Japan's Business Mood Improves Despite Looming US Tariff Hit

Summary:

Confidence among big Japanese manufacturers improved slightly in the three months to September, a central bank survey showed on Wednesday, a sign the export-reliant economy was weathering the hit from U.S. tariffs, at least for now.

The outcome keeps alive market expectations the central bank could raise interest rates again as soon as this month.

The headline index measuring big manufacturers' business confidence stood at +14 in September, up from +13 in June and marking the highest level since December 2024, the "tankan" survey showed. It compared with a median market forecast for a reading of +15.

An index gauging big non-manufacturers' sentiment stood at +34 in September, unchanged from the level in June and matching a median market forecast.

But big manufacturers and non-manufacturers expect conditions to worsen three months ahead, the survey showed.

The tankan is among key data the BOJ will scrutinise in deciding whether to raise interest rates to 0.75% from 0.5% at its next meeting on October 29-30.

A hawkish board split at the BOJ's September meeting and calls for a near-term rate hike by a dovish policymaker have led markets to price in roughly a 60% chance of an October hike.

Big companies expect to increase capital expenditure by 12.5% in the current fiscal year ending in March 2026, the tankan showed, up from a 11.5% gain projected in June and above a market forecast for a 11.3% rise.

Japan's economy expanded an annualised 2.2% in the first quarter on robust consumption, underscoring the BOJ's view the country was on course for a moderate recovery.

U.S. President Donald Trump last month signed an executive order formalising the trade agreement with Japan, removing some worries in Tokyo about the implementation of the reduced tariff rate of 15% on key Japanese export items such as cars.

But exports and factory output slumped in August, a sign the pain from higher U.S. levies could intensify in coming months.

The BOJ ended a massive, decade-long stimulus programme last year and raised rates to 0.5% in January, on the view that Japan was on the cusp of durably hitting its inflation target of 2%.

While inflation has exceeded 2% for more than three years, Governor Kazuo Ueda has stressed the need to tread cautiously to scrutinise the extent to which tariffs and slowing U.S. growth could hit firms' profits and wage-hike appetite.

Source: Reuters

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Political

Key points:

● Military, law enforcement to stay on the job

● Economic data publication suspended

● Trump threatens to fire federal staff if shutdown occurs

U.S. government services would be disrupted if President Donald Trump and Congress do not agree on a spending bill by midnight on Tuesday.

Hundreds of thousands of federal employees deemed to be not essential to protecting people and property would be sent home.

The impending shutdown would differ from past government closures because Trump has threatened to lay off more federal workers if lawmakers do not pass legislation to avert the closures. His administration has not outlined what cuts to expect.

"We will be looking for opportunities" to reduce the size of the federal government, said White House budget director Russ Vought in a television interview.

As of Tuesday afternoon, at least 21 of the 23 largest federal agencies posted details about which employees they would furlough. Here is a guide to what would stay open and what would close in a government shutdown, according to plans released so far:

WHEN AND WHY WOULD THE GOVERNMENT SHUT DOWN?

Congress writes detailed spending legislation for most U.S. government agencies each year, but rarely finishes before the fiscal year starts on October 1. Lawmakers typically pass stopgap spending bills to avoid disruption for several weeks or months while they finish their work.

The current stopgap bill is due to expire on September 30. Republicans and Democrats appeared unlikely to reach an agreement on some sort of extension that Trump would sign into law before midnight on Tuesday. This would mean wide swaths of the government would lack funds to continue their operations.

WHAT HAPPENS TO SOCIAL SECURITY, MEDICARE AND MEDICAID?

The Social Security Administration would keep issuing retirement and disability benefits, but would furlough 12% of its staff and pause marketing campaigns, according to the agency’s shutdown plan.

Payments would likewise continue under the Medicare and Medicaid healthcare programs.

WILL FOOD AID BE CONTINUED UNDER SNAP AND WIC?

The Supplemental Nutrition Assistance Program, the nation's largest food aid program, and the Special Supplemental Nutrition Program for Women, Infants and Children, known as WIC, would continue operations during a shutdown as funds allow, according to a shutdown planning document published by the U.S. Department of Agriculture.

DOES THE MAIL GET DELIVERED IF THE GOVERNMENT CLOSES?

The U.S. Postal Service would be unaffected because it does not depend on Congress for funding, USPS said in a statement. Post offices will be open.

