Global News Summary: 6 - 10 October 2025

The week of 6–10 October was dominated by escalating U.S.–China trade tensions, a prolonged U.S. government shutdown, and fragile global politics. Trump’s tariff threats drove the sharpest U.S. equity selloff since April (S&P 500 –2.7%, Nasdaq –3.5%), but safe havens like Treasuries and gold (breaking $4,010/oz) rallied. Europe struggled with French political chaos and German industrial collapse, while Japan braced for leadership transition under Sanae Takaichi. Inflation signals diverged, with U.S. services slowing, Japan showing resilient household spending, and Germany hitting 2005-level production lows. AI valuations drew bubble warnings even as mega-deals (OpenAI–AMD, Nvidia stake sales, OpenAI $500B valuation) reinforced sectoral exuberance. Despite turmoil, fund flows showed hedging, not panic, suggesting markets remain liquid and in “rotate, not retreat” mode.

United States (USD)

• Shutdown & Politics: Government shutdown stretched into its second week, delaying economic data releases. Trump hinted at health-care subsidy talks with Democrats to resolve the deadlock. He also threatened a 25% tariff on imported trucks (effective Nov 1) and a “massive increase” in tariffs on China, rejecting a meeting with Xi.

• Markets:

  • Oct 10 selloff: S&P 500 –2.7%, Nasdaq –3.5%, Dow –1.9%, VIX jumped to 22.

  • Gold surged past $4,000/oz for the first time; 10Y UST yield fell 8 bps to 4.06%.

• Macro Data:

  • ISM Services contracted for the first time since the pandemic.

  • Private data showed sluggish hiring and modest pay gains.

• Fed Minutes: “A few” officials wanted to keep rates on hold, highlighting inflation concerns even as swaps markets priced another 0.25% cut in October.

United Kingdom (GBP)

• Industry & Politics: UK steelmakers warned of their “biggest crisis” as the EU prepared steep 50% global steel tariffs, a larger threat than U.S. measures. The Conservative opposition pledged deep welfare and civil service cuts.

• Monetary Policy: BOE’s Bailey said Britain must raise investment to capture AI-led growth.

• Inflation Outlook: BOE’s Breeden and Mann warned inflation could peak near 4% in September, with household savings climbing to 10.7% in Q2, reflecting consumer caution.

Eurozone (EUR)

• France: Macron’s government faced a deepening crisis; former PM Philippe urged him to quit. Outgoing PM Lecornu scrambled for coalition deals to prevent snap elections.

• Germany: Industrial production collapsed to its lowest since 2005, with car output plunging 18.5% MoM. Government revised growth to 0.2% in 2025, 1.3% in 2026, supported by fiscal stimulus. Bundesbank’s Nagel urged common EU defense spending via joint debt.

• ECB Signals: Lagarde said inflation targets were nearly in sight, with growth recovery expected in 2026.

Japan (JPY)

• Leadership: Sanae Takaichi became ruling party leader; markets priced a “Takaichi trade” of fiscal stimulus.

• Macro:

  • Household spending rose 2.3% YoY in Aug (4th straight gain).

  • Wages slowed to +1.5% YoY in Aug (vs. Jul +3.4%), highlighting cost-of-living strain.

• Markets: Stocks hit record highs; yen weakened to 149.50/$. BOJ watchers saw rate hike more likely in December than October due to political transition.

China (CNY)

• Trade Tensions: Trump’s threats sparked sharp risk-off moves.

• Macro: Industrial profits in Aug rose 20.4% YoY, but PMI stayed in contraction (49.8 in Sep).

• Sectoral Impact: Qualcomm faced a Chinese antitrust probe; Tesla’s Shanghai sales rose.

Australia & New Zealand (AUD, NZD)

• Australia:

  • Home prices rose 0.8% MoM in Sep, strongest in nearly two years.

  • Household spending gains supported a firmer AUD; AMP flagged positive rate gap vs. U.S.

• New Zealand:

  • RBNZ cut rates by 50 bps to 2.5%, open to further easing.

  • Consumer confidence rose to 94.6 in Sep.

AI & Technology

• Mega Deals:

  • OpenAI agreed to buy tens of billions in chips from AMD, potentially taking a 10% stake.

  • Nvidia insiders sold $1B+ CoreWeave shares; Nvidia still valued OpenAI at $500B.

• Corporate Moves:

  • AI tie-ups: Fujitsu–Nvidia, Hitachi–OpenAI.

  • Anthropic released new coding AI; IMF & BOE warned of bubble-like valuations.

  • Microsoft folded AI subscription into Office; Meta acquired Rivos chip startup, and pledged chatbot data use for ads.

• Valuation Concerns: IMF, BOE, and strategists compared AI momentum to late-1990s dotcom exuberance.

Debt, Inflation & Recession Risk

• Global Curves: Yield curves steepened across U.S., UK, EZ, Japan — suggesting reflation expectations, not recession.

• Inflation Divergence:

  • U.S.: PCE in line, core at 2.9% YoY, services weak.

  • Eurozone: German CPI accelerated to 2.4% in Sep, French/Italian CPI remained below target.

  • UK: Shop price inflation rose to 1.4% in Sep; BOE warned of sticky inflation.

  • Japan: Persistent inflation noted despite soft wages.

• Recession Watch: While the Fed maintained caution on jobs, bond markets whispered optimism, and strategists saw corrections as technical, not structural.

The week underscored the clash between politics and fundamentals. Trade-war rhetoric triggered global selloffs, yet liquidity remained ample with massive flows into equities, bonds, and cash. Yield curves steepened globally, suggesting reflationary momentum rather than contraction. AI exuberance faced its first real test as valuations cracked under macro stress. Markets remain caught between Fed caution on labor weakness and a bond market that insists the cycle isn’t over.