China reported a GDP growth rate of 4.8% year-on-year, broadly in line with expectations but slightly below the government’s 5% target. Growth momentum remains slower than in previous quarters, reflecting impact from tariffs and continued pressure from weak domestic demand and a sluggish property sector.

With the data release, investors are again speculating that Beijing could roll out fresh stimulus measures during the upcoming four-day policy meeting, potentially including targeted support for infrastructure, credit easing, or measures to revive consumer confidence.

Markets: rebounded after last week’s sell-off

• China stocks rallied on the numbers

My View: China as number two economy with a higher growth rate should not be ignored. The economic path, policy moves and diplomatic signals continue to influence global markets. However, expectations should remain realistic. China’s leaders have consistently favored gradual, targeted adjustments over broad, aggressive stimulus.

The by end of this month scheduled Trump–Xi meeting could provide a short-term boost with positive rhetoric or a tariff pause. Yet, failure to reach a deal or renewed tariff threats could quickly dampen market sentiment and trigger another bout of volatility.

Markets are shaken by renewed fears of a brewing credit crisis. What started with the bankruptcies of a two auto-related companies in the US has now rippled through the global financial system.
Memories of the 2023 banking turmoil, marked by the collapse of regional lenders and the rescue of Credit Suisse, are quickly revived.
While the large global banks appear well capitalized and stress tests remain reassuring, markets are increasingly questioning whether these isolated “one-offs” are truly isolated.

In Asia and Europe, shares mirrored the US sell-off. Safe-haven assets like the Swiss franc and gold gained. Volatility spiked, with the VIX moving above the 20-level, signaling a rise in market nervousness.

Markets: global markets in the red

• Global equities sell-off

• Gold with new all-time high in direction to USD 4’400/oz

• Bond yields broadly lower with credit spreads rising - the US 10-year Treasury yield at 3.95%, falling first time below 4% since September 2024

• US dollar falls

• Cryptos see heavy losses

• Volatility sees a spike

My View: The key question: are these small dominoes heavy enough to topple the next one? For now, major banks remain solid, but confidence can shift quickly if headlines multiply.

Financial stress rarely emerges overnight. It builds quietly until one event tips the balance. While current incidents still appear contained, they serve as a reminder of how fragile parts of the credit system remain after years of cheap money.

From an investor’s and market’s perspective, the bigger risk in the short-term may not lie in the banks themselves but in forced liquidations. Highly leveraged funds or investors running “all-in” strategies might now be forced to unwind positions, amplifying volatility across asset classes.

In the ETFMandate portfolio I am “short” in US and European banks.
The positions got established this year during the months March to June. Obviously they do not have a positive performance, but are now kicking in and could pay-off should the dynamics emerge.

Fears about the health of the banking industry are spreading after a string of loan-related shocks in the US. The latest wave began with the bankruptcies of First Brands and Tricolor Holdings, both tied to the auto sector.

Today, shares of regional banks and investment bank Jefferies slumped as more signs of credit stress emerged. The focus quickly shifted to Zions Bancorp, which disclosed a sizable charge due to bad loans to a few borrowers, prompting an independent review.

Then Western Alliance reported potential fraud by one of its borrowers, further unsettling investors, even though the bank reaffirmed its guidance and 2025 outlook.

Analysts warn that while these may look like isolated cases, the clustering of such events is raising broader questions about hidden risks in the lending system, particularly in the private credit space. As one market strategist put it:

“Even if exposures are limited, investors tend to sell first and ask questions later — especially when credit fears rise.”

Markets: the news causing a sell-off and spike in volatility

• Global equities and Futures down

• Gold with new all-time high over USD 4’300/oz

• Bond yields broadly lower

• US dollar falls

• Cryptos see losses

My View: was never the question if, but when we would see a pullback. After the recent rally, it was quite obvious that the day was near. The only question now is whether this will remain a short-lived shakeout — or become the trigger point for a broader correction.

That depends largely on the behavior of speculative capital. In recent months, every small dip has been met with “buy the dip” enthusiasm. But speculators’ cash reserves are getting stretched, and cryptos, often labeled as “safe” during crises, are now losing ground sharply. That reduces margin buffers for leveraged investors and could even trigger forced selling via margin calls. If that spiral starts, it can unwind markets fast and painfully.