WHAT DOES A SHUTDOWN MEAN FOR THE INTERNAL REVENUE SERVICE?

The IRS will be fully staffed for five days, according to agency shutdown plans published Monday.

The strategy does not say what the IRS, which lost about a quarter of its staff this year and now employs about 75,000 people, would do if the shutdown lasts longer than five business days. An agency spokesperson declined to comment.

WHAT ABOUT THE AIRPORTS?

More than 13,000 air traffic controllers would continue working, but without pay until the shutdown ends, according to the Federal Aviation Administration.

Most TSA employees would continue working, according to an agency statement.

WILL FEDERAL COURTS BE FULLY OPERATIONAL?

Last week, the federal judiciary warned that the courts could run out of money to fully sustain operations as soon as Friday if Congress fails to pass a spending bill.

That is a shift. The courts sustained operations for five weeks when the government shut down during Trump's first term.

WHAT DOES A SHUTDOWN MEAN FOR THE MILITARY?

The 2 million U.S. military personnel would remain at their posts without pay until the shutdown ends, according to a Department of Defense statement.

National Guard forces Trump has deployed to U.S. cities must also continue to work.

Contracts awarded before the shutdown would continue, and the department could place new orders for supplies or services needed to protect national security.

Trump has ordered the department to rename itself the Department of War, a change that will require action by Congress.

HOW DOES A GOVERNMENT SHUTDOWN AFFECT LAW ENFORCEMENT?

Agents at the FBI, the Drug Enforcement Administration, Coast Guard and other federal law enforcement agencies would remain on the job.

WHAT HAPPENS TO BORDERS AND HOMELAND SECURITY?

Justice Department staff that administer the immigration court system will largely stay on the job because Trump declared illegal immigration a national emergency, according to a department statement.

Employees that communicate with state and local officials about immigrant arrests would also keep working, according to the statement. Border patrol and immigration enforcement agents would stay at their posts, as would most customs officers, according to the Department of Homeland Security’s shutdown strategy.

Tariff collections would continue, according to the strategy.

DOES A SHUTDOWN DELAY KEY ECONOMIC DATA?

Publication of major U.S. economic data, including employment and GDP reports of critical importance to policymakers and investors, would be suspended.

DOES A GOVERNMENT SHUTDOWN AFFECT SMALL BUSINESSES?

The Small Business Administration would furlough 24% of its staff, according to a statement. It would not approve new loans for small businesses to buy equipment and upgrade buildings. Lending to help businesses recover from natural disasters would continue.

WHAT HAPPENS IF THERE IS A NATURAL DISASTER?

The Federal Emergency Management Agency has about $2.3 billion available in its Disaster Relief Fund, according to a September 15 report, meaning the agency should function if a hurricane or other natural disaster strikes. About 4,000 FEMA employees would be furloughed, according to an agency statement.

Source: Reuters

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James Whitman

Economic

Political

The U.S. and South Korea are working closely to advance their trade and investment partnership including by processing appropriate visas for qualified South Korean workers, the U.S. State Department said.

U.S. Deputy Secretary of State Christopher Landau stressed the "critical role" of skilled workers of foreign companies investing in the U.S. at the first working group meeting on new visas for South Korean companies, the State Department said in a statement.

The meeting between senior State Department and South Korean foreign ministry officials aimed at improving U.S. visa programmes for South Korean businesses was held in Washington on Tuesday.

Landau said the United States was committed to encouraging investment by companies from South Korea as one of the leading foreign investors in the U.S., the statement said.

The talks were set up in the aftermath of a massive immigration raid at a Hyundai Motor (005380.KS) car battery facility under construction in the U.S. state of Georgia in September where hundreds of South Korean workers were arrested.

The arrests, which stunned the South Korean government and public, highlighted the lack of access to the right class of U.S. visas for specialised South Korean workers needed at investment sites.

Source: Reuters

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Manuel

Cryptocurrency

Stocks

Bloomberg senior ETF analyst Eric Balchunas said tokenized stocks are unlikely to pose a major threat to exchange-traded funds, even as the SEC considers a rule change that could bring shares of companies such as Tesla and Nvidia onto crypto exchanges.

Balchunas framed the potential change as more of a convenience for digital asset investors than a disruption of traditional markets. He likened it to how ETFs gave retail investors exposure to cryptocurrencies in a familiar wrapper.

