Macroeconomics: The Week Ahead: 13 to 17 October 2025

The Week Ahead – Preview: 

The level of complexity and ambiguity facing financial markets and real economy businesses continues to escalate, unleashing so many cross- and undercurrents as to make analysis at best tenuous, and the need to call out advocacy masquerading as analysis all the more imperative. While the tentative first steps to peace in Gaza is to be celebrated, it does little to resolve the numerous uncertainties facing businesses and consumers. The fact remains that the US govt remains in shutdown, and there are political crises from France to Japan, none of which look close to any form of resolution, above all in an age of antagonistic political narratives, which purposefully ride brutally roughshod over any form of debate that might lead to solutions. While there is a fog of uncertainty about the performance of the US economy building with every day that the government shutdown continues, the fact remains that pre-shutdown US data sent a host of conflicting messages, requiring nuanced interpretation, but fundamentally signalling that there has been no seismic or even dramatic shift in inflation, growth or employment trends (as yet) in the US or other major developed economies.

– USA China trade tension escalation – Shipping levies will be imposed by both the US and China as of tomorrow. As my good friend Uresh Perera neatly summarizes in his latest shipping outlook: “The combined impact of falling import volumes, higher regulatory costs, and inflation pass-through points to a more fragmented, cost-intensive shipping environment through 2026. Carriers and retailers face margin compression, route adjustments, and persistent policy risk as global trade rebalances under renewed protectionism.” The trade ‘war’ escalation signalled by the US threat of re-imposing 100% tariffs on Chinese goods, China’s introduction of export licenses for rare earths, US bans on exports of technology, and a further array of non-tariff barriers from both sides are obviously negative. Yet ambiguity abounds as China emphasized/clarified that it was not seeking to bar exports of critical minerals, but rather regulate them. On the US side, both the president and vice president talked up the chance of a major trade deal, even if this was couched in contingencies, and indeed sounding like the comments were primarily intended for their domestic business audience, though also posturing ahead of the still scheduled meeting between Trump and Xi on the sidelines of the November APEC meeting. On the China side, the inner workings of the ruling CCP remain eternally opaque to outside observers, but the language deployed in notices / announcements from the Foreign Ministry (under the aegis of President Xi) and those from the Commerce Ministry (MofCom) looks to be on a divergent path, the former amounting to geopolitical posturing, and the latter to a desire to ramp up negotiations with the US to achieve a or multiple trade deals – in other words symptomatic of an internal CCP power struggle. That power struggle owes everything to a misfiring Chinese economy, with Xi’s policies increasingly viewed by his political opponents as amplifying downside risks to the economy. This in turn puts a great deal of focus on next week’s annual Plenum of the CCP Central Committee, which is generally viewed as a ‘rubber stamping’ exercise for policy initiatives, as potentially signalling a shift both in power balances and policy making.

– US Govt shutdown/politics – the administration’s decision to start firing federal govt workers looks likely to harden positions on both sides of the political divide, making a resolution that much more difficult, as both sides indulge in a blame game, primarily motivated by ideology and a focus on next year’s mid-term elections. In France, the far right and far left remain determined to force parliamentary elections, and ideally (from their perspective) Macron’s resignation and early presidential elections, while the various more centrist parties are determined to try and avoid parliamentary elections, fearing large losses, but equally unable to fashion any form of 2026 budget compromise. In Japan, Komeito’s decision to abandon a 26 year coalition with the LDP leaves new elected LDP leader Takaichi with an enormous mountain to climb in terms of implementing any form of policy initiative, and the BoJ in an even more difficult position on rates, given the resultant slide in the JPY would normally be a decisive trigger for a further rater hike.

– IMF/World Bank autumn & G20 Finance Ministers meetings: The IMF & World Bank meetings will offer the usual barrage of global economic forecast updates and endless volumes of central bank speakers, with many trotting out downside risks to growth and employment, above all due to trade and security tensions and resource nationalism/supply chain risks, while also highlighting upside risks to inflation, while the G20 meeting will be another exercise in trying to ‘paper over the cracks’. Forecasts may well be upgraded for a number of countries for 2025, though 2026 outlooks may be shaded lower. Particular attention also needs to be paid also needs to be SEC officials appearing at the accompanying annual meeting of the IIF, above all in regard to upcoming/proposed changes to banking and market regulations, as well as those related to crypto/DeFi.