It’s also notable that the credit story is back. With rising interest rates, the risk of companies struggling to service debt was always the elephant in the room. The bull market and the AI mania simply pushed it out of focus.

As followers of ETFMandate know, I viewed the recent euphoria, particularly in AI-linked names that rallied on mere investment announcements, with increasing skepticism. At the end of the day, it’s not about what I believe, but what the market believes. Still, when conviction fades, risk must be reduced.

That’s why I’ve cut long positions substantially since May, except commodities as one of my key exposures, and increased short positions over the past two weeks, especially in AI-related and crowded trades.

Tensions between the US and China escalated once again after President Trump threatened a cooking oil embargo in response to Beijing’s refusal to purchase US soybeans. This latest move adds fuel to the already heated trade rhetoric seen in recent weeks, following China’s decision to limit rare earth exports, a critical resource for many US industries.

The tit-for-tat measures mark a clear re-emergence of the trade war narrative that had been dormant for some time. While global trade data had recently shown some improving signs, political tensions are once again clouding the outlook for cross-border supply chains and commodities supply.

Markets: higher volatility - markets remain resilient

• Global equities most trading positive

• Gold with new all-time high over USD 4’200/oz

• Bond yields falling broadly except the long-term yields in the US up to 4.04% from 4.0%

• US dollar is weaker again

• Cryptos: Bitcoin stabilized over USD 110’000

My View: The combination of solid bank earnings and lingering rate-cut optimism keeps markets broadly supported for now. Yet, the reappearance of trade war rhetoric is a reminder of how fragile sentiment remains.

Volatility has been rising since the first tariff threats resurfaced. This warning signal should not be ignored. If volatility remains elevated, quant driven managers like CTA (Commodity Trading Advisor) programs and other risk-budgeted systematic strategies could be forced to quickly unwind leveraged long positions to remain within defined risk limits. Such technical selling could amplify short-term market swings and lead to sharper drop of indices.
Another risk seen end of last week, is one similar the washout in Altcoins. Investors had significant losses in a very short timeframe of minutes. Are investors leveraged, they could be forced to liquidate immediately their equity investments due to margin call.

For the ETFMandate portfolio, I added more short positions in the recent days, at the same time staying invested in defensive positions with long-term investment horizon together with commodities and miners. I remain highly alerted to rising volatility and potential spillover risks from the renewed trade tensions.

The third-quarter earnings season begins this week, traditionally led by the US banking sector. Major players like JPMorgan, Wells Fargo, Citigroup, and Goldman Sachs will release their results on Tuesday, followed by Bank of America and Morgan Stanley on Wednesday.

Markets: investors nervous taking some profit or staying on the sidelines

• Global equities most trading negative

• Gold with new all-time high over night

• Bond yields falling broadly

My View: Overall, it’s a rare sight in recent weeks, investors showing signs of nervousness at these lofty market levels, just as the first earnings reports are about to roll in. After the latest rout over the weekend, they seem to be suddenly caught by renewed uncertainty, shifting from aggressive buyers to a more cautious, wait-and-see stance, even with some profit taking.

These first reports could set the tone for market sentiment. The ongoing US government shutdown is expected to delay key macroeconomic data releases, including this week’s inflation figures, leaving investors without crucial guidance from the Fed’s usual data points.
As a result, corporate earnings and even more important, the forward guidance from management, will take center stage.

This shift in focus could trigger significant market reactions: disappointing numbers or guidance might lead to sharp sell-offs in the stocks or even sector, while stronger-than-expected results could ignite another wave of optimism.
For now, markets are in a wait-and-see mode, but volatility could return quickly once the first big numbers hit the screens.

China returned to the spotlight. This morning, the latest trade data came in well above expectations. ccording to China’s customs authority, exports rose 8.3% year-on-year (est. 6.0%), up from 4.4% the previous month, while imports increased 7.4% YoY (est. 1.5%), accelerating from 1.3% in August.

The strong data, however, was definitely overshadowed by renewed trade tensions late last week. After China announced new limits on rare-earth exports on Thursday, US President Donald Trump responded on Friday evening with plans to impose an additional 100% tariff on all Chinese imports, effective November 1, on top of existing duties.

