Morning Brew October 20 2025

Good Morning,

First day back after three  weeks, it was certainly an interesting time:

 Equities

U.S. equities touched new highs in early October on continued AI enthusiasm and solid earnings expectations before reversing sharply when President Trump imposed 100% tariffs on Chinese imports. The S&P 500 lost 2.7% on October 10, and the Nasdaq fell 3.6%, marking one of the steepest single-day declines in months.  Right now wea re at 6690 in the US500 and 24940 for the US tech 100.  European markets proved choppy—France’s CAC 40 reacted to political instability but seems surprisingly resilient at less than 100 point from the  all time high while Germany’s DAX reached new records on industrial resilience before retreating to 24000 .  Japanese equities continued their record climb, contrasting with heavy selling in Chinese and Hong Kong stocks under renewed chip export controls. The Nikkei is certainly celebrating th e first female prime minister after WW2

 Fixed Income and Credit

Bond markets stayed largely rangebound despite macro shocks. U.S. 10‑year Treasury yields hovered near 4.0%, reflecting haven flows after tariff headlines. Credit spreads widened materially—U.S. high-yield risk premiums hit 282 basis points, their highest since August, signaling renewed risk aversion. In Europe, widening France–Germany yield spreads (around 85 bps) highlighted sustained political risk.

Commodities

Precious metals erupted to record levels as traders piled into gold and silver amid equity stress. Gold nearly reached $4,400 per ounce, while silver topped $54, both driven by ETF inflows and short squeezes. Friday we saw some nerves and the big question is if we  saw the top or if this is another bump in the road. We are way beyond mmost traders wildest dreams – at  currently 4245 and  51.82. Oil remained subdued, with WTI below $62 and Brent near $65 per barrel, constrained by tepid demand and easing geopolitical fears.

 Currencies and Crypto

Safe‑haven currencies strengthened: JPY and CHF both rallied as risk sentiment soured, while USD momentum faded after mid-month peaks. China stabilized the yuan below 7.13 per USD, containing market jitters. Meanwhile, Bitcoin plunged to $114,700 after a $19 billion liquidation wave, but quickly stabilized as ETF inflows resumed.

 Macro and Earnings Outlook

Broader trends appear remain constructive underneath the volatility. Earnings revisions across the S&P 500 have surged to multi-year highs, with seven of eleven sectors showing net upgrades—an unusually broad signal of underlying profit momentum. This earnings resilience contrasts sharply with rising trade friction and scattered signs of global economic deceleration visible in the IMF’s October World Economic Outlook and stability report.[3][2][4]

 Key Questions for Traders

- Will the U.S.–China tariff confrontation escalate into a broader trade war, reigniting inflation and volatility?

- Can upcoming Q3 corporate earnings validate current valuations after AI-driven gains and a historic Q3 rally?

- Is gold’s breakout sustainable, or a speculative bubble vulnerable to yield rebounds?

- Will widening credit spreads foreshadow funding stress or merely reflect tactical risk hedging?

- Can central banks maintain dovish stances amid rising geopolitical risks and supply-side cost pressures?

How will Europe deal with the French crisis?

Key Events:

Oct 20 Mon: China Rate Decision, GDP
Zions, BOK Financial, Servis1st Bank, HBT Financial

Oct 21 Tue: Canada – CPI
Coca Cola, GE Aerospace, RTX; 3M, GM, Northorp Gruman, Netflix, TI, Mattel, Capital one, EastWest Bank,

Oct 22 Wed: UK – CPI
Hilton, AT&T, ThermoFisher, Tesla, IBM, Texas Capital Bankl, SAP, Alcoa, Knight,

Oct 23 Thu: US - Initial Claims, Home Sales, Canada Retail Sales, EU Consumer confidence
American Airlines, Honeywell, Intel, Newmont, Ford,

Oct 24 Fri: UK - Retail Sales  Japan CPI, UK Retail Sales, International PMI, Eurozone - Markit Manufacturing PMI, US CPI & PMI

P&G,