Closing Recap

U.S. stocks finished broadly lower, extending yesterday’s pullback as a new wave of risk aversion hit markets, driven by a hawkish surprise from the RBNZ, political turmoil in France, and the ongoing U.S. government shutdown; gold surged to a new record, while the dollar firmed and Treasury yields were little changed. In the currency markets, the U.S. dollar firmed on safe-haven flows amid global political and economic uncertainty, pushing the EUR/USD down to one-month lows as French political concerns mounted, while the Japanese Yen plunged to fresh lows after the new Prime Minister signaled a dovish fiscal stance. 

Key Takeaways 

• Stocks Fall on Broad Risk-Off: Major indices declined for a second day, with the S&P 500 down -0.5%, as a confluence of negative global headlines weighed on investor sentiment after a negative media report on Oracle’s AI chip rental business triggered a pullback in the high-flying technology sector.
• Government Shutdown Enters Second Week: The U.S. government shutdown drags on, raising concerns about its economic impact and delaying key data releases, though markets remain focused on the eventual Fed response. 
• Gold Surges to New All-Time High: Gold prices continued their torrid rally, with December futures soaring to a new record of $4,004.40 per ounce, fueled by shutdown fears, dovish Fed expectations, and central bank buying. 
• Political Turmoil in France & Japan: Political instability in France, where President Macron’s leadership is being challenged, and a delay in forming a new government in Japan are contributing to global market anxiety. 
• Safe-Haven Dollar in Demand: The U.S. Dollar is gaining ground for a second day as a confluence of global headwinds—political turmoil in France, a dovish RBNZ, and a protracted U.S. shutdown—boosts its safe-haven appeal. The U.S. dollar firmed as a safe haven amid global political turmoil, with the Euro falling to one-month lows and the Japanese Yen plunging to fresh lows against the greenback after Japan’s new PM signaled a pro-stimulus agenda. The New Zealand Dollar is the biggest loser, plunging 1% after a surprise 50bps rate cut from the RBNZ.
• Bitcoin near ATH: Bitcoin prices pulled back, with whale selling pressure and overbought technical conditions prompting a correction from recent record highs. 
• Oil Prices Steady, Yields Flat: Crude oil and Treasury yields were little changed in a session dominated by political headlines and risk aversion. 
• Focus on Fed Minutes & Speakers: With a light data calendar due to the shutdown, investors will be keenly focused on today’s FOMC meeting minutes and a heavy slate of Fed speakers for policy clues. 

Market Overview 

After an unstoppable seven-day rally, a dose of reality finally hit Wall Street. The S&P 500 snapped its winning streak, pulling back from intraday record highs. U.S. equity markets finished broadly lower today, extending the previous session’s losses as a wave of risk aversion swept through global markets. The ongoing U.S. government shutdown, now in its seventh day, continues to be a major source of uncertainty, with fears mounting that it could extend well into next week. While the market has largely priced in the shutdown as an operational rather than economic crisis, the lack of progress in Washington and President Trump’s threats of mass layoffs are beginning to weigh on sentiment. The shutdown’s primary impact remains the delay of key economic data, forcing investors and the Federal Reserve to navigate with less visibility. 

Index	Last	Change	% Change
S&P 500	6714	-25.69	-0.0038
Nasdaq	22788	-153.3	-0.0067
Dow Jones	46602	-91.99	-0.002
Russell 2000	2458	-27.93	-0.0112

Adding to the cautious mood were significant political developments in Europe and Asia. In France, political turmoil intensified as President Macron’s leadership faced growing challenges, sending French bonds tumbling and the Euro to one-month lows. In Japan, the newly elected Prime Minister, Sanae Takaichi, is struggling to form a coalition government, delaying her confirmation and adding to political uncertainty. Takaichi’s pro-stimulus, “Abenomics 2.0” platform has sent the Japanese Yen plunging to fresh lows. 

Amidst this backdrop of political and economic uncertainty, safe-haven assets were in high demand. Gold surged to another new all-time high, breaking above the $4,000 per ounce level. The U.S. dollar also firmed on its safe-haven status against most currencies. Investors are now keenly awaiting the release of the FOMC meeting minutes this afternoon and commentary from a host of Fed speakers for any clues on the central bank’s thinking.

