US Government Shutdown Keeps Markets on Edge

The US government shutdown has now entered its second week, with no signs of resolution from the Senate deadlock. While markets have remained relatively calm for now, the uncertainty is gradually weighing on investor sentiment. President Trump and his allies have warned that the impasse could lead to mass layoffs, adding further tension. For traders and investors, the longer the shutdown drags on, the more nervous sentiment is likely to become, potentially creating volatility across equities, bonds, and commodities.

France’s New PM Lecornu Resigns

France saw political turbulence this week as newly appointed Prime Minister Sébastien Lecornu submitted his resignation to President Macron. Lecornu faced immediate pressure to bring France’s fiscal affairs in order and secure backing for the budget to address the country’s growing deficit. The challenge proved too great, highlighting ongoing instability in French politics. While Macron’s administration can design strong economic policies, the sudden resignation underscores the broader uncertainties in European fiscal governance.

AMD and OpenAI Announce Multibillion-Dollar Partnership

• • AMD expects the deal to add tens of billions in annual revenue.
• • The company will supply OpenAI with hundreds of thousands of AI chips over a four-year period.
• • OpenAI has been granted a warrant to purchase up to a 10% stake in AMD at just $0.01 per share.

Just weeks after Nvidia announced plans to invest up to $100 billion in OpenAI and provide its data center chips, AMD has entered the picture with its own massive deal. OpenAI, in turn, plans to pour billions into AMD — a clear signal that the AI momentum isn’t slowing down anytime soon. AMD shares jumped 32% following the announcement.

Goldman CEO Flags Complacency Risk

Goldman Sachs CEO David Solomon emphasized that while the US economy remains solid and momentum should continue into next year, investor complacency could trigger a correction. Speaking to Bloomberg, he compared current enthusiasm for AI to the dot-com boom, noting that technological excitement produces both “winners and losers.” Markets often run ahead of technological reality during innovation cycles, and after a strong rally, a moderate equity pullback would not be surprising.

Jefferies Downgrades Apple, Foldable iPhone Expectations Overblown

Jefferies downgraded Apple to Underperform, warning that expectations for iPhone 18-Fold are overly optimistic. Strong iPhone 17 demand was driven largely by price incentives rather than innovation, including deeper discounts and generous trade-ins in China. While Apple can produce a premium foldable device, a $2,000 price tag and competition from Samsung’s Galaxy Z Fold 7 raise questions about the market size.

Trump’s “Liberation Day” Tariffs Functioning as Tax, Not Growth Tool

Harvard economist Gita Gopinath evaluated the first six months of Trump’s “Liberation Day” tariffs, concluding they act more like a domestic tax than an economic strategy. While raising government revenue, the tariffs have imposed costs on US businesses and consumers, with modest contributions to inflation in household goods. The tariffs have failed to improve the trade balance or stimulate manufacturing, highlighting the limited economic benefits of the policy.

Fed Officials Signal Inflation Risks Ahead

Kansas City Fed’s Jeff Schmid says inflation remains too high, especially in services (3.5%), and cautions against further rate cuts, stressing the need to protect the Fed’s credibility. Nearly 80% of inflation categories are rising, though tariffs’ impact is muted. Fed’s Kashkari added it’s too early to tell if tariffs or AI will make inflation sticky and noted rate cuts may not meaningfully lower mortgage rates. NY Fed Survey: One-year inflation expectations climbed to 3.4% from 3.2%.

Goldman’s Kaplan Flags US Fiscal Stress Through Gold Surge

Goldman Sachs’ Robert Kaplan highlighted gold’s $4,000 mark and near 40% YTD gain as a “red light” on US fiscal stress. Investors are turning to gold as a safe haven even as 10-year Treasury yields lag, reflecting concern over the ballooning US deficit.

Summary of September FOMC Minutes:

The September minutes revealed that most participants viewed additional policy easing as likely appropriate before year-end. However, the discussion showed a broader inclination toward maintaining current rates rather than opting for a larger 50-basis-point reduction.

China Continues Gold Accumulation

The PBOC increased gold reserves to $283.3bn in September, marking eleven consecutive months of accumulation. This move coincides with the ongoing gold rally since 2023 and signals China’s strategy to diversify away from the US dollar, standing out among major central banks.

Market Snapshot: Record Highs Across Metals and Indices

• • Spot gold climbs above US$4,000
• • Silver surges to $51/oz, surpassing its 2011 peak.
• • Euro reaches an all-time high vs. the yen.
• • Nasdaq hits 25,000, marking a fresh milestone.