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Morning Macro 21st October
The Nasdaq and gold both make new all-time highs while yields edge lower, with the U.S. 10-year now trading below 4.00% at 3.97%. Also, the OIS is now pricing 51bp cuts by year end (last meet Dec 10th) so starting to sniff out the chance of a third cut.
The collapse of First Brands alone has triggered more than $4 billion in losses, hitting funds managed by Blackstone, PGIM, Franklin Templeton, CIFC, and Wellington. Yet, despite these setbacks, leveraged loan issuance surged to a record $404 billion in the third quarter of 2025, pushing the overall market to an estimated $2 trillion in size. (Chart 1, Pitchbook LCD, LSTA)
Total size of the global private credit market:
2007: $300B
2025: $3–4T ($2T US)

This time it’s different! (Chart 2, @topdowncharts)

UK government borrowing in the financial year to September 2025 was £99.8 billion; this was £11.5 billion, or 13.1% more than in the same six-month period of 2024!
Japanese yen falls as Takaichi wins key vote to become next prime minister, Japan’s first female PM.
Bitcoin/Nasdaq correlation faltering (Chart 3, Bloomberg)

The ratio of margin debt to money supply is higher than at any time except February and March 2000. – (Chart 4, Cypress Capital)

No key data today.

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.

Trump said he spoke with Putin in what he called a “very productive” call about ending the war in Ukraine. He plans to meet Zelenskyy today at the White House and hold an in-person meeting with Putin in Budapest to push for a possible peace deal.
Confidence in currencies has collapsed: cash allocation for institutional investors is down to its lowest since 2013, at 3.8%. Just buy gold!
Another day, another all-time high for Gold that peaked above $4376/oz (Graph 1, Bloomberg). The precious metal has added over $11 trillion in market value in 2025 alone, bringing its total worth to $25 trillion. Silver followed too, at a new all-time high of $54.45/oz.
Will the S&P go down? Investors are already cashing in profits. According to BofA Securities, last week investors sold $3 billion, with hedge fund managers leading – selling on a 4-week average basis reached $2.1 billion, bringing the weekly unwinds to the largest on record, dating back to 2008! Even retail investors are cashing right now, with outflows at $500 million last week!
Good week for bonds! The 10-year US Treasuries are trading below 4% to their lowest in 6 months! German bonds also opened higher on Friday, as European trading reflected the global bid for havens. The 10-year yield fell four basis points to 2.53%, the lowest since June. French bonds also rose, continuing their good week.
The US Treasury posted a $198 billion budget surplus in September – the largest on record for the month and nearly quadruple consensus estimates. Receipts surged to $544 billion, led by a jump in income and corporate tax payments, while outlays dropped to $346 billion. Customs receipts were at $30 billion, up more than fourfold from a year earlier due to Trump’s tariffs. Despite the strong close to the fiscal year, the FY2025 year-to-date deficit still stands at $1.78 trillion, only slightly below last year’s. (Graph 2, US Department of the Treasury)
Meanwhile, Bessent confirmed that he is planning on a $20 billion facility for Argentina to complement the existing $20 billion currency swap that was initially agreed with the two countries. Bessent added that the US would continue to support Argentina financially if Millee’s government pursues “good policies” regardless of the election outcome!

Data today: Euro Area inflation, Fed speeches

Morning Macro 16th October
UK Chancellor Rachel Reeves is setting the stage for a high-stakes autumn budget, signalling that taxes on the wealthy are firmly on the table. The move comes as the Institute for Fiscal Studies warns she may need to find as much as £40 billion to avoid what it calls a “fiscal Groundhog Day” next year – a grim cycle of fiscal shortfalls and patchwork fixes.
Meanwhile, UK GDP inched up 0.1% in August 2025, matching expectations and recovering slightly from July’s decline. The modest rebound was driven by a 0.4% rise in production output, led by manufacturing and energy supply, while services were flat for a second month. Construction slipped 0.3%, signalling still-fragile momentum despite resilient industrial activity.
Over in the US, the White House budget chief says more than 10,000 federal workers could be laid off during the government shutdown!
In Asia, China’s tightening grip on rare-earth exports continues to reverberate. The ECB’s Madis Muller cautioned that the move could stoke renewed price pressures across the euro area if supply shocks ripple through global markets.
Japan’s Finance Minister Katsunobu Kato has echoed that concern, urging coordinated G7 action to mitigate fallout. Across the Pacific, Scott Bessent hinted that Washington could extend its suspension of Chinese import duties if Beijing rethinks those export curbs – a clear sign of the policy chess now in play.
Central bank rhetoric remains in focus. In Tokyo, BoJ board member Naoki Tamura reaffirmed his hawkish stance, saying policy rates should rise toward 1%, arguing the current 0.5% setting is still well below neutral. Meanwhile, Fed official Stephen Miran admitted he’s yet to win over colleagues on the need for faster and deeper US rate cuts, despite signs of labour market softening. Now the interest rate differential between US and Japan is at its lowest in over 3 years and it still has room to go down, while its correlation with USDJPY continues its divergence. (Chart 1, Bloomberg)
USD weakness lingers post-Powell, with the 10-year yield steady near 4.00%. JGBs twist-flattened across benchmarks, the 2/30 curve holding at 222bps.

Gold continues its relentless climb, hitting a fresh high above $4,240/oz before easing slightly. ANZ now sees the metal reaching $4,400 by end-2025 and $4,600 by mid-2026 as rate cuts stack up. Silver too remains buoyant around $53/oz, up 14% this month amid razor-thin liquidity in London. Palladium hasn’t been left out in the recent parabolic rally across precious metals, but is the rally stalling? The MACD is rolling over, indicating bullish momentum is falling. (Figure 2, Bloomberg)
Data today: Italy inflation, Philly Fed surveys, Fed speak