Over the weekend, Trump shifted tone once again. In a Sunday post on Truth Social, he wrote:

“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment... The U.S.A. wants to help China, not hurt it!!!”

He added that the November 1 deadline was “an eternity,” though he could advance it if China “takes further actions.”

Markets: after Friday’s sharp sell-off, markets stabilized over the weekend and rebounded on Monday.

• China markets opened lower - Futures rebound during US trading hours

• Gold with new all-time high, over USD 4’100/oz

• Bond yields moving sideways after Fridays drop to 4.03% on the US 10-year

• US dollar tend sideways with increased intraday swings

• Volatility index (VIX) started to ease after the spike on Friday

My View: I already highlighted the TACO trade with the announcement of the the news, “Trump Always Chickens Out.” The cycles are now well known: Each cycle follows the same pattern: bold tariff threats, a wave of market panic, and then a quick rhetorical reversal.

Markets may overreact in the short term in either ways. The question will be whether this marks the start of a new tariff cycle or just another negotiation tactic.
Either way, volatility is back, and investors should prepare rather than ignore it.

Last week’s moves also served as a reminder of how a sharp and lasting sell-off could unfold if sentiment were to truly turn.

The market saw record inflows into equities during the last weeks. A significant share of that money was recorded into technology-focused funds. According to the latest figures from Bank of America, equity funds recorded inflows of USD 26 billion last week alone, while the cumulative inflow into listed equity funds over the past three weeks reached USD 152 billion, the largest three-week inflow ever recorded.

The data also shows that the rally is driven by highly enthusiastic retail investors despite already stretched valuations and a cooling institutional appetite.

Markets: equities remain buoyant with first signs of nervousness

• US indices continue to rise

• Commodities: rally takes a pause after big gains - Gold gaining back the USD 4’000/oz level

• Bond yields moving lower with US 10-year Treasury yield at 4.10%

• US dollar loses ground after dead cat bounce

• Volatility index (VIX) signals calm markets

My View: As highlighted in earlier posts, AI is driving a profound transformation, not only from a technological standpoint but also in investor behaviour.
The collective optimism, rapid reaction, and strong appetite for technology stocks have made retail investors the new market drivers, setting the tone for sentiment and short-term momentum.

However, when markets depend too heavily on sentiment, fragility increases. For me, this is a clear signal of rising risk and the mounting potential for a broader correction.
Should momentum turn, many of these highly leveraged retail portfolios could face forced liquidations, amplifying downside pressure once the crowd starts to exit.

In the ETFMandate portfolio, I continue to ride the commodity rally, maintaining my conviction that a correction in the technology sector could be imminent and may drag broader markets lower.
Momentum can persist longer than many expect. But retail-driven rallies often end as abruptly as they begin once sentiment shifts with a fall-out of new buyers.

Federal Reserve Chair Jerome Powell is set to speak today at 2:30 pm CET, just one day after the publication of the FOMC minutes from the September meeting.
Nothing new by now:
- the Fed is deeply divided over how far and how fast to cut interest rates as the balance of risks has shifted
- growing signs of economic and labor market weakness
- persistent inflation pressures
- overall cautiously dovish tone

Market expectations lean toward more cuts this year.

Markets: continue the rally despite uncertainties

• US indices are trading on record highs

• Gold takes a pause after recent strong move

• Bond yields slightly up with US 10-year Treasury yield at 4.13%

• US dollar moves sideways

• Volatility index (VIX) remains subdued

My View: I do not expect any major announcement in today’s speech. Without the latest jobs data, Powell simply lacks the evidence needed to justify a change in tone or policy stance.

Yet a deeper question is beginning to surface: how independent is the Federal Reserve current environment?
This question is not answered by few independent investors, but by how global markets perceive the Fed’s autonomy amid political pressure and missing economic data.

If that independence were to be called into question, the consequences could be immediate. Investors might respond by selling US Treasuries, pushing yields sharply higher and unsettling broader markets.
In a world already on edge between optimism and uncertainty, even the perception of diminished Fed independence could be enough to spark a wave of volatility.

Gold is shining brighter than ever, trading above USD 4’000 per ounce for the first time in history. The move underscores renewed investor demand for tangible assets amid political gridlock and persistent uncertainty around fiscal policy.
The US government shutdown has entered its eighth day, with no sign of progress in Washington as lawmakers remain deadlocked over spending priorities.

