By: John Kicklighter, Head of Market Research
The quiet broke through the US session closing out the trade Friday. A revival of US-China trade tensions seemed the spark behind the market’s upheaval, but can this ‘old’ theme carry a trend?
Talking Points:
Sentiment took a dramatic through the very end of this past week. For most of the period, it seemed as if the markets would be pass obliviously through background fundamental concerns and maintain their positive but restrained ‘risk on’ course heading. An ongoing US government shutdown, blurred view into the macro backdrop and even murkier outlook for accommodative monetary policy didn’t seem to perturb the masses as the S&P 500 started out Friday trade just off record highs and sporting the smallest rolling six-day historical range (as a percentage of spot) in four years. By the close of the session – and week – the benchmark index notched its biggest single day drop since April 10th and put technical analysis observers on edge with a tentative breach of the otherwise steadfast bullish trend channel ushering bulls comfortably along for months.
Chart of S&P 500 with 50-Day SMA and 1-Day Rate of Change (Daily)
Source: TradingView, Standard & Poor’s
The drop was a dramatic one, particularly due to the absolute quiet that preceded the sharp reversal in activity. Now market observers and participants need to raise a critical question: is this a lasting turn in the capital markets and the long running calm or merely an overdue jolt of counterbalancing volatility? What fundamental themes we latch onto next will likely play a critical role in determining these next steps.
Table of Relative Market Trend and Volatility for Major ‘Risk’ Related Assets
Source: John Kicklighter
There is the smell of volatility in the markets, and similar to sharks sensing blood, there is a heightened risk of sentiment shifting into a frenzied state of self-sustaining fear. Fundamentals can lead a general shift in sentiment and market trend, but it is also possible for confidence itself to instigate the course correction and then look to surrounding factors to justify the state after the fact. Sentiment itself has proven again and again lately that it can regain traction after abrupt corrections. As such, it would be reasonable to seek out a capable and all-consuming fundamental drive to anchor expectations of any genuine trend change moving forward. As far as key event risk that can act as catalyst for these undercurrents, there is both scheduled and unscheduled fuel for the fire in the week ahead.
Calendar of Top Global Macro Event Risk
Source: John Kicklighter
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While there is something to be said about a renewed importance of the Chinese trade report for September due on Monday, the first thematically driven update that can trigger its of systemic avalanche comes Tuesday with the first run of top-tier corporate earnings reports for the season from the financial sector. As is typically the case, there are a number of banks and asset managers due to report the same day including Citibank, Wells Fargo, Goldman Sachs and BlackRock.
The most prominent listing however is JPMorgan which is the 10th largest market cap in the US as well as the guiding light of the financial sector. CEO Jamie Dimon has weighed in on numerous prominent concerns such as capital markets being pushed to increasing risk of a correction and the importance of investing in AI. It will be perhaps even more important to take in the outlook offered by the company as to evaluate the bank’s performance over the past quarter. While the influence of this update can cut both ways; the fragile state of the market through the end of this past week could make investors particularly sensitive to an unfavorable turn for JPM.
Chart of JPMorgan Stock Price Overlaid with DJIA and 20-Day Correlation (Daily)
Source: TradingView
As far as event density, Tuesday is clearly the most intense day on the coming week’s docket. Another notable Chinese report (new lending), Singapore Q3 GDP, UK employment statistics, Eurozone economic sentiment and the US-based NFIB business confidence report are all due before the US open. All of that data and the earnings run aside, specific considerable should be afforded to the breadth of insight offered from the IMF’s semi-annual reports. The bi-annual World Economic Outlook will be the most digestible of the three reports. The global growth forecast is particularly appealing against a backdrop where economies are facing divergent futures and official data series are coming under increased scrutiny.
There are few other viable examples of a unified measurement for the globe with a distinct credibility behind its forecasting abilities. In addition to the WEO, we are also due the updated Global Financial Stability Report (GFSR) that touches on distinct risks to the operation of the markets and the Fiscal Monitor that will offer update on a world struggling with ballooning debt. Historically, these updates have not seized the mass’s attention; but an already-unsettled market may look to this data to feed its fears (or hopes).
Global Growth Forecasts from July WEO Update
Source: IMF World Economic Outlook July 2025 Update
Through the rest of the coming week, there is a stretch of global data that can generate some regional or thematic interest (like business confidence reports for countries at the center of US trade disputes) as well as a run of key Fed official speeches (most notably multiple engagements from top dove Stephen Marin and Fed Chairman Powell). However, the most important event risk may rest on US data that may or may not cross the wires at their previously scheduled release times. We have already seen the very important September US CPI release delayed from this Wednesday, October 15th out to Friday, October 24th.
And yet, the upstream, factory inflation PPI release is still supposedly due this Thursday. It can readily feed the market’s inflation fixation for its monetary policy speculation…if it crosses the wires. Meanwhile, retail sales for the past month are supposedly still due from the US Census Bureau on Friday. The American consumer has a disproportionate hand in the future health of the US economy. In addition to these top readings, it is worth also watching for: the US NAHB housing market index; housing starts; import / export inflation and TIC capital flows.
Chart of US CPI Year Over Year and Unemployment Rate (Monthly)
Source: Federal Reserve Economic Database, Bureau of Labor Statistics
What are the major events and indicators on tap for the global economy that could charge volatility in markets and reshape deeper fundamental themes? Sign up for the updated Global Macro Calendar updated each week with a two week look ahead of the top events!
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--- Written by John Kicklighter, Global Head of Content
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