PMIs Show US Business Activity Accelerated In October At Second-Fastest Pace This Year

Economic

Summary:

The survey data are consistent with the economy expanding at a 2.5% annualized rate...

US business activity growth accelerated in October to the second-fastest so far this year, according to early 'flash' PMI data, accompanied by the largest rise in new business seen in 2025 to date.

Both Services and Manufacturing surveys increased more than expected in the preliminary October data (with Services continuing to lead)...

"October's flash PMI data point to sustained strong economic growth at the start of the fourth quarter," according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, "with business activity picking up momentum across both manufacturing and services despite some reports of businesses being adversely impacted by the government shutdown."

The survey data are consistent with the economy expanding at a 2.5% annualized rate in October after a similar rise was signalled for the third quarter.

But it wasn't all unicorns and fairytales:

"However, business confidence in the outlook for the coming year has deteriorated further, and is at one of the lowest levels seen over the past three years as companies worry about the impact of policies, most notably tariffs.

Companies are also concerned over disappointing export sales, especially in manufacturing, and factories are seeing an unprecedented rise in unsold stock.

Having bought excess inputs earlier in the year to front-run tariffs, producers are making more goods to use up these inputs but are often struggling to sell the end product to customers."

Finally, Williamson notes that there has been no pass-through of tariff-induced inflation to consumers

"Hence, although input costs continued to rise sharply again in October, principally reflecting the pass-through of tariffs, average selling price inflation has cooled to the lowest since April as firms compete on price to win sales."

Solid 'soft' data amid a vacuum of 'hard' data dude to the govt shutdown.

Source: Zero Hedge

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Samantha Luan

Economic

Political

Key points:

● Rinderknecht faces up to 45 years in prison if convicted

● Blaze killed 12 people, destroyed thousands of homes

● Trial set for December 16, defendant held without bond

The man accused of deliberately setting the blaze that grew into one of the most devastating wildfires in Los Angeles history, killing 12 people and incinerating thousands of homes, pleaded not guilty on Thursday to three federal arson-related charges.Jonathan Rinderknecht, 29, is charged with "maliciously" starting a fire on January 1 that was quickly suppressed but continued to smolder beneath dense vegetation near Pacific Palisades before reigniting a week later amid fierce winds.

At an arraignment on Thursday before U.S. Magistrate Rozella Oliver in federal court in Los Angeles, he pleaded not guilty to three felony counts in a grand jury indictment returned on October 15 - arson, destruction of property by means of fire and illegally setting timber afire.If convicted as charged, he would face a mandatory minimum sentence of five years in prison and a statutory maximum sentence of 45 years behind bars.Rinderknecht, who was arrested earlier this month in Florida and appeared in court in shackles and wearing white jail garb, was ordered to remain held without bond as he awaits trial.

The bearded defendant tried to insist to the judge that he wanted to "talk about" his detention, but his lawyer, Steve Haney, cut him off. A trial date of December 16 was set.In seeking bail for his client, Haney had argued that his client essentially was being charged with an arson allegedly committed seven days before a much larger fire for which he is being blamed.Speaking to reporters after the hearing, Haney questioned the fairness of a legal theory blaming Rinderknecht for the supposed reignition of a fire that had not been adequately extinguished.

"So why are they blaming him for whatever the fire department didn't do?" Haney asked rhetorically, adding that the defense was not conceding prosecutors' assertion that one fire was a continuation of another.Haney said his client has no prior criminal record and no documented history of mental illness.The indictment holds Rinderknecht responsible for one of the most destructive Los Angeles fires on record, a conflagration that laid waste to the affluent coastal foothill community of Pacific Palisades. The blaze leveled some 6,000 structures, with property damage estimated at $150 billion.

According to prosecutors, Rinderknecht had been working as an Uber driver on New Year's Eve before dropping a passenger off and heading to a hilltop trail near Pacific Palisades, where he once lived.Once there, according to court documents, he listened to a rap song whose music video depicted things being set on fire, then proceeded to light a real blaze shortly after midnight and fled the scene, only to return a short time later to watch the flames and firefighters.

The Palisades fire coincided with another massive wind-driven blaze about 35 miles (56 km) to the east known as the Eaton Fire, which wiped out much of the community of Altadena.