Economic Calendar

The U.S. economic calendar is dominated by the FOMC minutes and a heavy slate of Fed speakers, as the government shutdown continues to delay official data releases. Today’s Major U.S. Events:

• FOMC Meeting Minutes (from Sept 16-17 meeting) 
• Heavy Slate of Fed Speakers: Musalem (13:20 GMT), Barr (13:30 GMT), Kashkari (19:15 GMT), and Goolsbee (23:15 GMT) are all on the docket. 
• BoE’s Pill Speaks (15:00 GMT).

Major International Releases (Today):

•  German Industrial Production (Aug): -4.3% m/m (a heavy drop, worse than -1.0% est.). 
• RBNZ Rate Decision: Surprised with a 50-basis-point cut to 2.50%. 

The only notable data from the previous U.S. session was a survey showing rising consumer inflation fears. 

• NY Fed Inflation Expectations (Sep): The one-year ahead expectation ticked up to 3.4% from 3.2%, with consumers also noting a rising risk of job loss.

Commodities, Treasuries and Currencies 

Gold prices surged to a new record high, with the December futures contract gaining $28.10 (+0.70%) to settle at $4,004.40 per ounce, its first-ever daily close above the $4k milestone.. The rally was driven by strong safe-haven demand from the U.S. government shutdown, political turmoil in Europe, and continued expectations of Fed easing. Crude oil prices were little changed, with WTI settling up $0.04 at $61.73/bbl.

Asset	Change	Unit	Last
WTI Crude	0.04	USD/bbl	61.73
Gold	28.1	USD/oz	4004.4
EUR/USD	-0.0037	USD	1.1672
USD/JPY	1.1	JPY	151.45
US 10-Yr Yield	-3.7 bps	%	0.04124

In the currency markets, the U.S. Dollar Index (DXY) rose, benefiting from safe-haven flows. The currency market is being driven by a powerful risk-off bid for the U.S. Dollar, fueled by a perfect storm of negative catalysts from Europe to the Pacific. 

• EUR/USD: The pair is in a clear downtrend, falling for a third consecutive day to one-month lows near 1.1615. The Euro is being hammered by France’s political crisis, where pressure is mounting on President Macron to resign. A very large $2.5B options expiry at the 1.1650 strike could offer some resistance to further declines today, but with the 100-day moving average at 1.1628 at risk, the technical picture is deteriorating rapidly. 
• GBP/USD: Sterling is losing traction, trading below 1.3400. The pair is being dragged down by broad dollar strength and growing expectations that the Bank of England will be forced to cut rates again this year amid a loosening labor market. 
• USD/JPY: The pair has surged to its highest level since February, trading above 152.40. The Yen is collapsing under the weight of dovish policy expectations following Sanae Takaichi’s victory and soft domestic wage data, which showed real incomes falling for the eighth straight month.

U.S. Treasury yields were little changed, with the 10-year yield holding steady around 4.124%, as the bond market remained in a holding pattern ahead of the FOMC minutes. Bitcoin saw a sharp correction, falling below $120,000 after on-chain data revealed large “whale” investors moving significant amounts of BTC to exchanges, signaling profit-taking. Bitcoin prices fell, with whale selling pressure and overbought technical conditions prompting a correction from recent record highs.

Looking Ahead 

The market will be laser-focused on the release of the FOMC meeting minutes this afternoon for deeper insights into the Federal Reserve’s thinking on inflation, growth, and the future path of interest rates. Commentary from the heavy slate of Fed speakers will also be critical. The duration of the U.S. government shutdown and any progress in funding negotiations will be a key focus, as will the unfolding political situations in France and Japan. With official U.S. economic data on hold, market sentiment will remain highly sensitive to these political and policy-driven headlines. The situation in France is a major new risk factor. The pressure on French bonds is a key indicator to watch. A deepening of the political crisis could accelerate the sell-off in EUR/USD, with bears now firmly in control. Gold is in a powerful uptrend, but it now faces the headwind of a resurgent, safe-haven dollar. The price action today will be a key test of which force is stronger in the current risk-off environment.