He added that tokenized stocks would give crypto-native traders access to conventional equities in their preferred format but are unlikely to erode ETF market share in a meaningful way.

Balchunas wrote on social media: “This is just allowing crypto natives to buy regular person investments in a format they prefer. Only this side of the equation has way more money, which is why tokens likely won’t dent ETF market share much.”

The rumored regulatory shift highlights how U.S. regulators are beginning to test the intersection of Wall Street and blockchain technology.

Tokenized equities would represent traditional shares on-chain, offering near-instant settlement, fractional trading, and global accessibility, features long touted as advantages of blockchain-based markets.

Globally, tokenization has gained momentum as banks and financial infrastructure providers pilot blockchain-based trading and settlement systems.

UBS and JPMorgan have launched tokenized bond and fund offerings, while Hong Kong and Singapore have introduced regulatory sandboxes to test tokenized securities platforms. Meanwhile, in Europe, Deutsche Börse has made significant progress in digital bond issuance and settlement using DLT.

Supporters argue that tokenization could eventually modernize capital markets by reducing intermediaries, cutting costs, and opening access to a wider pool of investors. However, critics have raised persistent questions regarding custody, compliance, and investor protection.

In the U.S., regulators have historically been cautious, often citing the need to ensure that new technologies don’t undermine financial stability or market integrity.

If approved, tokenized stocks on crypto exchanges would represent one of the most significant steps by the SEC to bridge traditional securities with blockchain-based trading venues. However, the scope and structure of such a program remain unclear, and the commission has not yet issued a formal statement.

Source: Cryptoslate

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Stocks

Economic

Markets wrapped up the third quarter on a strong note, defying September’s reputation as one of the toughest months for the US stock market.

The S&P 500 (^GSPC) and Nasdaq (^IXIC) each logged their best third quarter since 2020 and strongest September since 2010, while the Russell 2000 (^RUT) recorded its best Q3 since 2009 as the Federal Reserve kicked off its rate-cutting cycle. The Dow Jones Industrial Average (^DJI) closed at a record high.

Over the past three months, the benchmark index climbed nearly 8%, led by outsized gains in the Technology (XLK) and Consumer Discretionary (XLY) sectors — a rally that underscored investor confidence in the economy’s resilience, even as sentiment sours amid shutdown concerns.

Still, Wall Street isn’t overly concerned that the looming shutdown will derail the market’s recent string of record highs.

“Investors need to do nothing,” said Omar Aguilar, CEO and chief investment officer at Schwab Asset Management, noting that any market volatility would hinge on "the length of the shutdown" and the subsequent impact on data visibility for the Fed. “Once this all gets cleared out, things will come back to normal.”

"Normal," of course, has changed from recent market cycles as today's tech boom powers valuations to levels last seen during the dot-com bubble.

Among the quarter's standout performers in the index were AppLovin (APP), Robinhood (HOOD), Western Digital (WDC), and Seagate (STX), names outside the Magnificent Seven that show how AI enthusiasm is broadening beyond the megacaps.

But the heavyweights held their own: Nvidia (NVDA) gained nearly 20% over the last three months while the once downbeat Intel (INTC) surged around 50%. Oracle (ORCL) stock gained over 30% in the quarter after landing a $300 billion cloud-compute contract with ChatGPT parent OpenAI, which sent shares up over 30% in a single day in early September.

“We're in batting practice of a double header as it relates to the AI revolution,” Kevin Mahn, chief investment officer at Hennion & Walsh, told Yahoo Finance on Tuesday. “Batting practice is the AI infrastructure buildout. The games will ultimately involve the implementation of these AI algorithms that will transform the economy and society, and likely lead to returns on investment. But that's years down the road."

On Tuesday, the S&P 500 and Nasdaq each logged their best third quarter since 2020 and strongest September since 2010, as tech stocks continued to dominate.

The famous architecture of New York City in the USA with the iconic Wall Street bull standing fast next to the New York Stock Exchange building.

According to DataTrek Research, the 10 largest tech and tech-adjacent companies now make up nearly 39% of the S&P 500, up 2 full percentage points since the start of the year.

That's equivalent to the combined weight of both the Real Estate (XLRE) and Materials (XLB) sectors within the S&P 500.

