Daily Market Outlook, October 17, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Global markets took a hit as shares of US regional banks tumbled amid growing concerns over lending standards. Investors, seeking safety, turned to government bonds, while gold continued its impressive streak, heading for a seventh consecutive week of gains. A promising market rally, driven by yet another optimistic projection for artificial intelligence demand, lost steam as concerns over hidden financial vulnerabilities resurfaced. The unease was sparked by disclosures of bad loans from two regional banks.Zions Bancorp saw its shares plunge 13% after reporting a $50 million charge-off related to a loan issued by its California Bank & Trust division in San Diego. Similarly, Western Alliance Bancorp dropped 11% after acknowledging exposure to the same borrowers. These renewed worries about the banking sector emerged just days after the collapse of subprime auto lender Tricolor Holdings, which forced JPMorgan Chase & Co. to take a $170 million charge-off in the third quarter. This development led to higher credit costs for the bank and a cautionary note from CEO Jamie Dimon about mounting financial pressures. Adding to the tension, the situation unfolds against the backdrop of escalating US–China trade tensions and the uncertainty caused by the ongoing US government shutdown, which has delayed crucial economic reports.
The MSCI Asia Pacific Index dropped, with financial stocks bearing the brunt of the losses. US equity index futures also fell after Thursday's decline, and European are opening lower. Amid the turbulence, traditional safe-haven assets like gold and silver surged to record highs. Concerns about credit quality in the US economy, coupled with escalating US-China trade tensions, drove demand for these precious metals. Treasury yields continued their downward trend, with the two-year yield hitting its lowest point since 2022 and the 10-year yield dipping below 4%. The Dollar index weakened, while the Yen climbed past 150 against the Dollar. The Swiss Franc also gained ground.
In Japan, Bank of Japan Governor Kazuo Ueda hinted at the possibility of further policy normalization, stating that an interest rate hike could be on the table if confidence in the country’s economic outlook improves. Meanwhile, political developments added to the uncertainty, as the ruling Liberal Democratic Party (LDP) explored the possibility of forming a coalition with the opposition party Ishin. The outcome of these discussions remains uncertain, with a 50-50 chance of an agreement ahead of a crucial legislative vote to determine Japan's leadership.
Oil prices were on track for a third consecutive weekly decline as concerns over oversupply and renewed US-China trade tensions weighed on the market. Brent crude hovered around $61 per barrel as President Trump announced plans for a second meeting with Russian President Vladimir Putin. This raised speculation that increased production from OPEC+ members could worsen the global oil surplus.
In the UK, the weighted average gilt yield has fallen by approximately 20 basis points within just a week. This significant development is likely being closely monitored by the Treasury. Based on the timing of previous fiscal events, it is estimated that the ten-working-day observation window used by the OBR to assess gilt yields and other market variables for the fiscal forecast likely closed earlier this week. As a result, part of the decline in yields would have been captured, though not entirely, if our assumption about the observation window is accurate.This is important due to the impact it has on projections for debt interest payments over the OBR’s forecast horizon. To put it into perspective, the difference in shifting the observation window by just a few days could amount to as much as £3 billion, depending on whether the sharp drop in gilt yields is included. At this stage, it remains unclear exactly what dates the OBR selected, and therefore, how much influence this will have on the fiscal forecast. However, if the OBR is operating on a slightly later timetable than usual, capturing the lower gilt yields could reduce the Chancellor’s challenge of creating fiscal headroom by up to £3 billion. This, in turn, could slightly ease the burden of implementing tax increases.
Following a tumultuous week marked by steep losses and the disappearance of hundreds of billions in market value, Bitcoin has once again fallen short of its reputation as a "safe-haven asset." Often referred to as "digital gold," the cryptocurrency was anticipated to serve as a protective hedge during times of market chaos. However, instead of holding steady, it tumbled alongside global stock markets and credit sectors this week. In many respects, the Crypto decline has led the derisking dynamic witnessed over the past week.
As disruptions to the U.S. calendar persist, the spotlight falls on the delayed September CPI report from the Bureau of Labor Statistics (BLS) this Friday. This key data, crucial for indexing spending commitments, is expected to show headline inflation inching up to 3.1% year-over-year from 2.9%, while core CPI is projected to hold steady at 3.1% year-over-year.
