The big three (October 2025)

1. Gold reaches unprecedented highs  

Gold futures surged to a record $4,000 per troy ounce on October 7th, marking the first time the precious metal has breached this milestone. The rally reflects a convergence of macroeconomic and geopolitical drivers that have reinforced gold’s appeal as a defensive asset. Weaker US economic data, most notably the recent soft jobs report, has intensified expectations that the Federal Reserve will soon accelerate its rate-cutting cycle, pushing real yields lower and thereby boosting demand for non-yielding assets, such as gold. Meanwhile, sustained central bank buying, particularly from emerging markets seeking to diversify reserves away from the US dollar, has provided a powerful tailwind. Geopolitical tensions in the Middle East and ongoing uncertainty regarding the global fiscal outlook have further heightened demand for safe havens. At the same time, investor inflows into gold ETFs and physical holdings have accelerated amid concerns over rising government debt burdens and potential currency debasement. The metal’s historic rise highlights growing investor unease about the durability of fiat currencies and long-term inflation pressures, even as headline inflation moderates, cementing gold’s role as a store of value in a period of policy and economic fragility.

2. US government shuts down 

The US government entered a shutdown on October 1st after Congress failed to agree on spending legislation for the new fiscal year. The deadlock stems from partisan disputes over fiscal priorities, including cuts to discretionary programs and foreign aid. As a result, around 900,000 federal employees have been furloughed, and many government departments, particularly those responsible for data and regulation, have halted key functions. The immediate consequence for markets is uncertainty. Financial regulators like the SEC have suspended most operations, delaying IPOs and fund launches, while crucial agencies such as the Bureau of Labour Statistics and the Census Bureau have paused the release of economic data. This means no official updates on jobs, inflation, or retail sales, leaving investors and policymakers effectively flying blind, although unofficial data sources do produce estimates for many of these statistics. Without fresh data, the Federal Reserve faces greater difficulty gauging economic momentum or confirming whether disinflation continues, complicating its interest rate decisions. Markets have largely shrugged off the news, with equities broadly stable, but bond yields are lower as investors seek safe-haven assets amid the uncertainty. 

3. Emerging markets stage a comeback  

Emerging market equities have staged a powerful rally in 2025, with the MSCI Emerging Markets Index up more than 30% year-to-date, its best performance in over a decade. The surge has been fuelled by a combination of easing global financial conditions, a weaker dollar, and renewed investor appetite for undervalued international assets amid sky-high valuations in US markets. Expectations of imminent Federal Reserve rate cuts have driven capital back into higher-growth regions, while declining US yields have reduced funding pressures for EM economies. China’s market recovery has been central to the upswing, supported by targeted fiscal stimulus, looser regulation in technology sectors, and growing optimism around artificial intelligence and semiconductor investment. Meanwhile, Brazil, India, and South Korea have also delivered robust gains on the back of stronger commodities, manufacturing resilience, and improving corporate earnings. However, analysts warn that the rally could moderate if US-China trade tensions resurface or if global growth slows. Sustained performance will depend on credible domestic reforms, continued dollar weakness, and stable political conditions across key emerging economies.