Written Commentary
The Ghost in the Machine Q3 2025
October 6, 2025
- Regular macro inputs still heavily subordinated to trade and other political risks; digesting UK RICS House Price survey, Japan PPI, Sweden GDP and Norway CPI; busier day for central bank speakers and corporate earnings; China property sector resolution meeting speculation
- Risk appetite robust but underlying array of risks only accumulating
EVENTS PREVIEW
As the US threatens a 50% tariff on Brazilian imports in order to force an end to the trial of former Brazilian president Bolsonaro, and copper markets continue to reel from 50% tariffs as of 1 August, trade wars remain the primary focal point. But this increasingly ideological political non-trade related imposition of tariffs underlines the very sorry state of international relations, as well as further undermining international trust in the USA.
The day’s ‘regular’ macro schedule is sparse with Japan’s PPI, the UK RICS House Price survey, Norway’s CPI and Sweden’s monthly GDP to digest ahead of nothing more than US weekly jobless claims and Brazil’s IPCA inflation. A busier day for central bank speakers follows the Bank of Korea’s expected rate hold decision, with rate cuts expected in Egypt and Serbia. A busier day for corporate earnings has a robust preliminary report from chip behemoth TSMC, along with Fast Retailing, Seven & i & Tata Consultancy Services, with the US looking to Conagra Brands and Delta Airlines.
However, speculation about a once in a decade meeting next week in China to discuss a major initiative to resolve its long standing property crisis will likely be the major talking point outside of trade tensions. While risk appetite remains ostensibly robust, the imbalances in the US equity market rally are all too clear; the underlying risks for markets from sovereign debt loads, impaired market reaction function, thin summer trading volumes and little visibility on the economic outlook remain very real. Even if the roller coaster ride in markets in H1 2025 has prompted many portfolio managers to shift their hedging strategies, imbalances remain, though those that drove the USD’s weakness are now much reduced.
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