Global DM 2026 W4 Recap
As geopolitical risks resurface with renewed trade war threats, can resilient economic data and strong corporate earnings prevent a market downturn?
(Apologies for I skipped the 2026 3rd weekly recap, I was on my vacation to Japan but I didn't notice in advance 😼)
Macro Overview
Global markets experienced a volatile, holiday-shortened week, initially impacted by renewed trade war fears following US tariff threats against European nations. However, market sentiment improved after President Trump softened his stance, leading to a recovery. Economic data showed stronger-than-expected US Q3 GDP growth, but inflation remained elevated. Labor markets showed stability, and consumer sentiment improved, though concerns about purchasing power and future labor markets persisted. Business activity saw a slight uptick, driven by manufacturing.
Policy Insights
US monetary policy remains focused on inflation, with the Fed's preferred PCE index staying above target despite stable jobless claims. The European Central Bank's stance is cautious, with Norges Bank holding rates steady. Geopolitical tensions, particularly US tariff threats and the EU Parliament's delay on the Mercosur deal, highlighted trade policy uncertainties. Japan's BoJ kept rates unchanged amidst political uncertainty and concerns over unfunded tax cuts, which spiked JGB yields. China's policy faces challenges from weak domestic demand and deflationary pressures, despite industrial growth driven by exports.