Commodity markets are seeing broad strength: silver, platinum, copper, and palladium are all advancing, the recent weeks mainly driven by speculative trading in combination with fueled supply concerns and expectations of sustained demand from industrial and energy transition sectors.
Mining stocks are among the day’s outperformers, benefiting from the commodity tailwind.

Markets: remain resilient

• US indices are hovering near record highs

• Gold and metals are rising simultaneously

• Bond yields are holding steady

• US dollar strengthened

• Volatility index (VIX) remains subdued

My View: Gold’s breakout above USD 4’000 marks a psychological turning point. Historically, such milestones often coincide with a broader shift in sentiment, from denial to acceptance that inflation and fiscal imbalances are here to stay. While AI and tech narratives continue to dominate equity headlines, the rally in real assets tells a parallel story: one of investors quietly hedging against long-term instability.

The combination of record equity prices, a stalled government, and surging gold is unusual, and not sustainable in the long run. Something will have to give.
Either growth catches up with valuations, or markets will face a reality check once fiscal and monetary limits are tested or in case earnings will disappoint. This could lead to a sharp shift in investor sentiment.

For now, ETFMandate portfolio is well positioned in the commodity sector with investments in global, gold and rare earth miners as well as direct exposure to commodities like gold, silver, copper and platinum.

After such a strong run, some profit taking could make sense should the up-trend stall.

In Japan, Sanae Takaichi won the Liberal Democratic Party’s leadership election last weekend, positioning her to become the country’s first female prime minister.
Markets reacted swiftly and positively, buoyed by expectations of renewed fiscal stimulus and a weaker yen supporting exporters.

In Europe, meanwhile, France is once again facing political turbulence. Prime Minister Sébastien Lecornu abruptly resigned on Monday, less than a month into his term and only 14 hours after presenting his cabinet. President Macron has given him until Wednesday to form a new cabinet, underscoring the fragility of France’s political landscape.

Markets: opposite reactions

• Japan: equities surged around 5 %, led by export-oriented stocks, while bond yields climbed and the yen weakened further as investors priced in a more expansionary fiscal policy.

• France: The CAC 40 index fell nearly 2 %, and French bond yields moved higher, reflecting rising political risk and the addition of a risk premium to sovereign debt.

My View: With limited economic data available, partly due to the US government shutdown, and the earnings season yet to begin, political developments have taken center stage in driving short-term market sentiment.
Typically, politics act only as temporary market movers. Yet in the current vacuum of hard data, they have become the dominant narrative.

In Japan, expectations of a large fiscal push could clash with already elevated public debt levels, potentially putting upward pressure on borrowing costs. A weaker yen may provide support to exporters, but given the market’s rally to record highs, I prefer to stay cautious and refrain from new active positions in the region for now.

In France and across Europe more broadly, the challenges run deeper. The continent faces a confluence of political, economic, and market headwinds. As discussed in my blog article “Europe – The Struggling Candidate”, I see little room for meaningful upside and expect the negative momentum to persist — slowly but steadily.
Within Europe, I maintain a selective approach, focusing on valuation discipline and sustainable dividend yields rather than broad market exposure.

The US government enters its second day of shutdown with a deepening political gridlock. Prediction markets currently see the shutdown lasting nearly two weeks, broadly in line with history. Bank of America data shows the average government shutdown since 1990 has run its course in about 14 days. The S&P 500, meanwhile, has historically gained about 1% in the week before and after such episodes

Yesterday, despite the shutdown released ADP private payroll report showed a decline of 32’000 jobs versus expectations for a 45’000 gain. Today, markets face the risk of a data blackout if the shutdown persists. Key reports from the Bureau of Labor Statistics may not be released on schedule. That would leave the Federal Reserve “flying blind” just as inflation and labor market signals are diverging.

Markets: shrugging of all negative news across the globe

• Global equity indices trading all in the green

• US Bond yields slightly up after yesterday's drop with the 10-year yield at 4.12%

• US dollar tending sideways

• Gold prive moves below the USD 3’900/oz level

• Cryptos join the risk-on mode with Bitcoin price back close to 120’000 level.

