Morning Macro 20th October
Equities and bond yields rallied marginally on Friday, while precious metals had a wobble (gold down -1.7%, silver -4.2%) but the markets still look uneasy amid growing worries about the credit health of regional US banks. While the tens of millions in fraud losses disclosed by Zions and Western Alliance pale next to the recent collapse of First Brands and Tricolor, they’ve reignited Wall Street’s debate over whether another era of easy money is facing a reckoning.
U.S. BANKS ARE NOW SITTING ON OVER $395 BILLION IN UNREALIZED LOSSES, MOSTLY FROM MARK-TO-MARKET WRITE-DOWNS ON BONDS AND SECURITIES — BLOOMBERG
New home prices in China (70 cities surveyed by NBS) fell 0.4% m/m in September based on Reuters calculations of NBS data, steepest decline in 11 months, following 0.3% drop in August. (Chart 1, @C_Barraud).
Meanwhile China’s GDP slowdown less than feared amid external demand boost. GDP growth eased to 4.8% YoY in Q3 (+4.7% expected), mainly supported by strong exports, while household consumption slowed and fixed investment fell for the first time since 2020. (Chart 1, @C_Barraud)
S&P has just downgraded France’s sovereign credit rating to A+ from AA–.
This surprise move is likely to add pressure on French bond spreads. Beyond raising borrowing costs and denting France’s economic standing, this highlights the need of deeper structural reforms to revive productivity and growth.
Korean stocks are set for their best year since the turn of the century. This market has been THE one this year globally, +56% YTD on the index.
Indian rupee is Asia’s worst-performing currency of 2025. Heading for its biggest annual drop since 2022. Especially tough given India imports about 90% of its crude.
Gold now accounts for over 20 % of global central bank reserves, the highest share we’ve seen in nearly three decades.
Institutional investors are all-in on stocks: Global managers’ cash allocation fell to 3.8% in October, the lowest in 12 years….Last week saw record weekly inflows to tech funds…. Net inflows to single stocks last week hit +$4.1 billion, the 5th highest since 2008, and the largest on record for a week when the S&P 500 fell at least -1%….. In September 2025, US investors took on another +$67 billion in margin debt bringing the total to a record $1.13 TRILLION…. Meanwhile hedge funds sold -$1.6 billion, posting their 5th consecutive weekly sale.
No key data today.