Source: TradingView

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Adam

Commodity

Finding support at 6-month lows of around $56.40 per barrel, WTI has rallied just shy of 8.6% in the last three sessions alone.

Currently trading at $62.04, up 4.10% in yesterday’s session, recent performance marks the best three-day stint since late July.

As ever, let’s take a look at some of the macro themes at play, followed by some technical analysis as we attempt to answer the immortal question: what’s next for WTI?

WTI (West Texas Intermediate): Key takeaways 24/10/2025

Gapping up 1.1% at Thursday’s open, WTI crude has found renewed buying support on new sanction announcements from the United States on leading Russian oil companies, including Rosneft and Lukoil

Constrained previously by logistical problems of safe storage, and of course, funding issues, the US Department of Energy confirmed on Tuesday its intentions to purchase 1 million barrels of crude oil to replenish reserves, bolstering crude gains

Otherwise, and in the bigger picture, a cloud of oversupply fears lingers over crude oil markets, especially considering record output from non-OPEC+ members

WTI (West Texas Intermediate): Where were we?

It’s high time I returned to my commentary roots and wrote some more coverage on crude oil markets.

Although it would be fair to say that oil has played second fiddle to precious metals in recent months, both in terms of market interest and, indeed, performance.

With that said, this appears to be changing, with recent geopolitical developments offering some welcome upside and, crucially, boosting WTI pricing above $60 for the first time since earlier this month.

WTI Oil: Crude rallies above $60 on fresh US sanctions and US million-barrel purchase_1

WTI Crude Oil (WTICOUSD), D1 year-to-date, OANDA

Without further ado, let’s break down some major macroeconomic themes and conclude with some market technicals, including some price targets.

WTI (WTICOUSD): Fundamental Analysis 24/10/2025

New US sanctions on Russian oil: Reported Wednesday, the United States announced new sanctions on Russian oil exports, following an apparent breakdown in ceasefire negotiations between Russia and Ukraine.

WTI Oil: Crude rallies above $60 on fresh US sanctions and US million-barrel purchase_2

U.S. Department of the Treasury, Press Releases, 22/10/2025

Coming only one day after Trump shelved a planned meeting in Budapest with Putin, it would seem that frustrations are running high after the demands of an immediate ceasefire have fallen on deaf ears.

"I don’t want to have a wasted meeting. I don’t want to have a waste of time, so I’ll see what happens. We did all of these great deals, great peace deals, they’re all peace deals. Agreements, solid agreements every one of them"

President Donald Trump, speaking to reporters at the White House, 21/10/2025

Clearly, the sanctions are intended as a bargaining tool to help encourage a peace deal, but at least so far, words from the Kremlin suggest that the Russian domestic oil industry will remain largely unaffected, boasting of its level of immunity from Western sanctions.

While Trump hopes the economic impact of new sanctions will encourage Putin to return to the negotiating table, only time will tell how effective these measures will be.

As for oil pricing, the associated fallout raises questions about supply, which is a positive development for pricing. This holds even more true when considering that the market narrative has been almost exclusively one of oversupply - the most recent geopolitical developments question this assumption somewhat, especially if tensions escalate.

US to buy 1 million crude barrels to replenish reserves: I think most would agree that, especially when compared to previous presidents, Trump shares a very particular relationship with the crude oil markets. After all, who could forget this legendary catchphrase?

If put simply, however, Trump policy surrounding crude oil centers almost exclusively revolves around two core tenets:

To maintain America’s lead as #1 producer of crude oil worldwide, therefore establishing control over supplyTo keep oil prices low to promote economic growth

On this basis, the latest development is the intent to purchase 1 million barrels of crude oil to replenish the Strategic Petroleum Reserve (SPR), which recently saw record levels of depletion under the administration of former President Joe Biden.

WTI Oil: Crude rallies above $60 on fresh US sanctions and US million-barrel purchase_3

US Energy Information Administration (EIA), Weekly U.S. Ending Stocks of Crude Oil in SPR, 23/10/2025

Being previously constrained by logistical matters and, of course, funding, the EIA will undoubtedly want to capitalise on historically low crude oil prices to increase its stockpile.

Naturally, markets have interpreted this information as positive for crude oil, helping to boost pricing.

Non-OPEC+ members report record crude output: While not as contemporaneous as the other two themes, a significant macro headwind continues to dictate the direction of crude markets: the fear of oversupply.

