the collapse of the US subprime auto lender Tricolor and the auto parts supplier First Brands prompted Bank of England Governor Bailey to raise “alarm bells” about the wider financial system, warning that these failures could be a “canary in the coal mine” for the opaque private credit market and drawing parallels to the lead-up to the 2008 financial crisis. He noted that complex loan structures in this non-bank lending sector were beginning to resemble the dangerous “slicing and dicing” of assets that preceded the previous crisis.
Elsewhere, China’s industrial profits surged 21.6% in September, the fastest growth in nearly two years, suggesting recent efforts to curb overcapacity and revive the economy are beginning to bear fruit. The rebound, driven by high-tech and equipment manufacturing, offers policymakers encouragement despite persistent headwinds including a property slump, weak domestic demand, and rising local government debt. Last week’s Fourth Plenary Session outlined seven priorities for the 15th Five-Year Plan (2026–2030), emphasising high-quality growth through stronger domestic consumption, technological self-reliance, and market-oriented reforms. Notably, the plan includes China’s first-ever target to significantly raise household consumption, signalling Beijing’s pivot towards demand-led growth with an implied medium-term GDP target of around 5%. Meanwhile, confidence in the renminbi appears to be improving, (in September 71% of households were more willing to sell foreign currency from 61% in August), suggesting stronger near-term support for the currency despite a firmer US dollar.
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