Inflation Eases While Trade Tensions Rise and Oil Prices Surge
- QU Economics Research Team
- 7 days ago
- 6 min read
Updated: 6 days ago
Market Weekly Commentary | As of October 27th, 2025
A Recap of Economic and Financial Trends from the Prior Week
By: Khadija Farooqi, The Quinnipiac University Global Economics Research Team
Economic Recap
Source: U.S. Bureau of Labor Statistics, “12-Month Percentage Change, Consumer Price Index, Selected Categories” (October 2025). (Chart © U.S. Bureau of Labor Statistics. Chart used under fair use for educational commentary by The Quinnipiac Global Economics Research Team.)
The U.S. Bureau of Labor Statistics reported that inflation rose to 3.0% in September, slightly below expectations of 3.1% but higher than August’s 2.9%. On a monthly basis, CPI increased 0.3% following a 0.4% gain in August, while core CPI (which excludes food and energy) rose 0.2%, below market expectations of 0.3%. Despite the ongoing government shutdown delaying several key releases, markets welcomed the inflation clarity ahead of upcoming monetary policy decisions. Meanwhile, U.S. business activity strengthened in October as the S&P Global Composite PMI rose to 54.8, marking its 33rd consecutive month of expansion, led by services growth and modest manufacturing improvement, though sentiment among producers weakened amid trade and policy uncertainty. Internationally, China’s economy expanded 4.8% year over year in the third quarter, slightly above forecasts of 4.6%, with quarterly growth accelerating to 1.3% from 0.7% in the prior period. Gains were driven by improved industrial output and exports, but soft consumer demand and persistent property market weakness weighed on overall momentum.
Market Recap
Source: JPMorgan Asset Management, “Weekly Market Recap” (October 27, 2025).(Chart © JPMorgan Asset Management. Chart used under fair use for educational commentary by The Quinnipiac Global Economics Research Team.)
U. Stocks advanced for the week, shaking off volatile headlines related to U.S. and China trade relations and a jump in oil prices after the United States announced sanctions against Russia’s two largest oil companies. The Dow Jones Industrial Average rose 2.24%, the S&P 500 gained 1.93%, and the Nasdaq Composite climbed 2.31%. The Russell 2000 and S&P MidCap 400 outperformed their large-cap counterparts, reflecting renewed strength in smaller domestic firms. Within the S&P 500, information technology and energy led the advance, while utilities and consumer staples lost ground. Treasury yields moved mixed, with short-term rates edging higher and long-term yields declining as investors priced in near-term Fed easing. Globally, the STOXX Europe 600 rose 1.68%, supported by strength in Germany, Italy, and the U.K. While in Asia, Japan’s Nikkei 225 jumped 3.61% following the election of Prime Minister Sanae Takaichi, whose pro-growth policies boosted sentiment. Chinese equities advanced as well, with the CSI 300 +3.24%, Shanghai Composite +2.88%, Hang Seng +3.62%.
Calendar Events
Economic Data:
Oct. 28: S&P Case-Shiller Home Price Index (Aug.), Consumer Confidence (Oct.)
Oct. 29: FOMC Interest-Rate Decision, Fed Chair Powell Press Conference
Oct. 30: Initial Jobless Claims (Oct. 25), GDP (Q3, advance estimate)
Major Corporate Earnings:
Oct. 28: Visa Inc. (Q4 2025)
Oct. 29: Microsoft Corporation (Q1 2026), Alphabet Inc. [GOOGL & GOOG] (Q3 2025), Meta Platforms, Inc. (Q3 2025)
Oct. 30: Apple Inc. (Q4 2025), Amazon.com, Inc. (Q3 2025)
Major Events:
Oct. 30: Alleged President Trump and President Xi Jinping meeting on the sidelines of the APEC Summit
**Note: Some releases are suspended due to the federal government shutdown.
Market Themes
The United States imposed sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, in a renewed effort to pressure Moscow into agreeing to a ceasefire in Ukraine. The move, paired with fresh EU bans on Russian liquefied natural gas imports, marks a significant escalation in Western efforts to curb Russia’s energy revenues. President Vladimir Putin dismissed the measures as “an attempt to put pressure on Russia” but insisted they would not derail the country’s economic stability. Analysts noted the sanctions could complicate oil trade flows, particularly for buyers like India, by exposing foreign financial institutions to secondary risks. The news pushed oil prices higher as traders weighed potential supply disruptions, with energy sector stocks outperforming broader markets. The tightening sanctions add another layer of volatility to global energy markets, where even small shifts in Russian output or shipping routes could ripple through prices and global inflation expectations.