My View:

Markets seem turbocharged by FOMO (“Fear Of Missing Out”) trading on autopilot, dismissing the shutdown, shrugging off weaker jobs data, and continuing their march higher. This underscores that markets rarely see shutdowns as more than short-term noise. History supports this resilience: shutdowns are rarely market-moving events.

The rosy narrative dominates, despite economic data shows some reddish flags. Much of the future success is already priced in today. Political dysfunction and global turmoil are treated as background noise.

This detachment can last longer than many expect, but when momentum finally meets an unwelcome surprise, the adjustment could be sharp. For now, the shutdown is little more than a headline, and the market remains turbocharged.

The US government has officially entered its first shutdown in nearly seven years — and the third during Donald Trump’s presidency. Democrats and Republicans have shown no signs of resolving their deadlock.
Roughly 750,000 federal workers are at risk of furlough, including employees at the Bureau of Labor Statistics. That means September’s crucial jobs report, scheduled for release this Friday, will likely not be published.

Markets: remain calm and shrugging of the event

• US equity Futures slightly negative

• US Bond yields saw only a brief jump and trading lower now

• US dollar lost and now on the rise

• Gold new highs almost touching USD 3’900/oz

• Crypto prices higher based on the event news

My View: Another government shutdown is hardly unprecedented, markets have learned to treat these events as temporary disruptions rather than existential risks. The last major shutdown in late 2018 stretched for 35 days, the longest in US history. That episode ultimately produced only modest lasting economic damage
The true impact lies not in the shutdown itself but in the data blackout it creates. With the Bureau of Labor Statistics furloughed, the September jobs report may not be available. This leaves the Federal Reserve “flying blind” at a critical juncture, where inflation risks and labor market weakness are pulling in opposite directions.

For now, investors are ignoring the noise, riding the ongoing AI-driven momentum trade. But this complacency could be tested if the shutdown is lasting longer. The missing data could feed uncertainty into the Fed’s next decision cycle.
With the September turbocharged rally the equity valuation feels increasingly disconnected from fundamentals.

Shutdowns rarely move markets in the short run. But with a longer shutdown and the absence of reliable data may well become the story, pushing volatility higher once investors realize they are navigating without instruments and put their focus back on the real facts on valuations. Soon the earnings season will kick-off and gives a next indication.

Republicans and Democrats remain at an impasse over federal funding, raising the threat of a shutdown just as the 2026 fiscal year begins.
The top four congressional leaders are scheduled to meet with Donald Trump at the White House on the eve of the deadline. Without a short-term spending bill, federal funding will expire, forcing the government to shut down.

Such an outcome would immediately disrupt the release of critical US economic data. From job market data to inflation reports, the flow of statistics the Federal Reserve relies on to calibrate monetary policy could be interrupted.

Markets: More signs of resilience

• US equities: AI-momentum trade continues

• US Bond yields down

• US dollar loosing ground against major currencies

• Gold new highs now above USD 3’800/oz

• Crypto prices climb with regained risk-on mode

My View: Another potential US government shutdown is hardly breaking news. We’ve seen this movie before, and markets usually shrug it off. The risk is not the shutdown itself but the data blackout it could trigger. Key economic data may be delayed, leaving the Fed “flying blind” at a moment when inflation risks and labor market weakness are pulling policy in opposite directions.

For now, investors couldn't care less. The AI-driven momentum trade picked-up again after last week’s brief pause. The narrative has taken on the shape of a perpetuum mobile:
- AI providers (e.g., OpenAI) require massive cloud capacity.
- Cloud providers (e.g., Oracle) in turn buy chips from semiconductor leaders like Nvidia.
- Chipmakers reinvest into AI ventures, fueling the next cycle.

Round and round it goes, a feedback loop that, by definition, cannot last indefinitely. Still, the rally continues to defy logic and valuation gravity. As long as investors and speculators remain convinced by this narrative, or “brainwashed” by it, markets will likely keep pushing to ever more exuberant levels.

Federal Reserve Chair Jerome Powell said Tuesday that weakness in the labor market is now outweighing concerns about stubborn inflation, leading to last week’s decision to cut the Fed’s key interest rate. Powell noted that recent job growth has slowed sharply, averaging only around 25,000 per month over the past three months. “The downside risks to employment have risen,” he warned.