Across the Atlantic, the UK’s economic releases are set to take center stage as well. The week kicks off with September’s public finance figures on Tuesday. While some recent discrepancies may be corrected due to VAT error revisions, the overall trend is likely to reveal a continued overshoot compared to the Office for Budget Responsibility’s (OBR) forecasts. With sluggish economic growth, government receipts could prove more fragile than expected. On Wednesday, UK inflation data is anticipated to show a slight uptick, with persistent issues in the services sector keeping pressure on prices. Additionally, we should see the long-awaited update on Producer Price Index (PPI) data, including the quarterly services measure that has been on hold since January. The week wraps up with retail sales data on Friday, where the broader trend remains weak despite monthly fluctuations.
On the global front, preliminary October manufacturing PMIs for major economies are due on Friday, offering fresh insights into industrial activity. Meanwhile, the speaker calendar begins on a quieter note, as many participants recover from jet lag following the Washington meetings. However, ECB President Christine Lagarde is scheduled to speak on both Tuesday and Wednesday, ahead of the central bank’s quiet period. Lastly, the Swiss National Bank (SNB) will release its first-ever public minutes on Thursday, marking a notable development in its transparency efforts.
Overnight Headlines
ECB’s Lagarde Says Europe ‘Well Positioned’ For Future Shocks
Closer UK–EU Ties Would Help Inflation Fight, BoE’s Greene Says
Fed’s Waller On Board For An Oct Cut, Miran Presses For Easing
Fed, FDIC Withdraw Climate-Related Financial Risk Standards
Banks Tap Fed Lending Facility In Sign Of Short-Term Market Strains
Goldman’s Waldron Cautions On Fallout From Credit ‘Explosion’
Trump Annouces Deal With German Merck On Tariffs, IVF Costs
Trump Finalises $1.6B Loan For Power Lines Initiated By Biden
CSX Revenue, Profit Fall Amid Lower Coal Prices
Interactive Brokers Logs Higher Profit As Trading Volume Climbs
Trump: Will Again Meet With Putin To Discuss End Of Ukraine War
Zelensky Hopes For Trump Decision On Tomahawks Tomorrow
Carney: NATO Can Flex Hard Power If Russia Breaches Airspace Again
Farage Says ‘Gotta Shoot’ Down Russian Jets In Harder Putin Line
Gold And Silver Hit Records On Credit Fears, US–China Tensions
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.1040 (EU1.94b), 1.1515 (EU1.46b), 1.1670 (EU893.6m)
USD/JPY: 150.46 ($1.06b), 152.00 ($784.2m), 175.00 ($704.4m)
USD/CAD: 1.4035 ($486.8m), 1.4000 ($458.1m), 1.3740 ($431.5m)
AUD/USD: 0.6540 (AUD529.4m), 0.6500 (AUD347.7m), 0.6460 (AUD325.1m)
GBP/USD: 1.3350 (GBP357.5m), 1.3250 (GBP332.3m)
EUR/GBP: 0.8700 (EU377.2m), 0.8800 (EU350m)
USD/MXN: 22.17 ($419.2m), 18.54 ($332m)
USD/BRL: 5.4850 ($309.2m), 5.5525 ($302.2m)
CFTC Positions as of the Week Ending 9/10/25
October 1, 2025: During the shutdown of the federal government, Commitments of Traders Reports will not be published
Technical & Trade Views
SP500
Daily VWAP Bearish
Weekly VWAP Bearish
Above 6440 Target 6800
Below 6700 Target 6400
EURUSD
Daily VWAP Bullish
Weekly VWAP Bearish
Below 1.17 Target 1.14
Above 1.1750 Target 1.1850
GBPUSD
Daily VWAP Bullish
Weekly VWAP Bearish
Below 1.34 Target 1.31
Above 1.35 Target 1.3580
USDJPY
Daily VWAP Bearish
Weekly VWAP Bullish
Below 150 Trgaet 148.5
Above 151 Target 154
XAUUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Above 4200 Target 4500
Below 4050 Target 3950
BTCUSD
Daily VWAP Bearish
Weekly VWAP Bearish
Above 106k Target 118k
Below 105k Target 100k
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!