Bessent Calls $20 Billion Lifeline To Argentina A ‘Mission-Critical’ Function Of Treasury During Shutdown and Why US Soya Bean Farmers Are Upset With Trump’s $20bn Argentina Bailout
The U.S. Treasury finalized a $20 billion emergency lifeline to Argentina, calling it a “mission-critical” move to preserve financial stability during the federal government shutdown. The deal, structured as a currency swap facility, gives Argentina’s central bank access to U.S. dollars to shore up liquidity and stabilize the plunging peso as President Javier Milei, a close ally of President Trump, faces political setbacks and rising inflation ahead of key elections. Supporters framed the aid as a show of backing for an ally pursuing market reform, but critics across parties questioned its timing and optics. U.S. soybean farmers, already struggling from Trump’s trade war with China, criticized the bailout since Argentina’s farmers have been selling more soybeans to China, taking a portion of the market once dominated by U.S. producers. Lawmakers also compared the package’s scale to the cost of extending Affordable Care Act subsidies, arguing it prioritizes foreign intervention over domestic relief. While Treasury Secretary Scott Bessent defended the action as essential for global stability, the peso’s continued weakness and calls for private-sector participation highlight both the financial risks and political fallout surrounding Washington’s expanding role in Argentina’s rescue.
Chart of the Week
Source: Bloomberg and Apollo Chief Economist, “Russell 2000 Companies by Earnings Status” (October 2025). (Chart © Apollo Global Management. Chart used under fair use for educational commentary by The Quinnipiac Global Economics Research Team.)
The chart shows that since April 2025, Russell 2000 companies with negative earnings per share (EPS) have outperformed those with positive earnings. Starting from the same baseline, the index of loss-making companies has risen to nearly 140, while the index of profitable companies has climbed to around 115. This means that, over the period shown, stocks of companies reporting losses have increased more sharply in price than those of companies reporting profits.
Market Outlook
Looking ahead, investor attention will turn to the Federal Reserve’s policy meeting, where officials are widely expected to cut rates by 25 basis points in response to moderating inflation and mixed economic signals. Markets will also closely watch third-quarter earnings from major technology firms, as results from these leaders in AI and digital infrastructure are expected to provide critical insight into corporate resilience and capital spending trends heading into year-end. Internationally, focus will center on the alleged upcoming meeting between President Trump and Chinese President Xi Jinping on October 30 at the APEC Summit, marking their first in-person discussion since Trump’s return to office. The meeting, described by analysts as a “high-risk, high reward” attempt to reset relations, comes amid renewed tariff threats, expanded Chinese export controls on rare earth minerals, and an approaching November 10 deadline for extending the current trade truce. While major breakthroughs are unlikely, both sides are expected to signal a willingness to de-escalate tensions and resume structured negotiations.
Heard it on a Pod
On the October 20th, 2025, episode of the Goldman Sachs Exchanges podcast, David Mericle, Chief U.S. Economist at Goldman Sachs Research, discussed the misconception that recent GDP growth has been powered primarily by AI. Mericle clarified that the surge in business technology investment earlier in the year was largely due to companies frontloading semiconductor and equipment purchases ahead of new tariff increases, rather than a genuine AI-led expansion. He also noted that while AI is beginning to influence select sectors such as technology and data services, there is little evidence that it is broadly replacing jobs across the economy. Still, he cautioned that as AI capabilities advance, businesses may begin slowing hiring in anticipation of greater automation over the next year.
Source: Goldman Sachs Exchanges – “Making Sense of Weak Job Growth Alongside Solid GDP Growth,” October 20, 2025.
Further Reading
Sources
CNBC. “Trump to Meet China’s Xi for the First Time in Second Term as Trade Deal Remains Elusive.” October 24, 2025. https://www.cnbc.com/2025/10/24/trump-china-xi-meeting-trade-rare-earths-tech-apec-south-korea.html
FXStreet. “US CPI Headline Inflation Set to Rise 3.1% YoY in September.” October 24, 2025. https://www.fxstreet.com/news/us-cpi-headline-inflation-set-to-rise-31-yoy-in-september-202510240300
J.P. Morgan Asset Management. “Weekly Market Recap.” https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/weekly-market-recap/
T. Rowe Price. “Global Markets Weekly Update.” https://www.troweprice.com/personal-investing/resources/insights/global-markets-weekly-update.html