Powell further emphasized that equity valuations appear “fairly highly valued” and stressed there are no guarantees for lower interest rates going forward — policy decisions will remain data-dependent.

The next key releases are due this week: jobless claims on Thursday and the Fed’s preferred inflation gauge, the PCE price index on Friday. Both could significantly influence expectations for further easing.

Markets: US markets take a pause

• US equities: the rally seems to take a pause

• Gold is holding firm below latest record highs

• Bond yields tending sideways

• Crypto prices advance slightly

My View: Markets are, once again, choosing to focus on liquidity and rate cuts while overlooking the Fed’s explicit warnings. Powell’s remarks highlight a delicate balance: inflation has not been fully defeated, while the labor market is deteriorating more rapidly than many expected. This could still lead into a stagflation scenario.

By stressing both the weak job market and no guarantees on rates, Powell is signaling that investors may be too complacent. The divergence, between Fed caution and market exuberance, creates a fragile setup. Short-term momentum may still carry equities higher, but valuations are stretched and policy risks are rising. The next 48 hours could be decisive: fresh jobless claims and PCE inflation could either validate the optimism or serve as a wake-up call.

Last week, the Federal Reserve (Fed) delivered a quarter-point rate cut, sparking renewed enthusiasm across equities. Investors are now speculating on further easing, with attention shifting to Fed Chair Jerome Powell’s upcoming remarks.

However, there is a wide dispersion of views within the Fed: 19 members in total, 10 support two rate cuts by year-end, 9 argue for one cut, none or even higher rates.

For 2026, the Fed projects a single quarter-point reduction, while traders are pricing in two to three more rate cuts next year. This highlights a clear gap between market expectations and a significantly more conservative guidance by Fed.

Markets:

• US equities: S&P 500, Nasdaq, Dow, and small-caps index at record highs.

• Gold on record high with the gold price currently trading at USD 3’770/oz

• US 10-year yields climbed from 4.0% to 4.15% in less than a week

• Cryptos negative performance since the Fed’s move

My View: Wall Street is walking a narrow path — between resilience and denial. The rally reflects confidence in the Fed’s support and in technology’s transformative momentum, with Nvidia and AI peers driving sentiment.

Yet, investors appear willing to ignore significant risks: political instability, tariffs, and the possibility that Powell may dampen expectations. September’s strong performance, despite its seasonal reputation for weakness, adds to the sense of complacency.

History reminds us that markets often display peak confidence just as caution is most warranted. The current surge looks less like recognition of fundamentals and more like denial of looming risks. Inflation and labor market data will be decisive for the Fed’s next steps, and any shift in tone — or renewed geopolitical flare-ups — could quickly destabilize this fragile equilibrium.

Last night the Bank of Japan (BoJ) sent out some hawkish tone, even the BoJ left its policy rate unchanged at 0.5%, in line with expectations. But, the central bank delivered an unexpected signal on policy normalization, announcing plans to begin gradually selling down its enormous holdings of equity ETFs, valued at more than 75 trillion yen (around USD 508 billion).
BoJ accumulated the funds as part of its monetary easing program that ended last year.
In a further hawkish sign, two board members dissented, voting for a rate hike. The 7–2 split keeps the door wide open for a possible increase at the next meeting in late October.

Markets: Japan assets take some hit.

• Japanese equities reacted negatively: the Nikkei 225 Future slid more than 1.6%.

• Bond yields climbed, with the 10-year JGB yield rising to fresh highs above 1.64%.

• The yen saw some intraday volatility but settled with modest up-moves against major pears

My View: The market impact from the planned asset sales will likely remain limited, given the BOJ intends to sell only around JPY 330 billion (USD 2.2 billion) annually. Still, this shift removes a key tailwind: instead of persistent buying support, markets will face a subtle drag from steady selling.

More importantly, is another message: we are no in the same post-financial or pandemic crisis regime where all major central banks pushed rates lower in unison. The global landscape is fragmenting — some central banks are easing, while others, like the BOJ, are preparing to normalize. For investors, this means a more nuanced and selective approach is required when deciding where to allocate capital.

I do not intend to allocate exposure to the Japanese markets in the near future.

Tonight, all eyes are on the Federal Reserve. Consensus expects a 25bps cut, bringing the Fed Funds rate down to 4.25%.