Most recently, this is reflected in record output from non-OPEC countries, which have contributed to the current bearish bias. Otherwise, the aforementioned EIA has also confirmed sustained high levels of production.

While there have been some attempts to stagger output increases by OPEC, which have proved limited in effectiveness, with crude oil inventories rising globally.

In a nutshell, although the previous two themes are bullish for crude oil, the longer-term bias likely remains bearish from a supply standpoint.

WTI (WTICOUSD): Technical Analysis 24/10/2025

WTI Crude Oil (WTICOUSD), D1, OANDA

While recent upside has been impressive, rallying by almost 8.6%, there is still plenty of work to be done if oil is to break the current downtrend.

While on a macro level, the narrative surrounding supply would have to change significantly to support this, technically, here’s some level to watch to the upside:

Price targets and support/resistance levels:

Price target #1 - Previous support turned resistance - $62.564

Price target #2 - $63.564 - 61.8% Fib

What is encouraging, however, is that one of my personal favourite indicators, the SSL channel, has flipped to report a bullish bias. While this can occur during periods of market consolidation, when combined with a rising OBV volume, it may perhaps signify that a larger change is afoot.

With that said, price action remains overwhelmingly bearish, assuming crude cannot break above ~$63.564, which might shake things up somewhat.

Source: marketpulse

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Adam

Bond

Data-starved bond traders risk seeing the October rally in Treasuries spoiled by the key inflation figures they’ve been waiting for.

US government securities climbed for much of October, sending benchmark 10-year yields below 4% to their lowest levels since April. They notched the gains even as a government shutdown delayed the release of crucial official statistics that would normally help traders plot the likely path of the economy and monetary policy.

Now, September inflation figures that were originally scheduled for Oct. 15 are set to be released Friday, just days before the Federal Reserve next meets. And while most investors see little chance of the consumer price data shaking expectations for a quarter-point interest-rate cut on Oct. 29, a surprise on the upside has the potential to upend the consensus for multiple reductions in the months ahead, putting recent market gains in jeopardy.

“There’s a risk that a higher-than-expected figure could change the outlook,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “It could prove to be a tipping point for the market.”

Through Wednesday, Treasuries returned 1.3% in October, on track for the best monthly performance since February, according to a Bloomberg index. Multiple drivers fueled the gains, from the potential for the shutdown to dent growth to resurgent trade tensions between the US and China, as well as several high-profile bankruptcies and a narrowed federal budget deficit.

Treasuries’ October Gains at Risk From CPI ‘Tipping Point’_1

Inflation, however, has continued to exceed the Fed’s 2% target. And while that didn’t keep the Fed from cutting rates last month, some officials have expressed the view that stubborn inflation merits a cautious approach to further reductions.

Economists expect the September consumer price report will show increases of 0.4% overall, and 0.3% excluding food and energy. The estimated year-on-year rates are 3.1% for both gauges. For the overall measure, that would be the highest since May 2024.

“Inflation has been sticky,” said Tony Farren, managing director in rates sales and trading at Mischler Financial Group. While a strong number would likely trigger a negative reaction, a softer number might not result in gains as traders would likely be skeptical of it, he said. “They’ll say, ‘There’s a lot of guess-timates in that number,’” Farren said.

Another wrinkle is oil. Until this week, expectations for future inflation generally had been in decline, thanks in part to a drop in crude that helped send the price of retail gasoline — which accounts for about 3% of the consumer price index — to the lowest level since December. That trend hit a snag on Thursday, however, when crude oil surged as much as 6.3% after the US imposed sanctions on Russian producers.

Treasuries’ October Gains at Risk From CPI ‘Tipping Point’_2

Short-term interest-rate futures markets are currently pricing in a high likelihood of quarter-point rate cuts at the subsequent Fed meeting in December, and at least three more next year. Those expectations are vulnerable if inflation flares up. Fed policymakers including Dallas Fed President Lorie Logan, Governor Michael Barr and St. Louis Fed President Alberto Musalem in recent weeks have said the potential for tariffs to increase price pressures has made them hesitant about additional rate cuts despite slowing job growth.

What Bloomberg Strategists Say ...

“Bonds and equities face asymmetric downside risks should inflation come in hotter-than-expected on Friday. However, if traders start questioning the quality of the data, the first reaction may not be the last.”