That leadership comes at a premium, however. The top nine tech names (excluding Tesla) trade at 36.5x forward earnings, versus 24.8x for the broader index. But investors appear willing to pay up, with earnings for those companies expected to grow nearly 19% next year, roughly 40% faster than the rest of the S&P 500.

That strength carried through to sector performance, with Technology leading the way — up more than 11% for the quarter — and Consumer Discretionary not far behind.

One obvious laggard? Consumer Staples (XLP). The companies behind everyday essentials like toothpaste and paper towels made up the only S&P 500 sector to finish the quarter in the red, down more than 3%.

Notable names such as Coca-Cola (KO), Costco (COST), and Colgate-Palmolive (CL) all moved lower over the past three months as investors rotated back into growth. That marks a sharp reversal from earlier in the year, when tariff concerns sent investors fleeing high-growth names for more defensive plays.

Source: Yahoo Finance

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Manuel

Economic

Political

President Donald Trump threatened mass firings of federal workers as the US hurtles toward a shutdown with Democrats and Republicans at an impasse over funding the government.

“We may do a lot and that’s only because of the Democrats,” Trump said in response to a question about the number of government employees who could be dismissed during a shutdown. The White House last week directed agencies to draw up plans for widespread firings if the government closed down. So far, no agencies have explicitly called for terminations in their shutdown plans.

With just hours to go until a midnight deadline, the deadlock over spending threatens to paralyze many US government operations for the first time in nearly seven years, causing the suspension of services for Americans and paychecks for federal workers. As many as 750,000 federal workers could be temporarily furloughed, even if Trump doesn’t proceed with permanent dismissals, the nonpartisan Congressional Budget Office estimated.

Political fallout could be widespread for both Trump and Democrats ahead of next year’s critical midterm elections, and leaders of both parties focused their public comments on blaming the other.

“They want to try to bully us — they are not going to succeed — into taking their partisan bill,” Senate Democratic Leader Chuck Schumer said Tuesday. “That’s why we are heading into a shutdown.”

Democrats “are taking a risk by having a shutdown,” Trump said at a mid-day Oval Office event. “We’re not shutting it down. We don’t want to shut it down because we have the greatest period of time.”

Asked about chances of a shutdown, he responded, “Nothing is inevitable, but I would say it’s probably likely.”

House Speaker Mike Johnson, a Louisiana Republican, similarly predicted that a shutdown is imminent.

“I’m an optimist, but I’m a little skeptical this morning,” he told CNBC Tuesday.

Although last-minute spending deals have averted several other threatened shutdowns in recent years, the stakes are especially high now, with the White House threatening to fire employees rather than furlough them, and Democratic leaders under intense pressure from progressives in the party to stand up to Trump.

Stocks fluctuated Tuesday morning with the prospect of a shutdown stoking concerns about how long it’ll go on and what impact the possibly delayed release of key economic data will have on the Federal Reserve’s upcoming interest-rate decisions.

Johnson accused Democrats of playing politics with their effort to renew health-care tax credits, saying it doesn’t have to be resolved until the end of the year when the tax credits expire.

“Open the government and then we’ll have all the discussions,” he said. “But right now that is a red herring.”

House Democratic Leader Hakeem Jeffries accused Republicans of being unwilling to participate in bipartisan negotiations, telling CNBC Tuesday that his party refuses to be a part of “a my-way-or-the-highway” approach.

Republicans in recent days have repeated the phrase “Schumer shutdown” in an attempt to pin the blame on their Democratic opponent.

“Chuck Schumer needs a Schumer shutdown and I think that’s what we’re probably careening toward,” Senate Republican Leader John Thune told CNBC on Tuesday.

Deep Divide

Lawmakers appeared no closer to a deal after a Monday meeting at the White House only served to underscore their deep divide. Democrats have sought an extension of health-care subsidies and a reversal of Medicaid funding cuts that were part of Trump’s signature tax legislation enacted earlier this year. Republicans are insisting on what they call a clean continuing resolution — without an array of controversial policy measures — that would extend government funding until Nov. 21.

Thune told reporters the Democrats’ push amounted to a “hostage taking.” While there is an opportunity to discuss potential health-care premium tax credit changes with Democrats, Thune said, “we can’t even have that discussion until we keep the government open.”

Until then, Thune said the Senate will take repeated votes on a short-term spending bill to reopen the government.