Markets: a nine-day winning streak ended yesterday

• Nasdaq Futures trading flat

• US 10-year yield is slipping towards 4.0%

• US dollar continues to drop (against Swiss Franc below 0.79)

• Gold: pulled back after reaching fresh record highs above USD 3’700/oz.

• Cryptos: Moving largely sideways.

• Volatility: The VIX index remains at low levels.

My View: Markets are extremely positioned going into the decision. Positioning data shows big bets, highlighted by an increasing and unusually high put/call ratio. A major institution even went so far to recommend their clients add exposure before the Fed’s announcement. That’s a surprising call, given the backdrop: we are coming off an eight-day winning streak in equities, the speculative sentiment is running hot, such an environment increases the likelihood of a setback, especially around a key policy event.

The press conference with Jerome Powell will be the interesting to follow. Investors will parse every word for clues about the future easing path. A 25bps cut is already priced in, what matters is the guidance.

Could this turn into a classic “buy the rumor, sell the fact” moment? With sentiment extreme, a take-profit wave following the announcement would not surprise me.

After a quiet weekend and a mixed set of economic headlines, investors show little hesitation in continuing the Tech Party.
France got a downgrade by Fitch to A+ from AA- with a stable outlook, following latest political challenges in combination with the budget.

In China, the economic data with retail sales and industrial activity came in lower as analysts expected while house prices continue to slid.

Markets:

• Equities: Most major indices are trading higher.

• Bonds: Yields move lower across the board.

• FX: The US dollar hovers near recent lows.

• Commodities: Gold extends its rally, climbing more than +1% together with other metals and oil.

• Cryptos: do not extend their latest up move

My View: Momentum may well carry markets into midweek, and possibly beyond. The real test could be on Wednesday, when the Fed announces its rate decision and outlines the outlook. The market is expecting a dovish cutting path. Until then, investors appear happy to ride the wave, brushing aside underlying risks in favor of speculative momentum.

Consumer sentiment further deteriorated in September, reaching its lowest level since May. The University of Michigan’s preliminary reading of its Survey of Consumers fell to 55.4, well below the 58.1 expected by economists and down from 58.2 in August.

While inflation expectations remained stable, they are still elevated: year-ahead inflation was seen at 4.8%, unchanged from August but above July’s five-month low of 4.5%.

Markets: investors ignore negative data

• US equities mostly up led by tech

• US 10-year yield quickly touched 4.08%

• Gold: continues its uptrend trading around USD 3’650/oz

• US dollar: regains some ground

• Cryptos: follow the risk on stance

My View: This combination of weakening sentiment and sticky inflation highlights the challenging backdrop for households, as purchasing power remains pressured and confidence subdued.

Despite the negative signal, equity indices remain supported by speculation of policy easing, with traders betting that the Federal Reserve will prioritize growth risks over inflation persistence.

Markets are ignoring negative data points and trading as if the consumer slowdown does not matter. This is a sign of speculation, where short-term positioning outweighs fundamentals. History has shown that such disconnects often increase fragility — when sentiment finally shifts, corrections can be sharp.

The August CPI came in mixed: headline prices rose 0.4% MoM (above 0.3% expected) but annual inflation held at 2.9%, in line with forecasts. Core CPI matched estimates at 0.3% MoM / 3.1% YoY.

Yesterday’s softer PPI and a jump in jobless claims (263k vs. 235k expected) reinforced expectations that the Fed will cut rates next week. Markets see a 25bps cut as certain, with a 50bps cut still on the table.

Markets: Investors rate speculations continue

S&P 500: trading at record highs

• US Futures gain 0.2%

• US 10-year yield quickly touched 4.0%

• Gold: a quick bounce before giving up some gains of recent days

• US dollar: heading south

• Cryptos: give up most of their intraday gains

My View: The Fed’s balancing act continues. Inflation isn’t fully conquered, but some cracks in the labor market are becoming more visible. With the PPI cooling and jobless claims jumping, the central bank seems to have the cover it needs to ease.

A quarter-point cut is almost locked in; a half-point remains a wild card. Markets are pricing in the best-case scenario, hoping for easing policy and expecting a cooling inflation. With this speculation, the rally might have room to continue. However, with such speculative bets, the risk of disappointment is rising.