If the economy doesn’t continue to decelerate and the inflation numbers stay substantially above target, it’s going to be hard to make a case to meet the market’s expectations” for a full percentage point of rate cuts in the next year, said Robert Tipp, chief investment strategist and head of global bonds at PGIM Fixed Income. “Now that this has been fully priced in, there’s perhaps some anxiety about where exactly these inflation numbers are, and whether they’re supportive of the narrative that’s been priced in.”

Investor anxiety on that point is reflected in Treasury options activity, which has included several notable trades for protection against a rebound in the 10-year note’s yield beyond 4.05% by the end of the week. The benchmark closed at 4% on Thursday after the spike in oil, up 0.05 percentage point on the day, and was little-changed in early Asian trading on Friday.

Interest-rate strategists at Barclays Capital this week recommended exiting a bullish position in Treasuries, recommended since June, based in part on the potential for the September CPI data to erode profit in it.

And those at Morgan Stanley, citing “risk of an upside surprise” by the September CPI based on seasonal patterns, advised positioning for an increase in 10-year breakeven inflation rates — the CPI rate needed to equalize the returns of regular and Treasury inflation-protected securities, or TIPS.

“We are a little more concerned about inflation than the market is here,” said Anders Persson, CIO and head of global PHI at Nuveen Asset Management. “We are still of the view the Fed moves at the next meeting and the rate path is lower, but we want to get more insight on inflation.”

US 10-year yields were one basis point higher at 4.01% as of 5:15 a.m. in New York.

Source: Bloomberg

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Glendon

Forex

Economic

The final October print for UMich Consumer Sentiment data slipped a smidge from the preliminary print, to its weakest since May as a modest increase in sentiment among younger consumers was offset by decreases among middle-age and older consumers.

The final October sentiment index fell to 53.6 from 55.1 in September, a deterioration from the preliminary reading, according to the University of Michigan. A measure of current conditions dropped to the lowest since August 2022.

Overall, consumers perceive few material changes in economic circumstances from last month; inflation and high prices remain at the forefront of consumers' minds with the spread between Democrats' and Republicans' confidence at a record high...

Source: Bloomberg

Year-ahead inflation expectations ebbed from 4.7% last month to 4.6% this month. These expectations are currently midway between the readings seen a year ago and the highs seen this year in May in the wake of the initial announcements of major tariff changes. Long-run inflation expectations increased from 3.7% last month to 3.9% this month but remains below this year's high point seen in April.

Source: Bloomberg

Notably the rise in longer-term inflation expectations was driven by Independents...

Consumers remain frustrated by the persistence of high prices, spontaneously mentioning high prices at various points throughout the interviews.

About 45% of consumers referenced that their personal finances were eroded by high prices, the highest reading since August 2024.

Labor market expectations were stable this month, albeit at generally unfavorable levels.

About 64% of consumers expect unemployment to increase in the year ahead, just shy of this year's high of 66% seen in March. For the eleventh consecutive month, more than 60% of consumers expect any income gains over the next year to be outstripped by inflation.

The expected probability of job loss waned slightly but remained elevated

Finally, there was little evidence this month that consumers connect the federal government shutdown to the economy. Only about 2% spontaneously referenced the shutdown during this month's interviews, compared with the 10% of consumers who did so in January 2019 during that 35-day shutdown.

Source: Zero Hedge

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Commodity

Oil prices edged up on Friday, extending the previous day's surge and on track for a weekly gain as U.S. sanctions on Russia's two biggest oil companies over the war in Ukrainespurred supply concerns.

Brent crude futures rose 46 cents, or 0.7%, to $66.45 by 1125 GMT. U.S. West Texas Intermediate crude futures also advanced 46 cents, or 0.7%, to $62.25.

"Everyone is waiting for signs of how big the impact is of the new sanctions on Russia. The market is in a wait-and-see mode to see what happens to the flows," said Giovanni Staunovo, commodity analyst at UBS.

Both benchmarks jumped more than 5% on Thursday following the sanctions announcement and were set for about a 7% weekly gain, the biggest since mid-June.

Six-month spreads for Brent and U.S. crude futures returned to backwardation - where contracts for later loading fall below those for earlier loading - having briefly been in contango this week.