Senator John Barrasso, a member of Senate Republican leadership, said the chamber would take a break for the Yom Kippur holiday this week if there is a shutdown but then return to Washington and vote through the weekend. Trump Threatens "A Lot" Of Firings as Shutdown Deadline Nears_1

Trump Threatens "A Lot" Of Firings as Shutdown Deadline Nears_1

If the president was seeking to curry Democratic votes, it wasn’t immediately apparent. Trump, who last week canceled a planned sit-down with Democratic leaders, on Monday evening posted a poorly dubbed video on social media of Schumer and Jeffries, set to mariachi music, suggesting the pair wanted to import new voters who “can’t even speak English.”

Schumer sniped back that the president is “trolling away on the internet like a 10-year-old.” Jeffries called the depiction of him in a sombrero “racist” and dared Trump to insult him to his face.

Trump ally Sean Hannity, on Fox News, suggested to Johnson that there was no chance Trump would give into any of the Democrats’ demands, and Johnson agreed. Meanwhile, on Capitol Hill, Democrats cheered party leaders in a closed-door meeting Monday evening that appeared to rally the troops.

Exit Ramps

A shutdown would be the first since 2018-2019, when funding for the government lapsed for five weeks, including over New Year’s Day, during Trump’s first term.

Although Republicans control both chambers of Congress — as well as the White House — they appear to need the support of at least seven more Senate Democrats to clear procedural hurdles and pass a funding bill.

One possible path being discussed late Monday involves a potential compromise that would extend health-care tax credits but phase down the amounts in the second and third year.

GOP lawmakers expressed confidence that, even if the government shut down briefly, Democrats would eventually yield.

“A 600-pound man is more likely to pass up a donut than the Democrats are to shut down the government for any length of time, because they love the government as much as a 600-pound man loves a donut,” said Senator Lindsey Graham, a Republican from South Carolina.

Graham said he expected a “brief” shutdown while Republicans and Democrats find “common ground.” He pointed out that Republicans have previously tried to use shutdowns to extract policy concessions, only to eventually give up and fund the government without getting anything in return.

“It may be popular, but shutting the government down is not the answer to popular legislation,” Graham said. “I’ve learned that the hard way.”

Source: Bloomberg

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Commodity

It's not just gold (GC=F) notching a strong quarter as a potential government shutdown looms.

Silver futures (SI=F) are up 27% over the past three months, versus gold's more than 15% rise, and roughly 58% year to date compared with the yellow metal's 45%.

On Tuesday, gold futures held near record highs above $3,875 an ounce while silver futures traded around $46. The metal was within striking distance of its closing high of $48.70 — just north of $150 in today's dollars — set in January 1980. That was during a famed silver squeeze, when the infamous Hunt brothers tried to corner the market.

"Silver is in a fundamental deficit with demand outstripping supply," Sprott Asset Management senior portfolio manager Shree Kargutkar told Yahoo Finance. "This development is being picked up by investors who are adding to their holdings through ETFs (exchange-traded funds) as well as physical silver."

Sprott remains bullish on the metal, highlighting its industrial demand across sectors, from electronics to medical applications.

Silver's hockey stick rally comes as gold has dominated the spotlight this year, driven by expectations of Federal Reserve easing and robust foreign central bank demand, with holdings recently surpassing US Treasurys for the first time since 1996.

On Monday, Goldman Sachs analysts pointed to their bullishness on gold amid a "goldilocks regime" — not too hot, not too cold, in other words — for the broader market.

The analysts expect gold to reach $4,000 by mid-2026, though increased trades into the space "might create near-term more bumpiness.

Earlier this month, analysts at the firm said gold was their "highest-conviction long recommendation," outlining an upside scenario of $5,000 by the end of next year amid rising concerns over Federal Reserve independence, as President Trump aims to place dovish governors at the central bank.

Along with gold and silver, precious metals palladium (PA=F) and platinum (PL=F) have rallied 44% and 79%, respectively, in 2025 amid a weaker greenback trend.

The US dollar index is down about 10% year to date, making commodities priced in dollars cheaper for buyers using other currencies

Barclays head of global asset allocation Nikola Vasiljevic recently noted that precious metals have historically been standout winners during periods of dollar weakness

"Data shows that this asset class has delivered real annualized returns of around 15% on average, and this is because they act as a direct hedge, being a traditional store of value," Vasiljevic said.