Back and forth on trade

Daily update

Financial markets have been pushed around by trade, again. This time the reaction has been positive, as the US seems to have moved away from its more antagonistic position towards China. While the back and forth over trade has certainly done some economic damage, equity markets have reacted more dramatically than the real economy.
China’s third-quarter GDP slowed, but by a little less than expected. While trade uncertainty added volatility, the pattern of stockpiling has varied across sectors. China continues to trade normally with most of the world, and has undoubtedly managed to avoid some of the tariffs. There is no reason to suppose China’s official GDP will miss the official GDP growth targets this year.
New reports on Friday suggested that Italy is about to increase its flat rate tax on wealthy foreigners, again. This pattern of behaviour is to be expected. Global wealth is at record-high levels, and must be considered a tempting target for governments with high debt levels.
The US government shutdown is now the third-longest in history, but there is the prospect of September consumer price data being published on Thursday. Large swathes of government spending automatically increase in line with the consumer price index, and the number needs to be calculated.

20 Oct 2025

Back and forth on trade

Financial markets have been pushed around by trade, again. This time the reaction has been positive, as the US seems to have moved away from its more antagonistic position towards China. While the back and forth over trade has certainly done some economic damage, equity markets have reacted more dramatically than the real economy.

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