Global Tension: A Macro Pilgrim's Ledger (October 19, 2025)

A weekly report by Brent Johnson of Santiago Capital Research

Over last weekend, sentiment across global markets was tense. Analysts and traders warned that Monday could bring heightened volatility as U.S.–China hostilities threatened to escalate further. Reports circulated of new Chinese export restrictions and potential tariff retaliation from Washington, and futures reflected the unease.

That tone shifted late Sunday after Trump acknowledged that relations with China remain strained but indicated he was hopeful about continued dialogue and reiterated his intention to meet with President Xi. The remarks helped ease immediate fears of renewed confrontation, with markets opening more stable than initially expected.

From there, attention turned back to the policy landscape. The ongoing government shutdown limited the flow of official data, leaving investors reliant on regional Fed surveys and policy signals to gauge economic conditions. At the same time, diplomatic headlines began to dominate as markets welcomed the announcement of a peace agreement between Israel and Hamas.

By the week’s end, the narrative had evolved from anticipated volatility to cautious stability. Markets were reminded once again that tone and timing can move prices as decisively as data, and that in moments of uncertainty, a few measured words can change the entire direction of the conversation.

“In politics and in markets, tone is often the first signal of direction.”
— George Schultz

The Week That Was

The week began quietly, with U.S. markets closed Monday for the Columbus Day holiday, but the calm was short-lived. The government shutdown dragged into another week, freezing most federal data releases and leaving traders to navigate a thin stream of private and regional updates. Lingering U.S.–China policy tensions only added to the unease, keeping global risk appetite in check.

When the first readings arrived midweek, they offered little comfort. The New York Fed’s Empire State Manufacturing Survey slipped further into negative territory, signaling persistent weakness in new orders and employment.

Later that day, the Fed’s Beige Book described economic activity as “little changed,” with selective hiring, slower consumer spending, and a cautious tone across most districts—confirmation that growth remained steady but subdued.

Thursday brought more of the same. The Philadelphia Fed Manufacturing Survey eased modestly, showing softer new orders and extended delivery times, while weekly jobless claims remained suspended by the shutdown, depriving investors of a key labor-market gauge. With CPI still delayed until October 24, markets were left to parse tone rather than numbers.

Friday’s calendar featured Industrial Production and the Import & Export Price Indexes for September, but both releases were affected by the shutdown. With no official figures to anchor expectations, investors leaned on anecdotal signals from the Beige Book and earnings reports to assess the underlying trend—an economy still expanding, but increasingly uneven across regions and sectors.

The mosaic that emerged was one of cautious stability. Growth persisted despite policy paralysis, yet the absence of reliable data left markets operating in a fog, waiting for Washington to reopen and for the missing pieces—particularly inflation—to complete the picture.