– The US Q3 earnings season officially kicks off on Tuesday with the usual array of financials leading the way, with Factset estimating the consensus for S&P 500 earnings growth at a healthy 8.9% (though below 5-yr average). But in contrast to Q2, revisions to EPS estimates have been higher overall, thus setting a higher bar for upside surprises, and all the more so given lofty valuations, above all in tech and related sectors. In respect of the latter, a close eye needs to be kept on an extension write down times for tech equipment valuations, which were a notable feature among some of the MAG7 reports (above all Meta) in Q2, this should probably be considered in the same way that revaluations accounting for ‘good will’ was viewed negatively by more critically minded analysts in the 1990s and 2000s.

– IMO meeting to decide on IMO Net Zero Framework adoption: the deep divide between the EU and the US on this is abundantly evident, with the US threatening UN members that vote to adopt the Framework not only with tariffs, but sanctions, fees and visa restrictions for officials, while various industry groups (above all oil) have voiced major concerns. This will be a major test of political will, as well as the path to decarbonization.

– IEA and OPEC monthly Oil Market reports are expected to see OPEC continue to sound an upbeat (and to a large extent self-serving) outlook for oil demand, while the IEA will stick with its expectations for a considerable and growing surplus. Neither organization nor anyone else really understands the motivations for China’s huge increase in storage related purchases of crude, nor when this might revert to a more normal demand related pattern, which could remove a key floor under oil prices, notwithstanding geopolitical risks.

– With US CPI delayed until 24 October, and the run of Retail Sales, Industrial Production and other official data postponed until the US govt shutdown is resolved, the only US statistical items on offer will be various surveys (US NY & Philly Fed, NAHB and NFIB). China’s trade data proved to be stronger than forecast, with exports to non-US destinations offsetting a 27% y/y fall in exports to the US, notably rises of 14%, 15.6% and 56.4% respectively to the EU, Asia and Africa. Imports were also stronger than expected, but the rise was driven by stockpiling (unsurprising given price weakness in a number of sectors) rather than signalling increased domestic demand. CPI and PPI are expected to signal somewhat less deflation at -0.2% and -2.3% y/y, but base effects above all in PPI will account for much of the improvement, with anti-involution (competitive price cuts) measures only set to be implemented as of mid-October. Credit Aggregates are forecast to show the usual end of quarter jump, but unlikely to disguise continued weakness in consumer and business loan demand, with the front loading of local govt borrowing earlier in the year softening the uptrend in Aggregate Social Financing. The UK’s BoE MPC remains deeply divided on the appropriate path for rates, this week’s labour and monthly GDP data and next week’s CPI should go a long way to swinging market expectations for November’s policy meeting. Average Hourly Earnings are seen unchanged on headline measures at 4.8 % and 4.7% y/y, though the Private Sector ex-Bonus measure is forecast at 4.5% y/y from 4.7%. Meanwhile HMRC Payrolls are again seen dropping a modest -10K, but attention needs to be given to Private Sector Employment, which essentially has been in some form of contraction in every month since December 2024. Monthly GDP is expected to eke out a gain of 0.1% m/m, after flatlining in July, paced by modest gains of 0.2% m/m in Industrial Production and 0.1% m/m in Index of Services. Elsewhere, Australian Unemployment, Indian CPI and Japan’s Factory Orders will also garner some attention.

– There are 35 S&P 500 companies reporting this week, with worldwide corporate earnings highlights as compiled by Bloomberg News likely to include: ABB, Abbott Laboratories, Aeon, America Movil, American Express, ASML Holding, Avenue Supermarts, Axis Bank, Bank of America, Bank of New York Mellon, Blackrock, Cambricon Technologies, Charles Schwab, China Tower, Citigroup, CSX, EQT, Fastenal, Fifth Third Bancorp, Fuyao Glass Industry, Goldman Sachs, Hangzhou Hikvision Digital Technology, HCL Technologies, Huntington Bancshares, Hygon Information Technology, Infosys, Interactive Brokers, Investor, Johnson & Johnson, JPMorgan Chase, JSW Steel, LM Ericsson, M&T Bank, Marsh & McLennan, Morgan Stanley, Nestle India, Nordea Bank, PNC Financial Services, Prologis, Schlumberger, State Street, Synchrony Financial, TSMC aka Taiwan Semiconductor Manufacturing, Travelers, Truist Financial, United Airlines, US Bancorp, Volvo, Wells Fargo, Zijin Mining