That indicates a shift among trader concerns from oversupply to undersupply, allowing them to sell at near-month higher prices instead of paying for storing oil for future sale.

US SANCTIONS TWO MAJOR RUSSIAN OIL SUPPLIERS

U.S. President Donald Trump hit Russia's Rosneft (ROSN.MM) and Lukoil (LKOH.MM), with sanctions on Thursday to pressure Russian President Vladimir Putin to end the Ukraine war. The two companies together account for more than 5% of global oil output.

The sanctions prompted Chinese state oil majors to suspend Russian oil purchases in the short term, trade sources told Reuters. Refiners in India, the largest buyer of seaborne Russian oil, are set to sharply cut Russian crude imports, industry sources said.

"Flows to India are at risk in particular," Janiv Shah, a vice president of oil markets analysis at Rystad Energy, said in a client note. "Challenges to Chinese refiners would be more muted, considering the diversification of crude sources and stock availability."

Kuwait's oil minister said the Organization of the Petroleum Exporting Countries would be ready to offset any shortage in the market by raising production.

The U.S. said it was prepared to take further action, while Putin derided the sanctions as an unfriendly act, saying they would not significantly affect the Russian economy and talking up Russia's importance to the global market.

Britain sanctioned Rosneft and Lukoil last week and the European Union approved a 19th package of sanctions against Russia that includes a ban on imports of Russian liquefied natural gas.

The EU also added two Chinese refiners with a combined capacity of 600,000 barrels per day, as well as Chinaoil Hong Kong, a trading arm of PetroChina (601857.SS) , to its Russian sanctions list, its official journal showed on Thursday.

Russia was the world's second-biggest crude oil producer in 2024 after the United States, U.S. energy data showed.

Investors are also focusing on a meeting between Trump and Chinese President Xi Jinping next week as the pair work to defuse longstanding trade tensions and end a spate of tit-for-tat retaliatory measures.

Source: reuters

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Michelle

Economic

Forex

U.S. business activity picked up in October, but a deterioration in the economic outlook blamed on the Trump administration's protectionist trade policy limited job gains and companies were sitting on piles of unsold goods amid a slump in exports.

S&P Global's flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 54.8 this month from 53.9 in September. A reading above 50 indicates expansion in the private sector.

The services sector accounted for most of the improvement, with manufacturing maintaining a steady pace of expansion.

At face value, the PMI suggested the economy started the fourth quarter on a solid footing. But an official data blackout because of the U.S. government shutdown amid a standoff over funding between Republicans and Democrats in Congress has made it difficult to gauge the economy's health.

August's data showed a stalling labor market as businesses remained reluctant to boost hiring, but consumer spending was resilient, mostly driven by higher-income households.

"Business confidence in the outlook for the coming year has deteriorated further, and is at one of the lowest levels seen over the past three years as companies worry about the impact of policies, most notably tariffs," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"Companies are also concerned over disappointing export sales, especially in manufacturing, and factories are seeing an unprecedented rise in unsold stock."

EXPORT ORDERS SINK TO SIX-MONTH LOW

The survey's measure of new orders received by businesses increased to 54.2 from 53.1 in September. Its gauge of export orders dropped to six-month low of 47.8 from 49.7 in September.

Rising inventory is tempering selling price increases even as businesses continue to face higher costs for inputs.

A measure of prices asked by businesses slipped to 55.2 from 56.5 in the prior month. A measure of prices paid for inputs edged up to 60.8 from 60.6 in September, attributed to tariffs.

It is unclear what the implications are for inflation. Though consumer prices have risen amid the pass-through from tariffs, they have not sky-rocketed as economists had feared.

There are indications that businesses have absorbed most of the import duties and have also been selling merchandise accumulated before President Donald Trump's wide-ranging tariffs. Though the S&P Global survey reported businesses were carrying excess inventory, government data last month showed inventories were drawn down in the second quarter.

Economists say companies are absorbing import duties at the expense of hiring more workers. The Federal Reserve is expected to cut interest rates again next week to shore up the labor market. The survey's measure private sector employment rose to 51.4 from 50.6 in September. All the gains came from the services sector, with factory employment growth slowing.

S&P Global said employment growth in both sectors "was curtailed by a lack of suitable candidates to replace leavers but also reflected concerns over staffing needs given current sales levels and uncertainty over the demand outlook."