Market Summary by AFORTI: US-China trade war escalation, interest rate cuts, US government shutdown

2025-10-13

The past week was dominated by: the escalation of the US-China trade war, which caused a sharp sell-off in stock markets and a drop in Bitcoin, and the interest rate cut in Poland to 4.50%. Amid rising market uncertainty, gold hit a historic record, exceeding $4,000 per ounce. In the coming week, markets' attention will focus on key macroeconomic data, including the CPI inflation indicator and GDP in Poland, as well as price indicators in the eurozone and USA, still under the influence of the ongoing US government shutdown.

Economic Indicators

Poland

1. Foreign exchange reserves (EUR) (September): value 223.26B; forecast -; previously 223.50B;

2. Interest rate decision (October): value 4.50%/4.75%; forecast 4.75%; previously 4.75%;

3. Thomson Reuters IPSOS PCSI Index (m/m) (October): value 50.44; forecast -; previously 50.63;

Eurozone

1. Retail sales (y/y) (August): value 1.0%; forecast -; previously 2.1%;

2. Retail sales (m/m) (August): value 0.1%; forecast 0.1%; previously -0.4%;

3. Sentix investor sentiment (October): value -5.4; forecast -7.5; previously -9.2;

4. Thomson Reuters IPSOS PCSI Index in Germany (October): value 45.75; forecast -; previously 47.00;

5. Thomson Reuters IPSOS PCSI Index in France (October): value 40.61; forecast -; previously 39.89;

Germany

1. Industrial production in Germany (m/m) (August): value -1.0%/-4.3%; forecast -; previously 1.3%;

2. Industrial production in Germany (y/y) (August): value -4.20%; forecast 1.53%; previously 1.53%;

3. Car registrations in Germany (y/y) (September): value 12.8%; forecast 5.0%; previously 5.0%;

4. Export value in Germany (m/m) (August): value -0.5%; forecast 0.3%; previously -0.6%;

5. Import value in Germany (m/m) (August): value -1.3%; forecast -0.5%; previously -0.1%;

6. Germany's trade balance (August): value 17.2B; forecast 15.1B; previously 14.7B;

France

1. French IHS S&P Global Construction PMI (m/m) (September): value 42.9; forecast -; previously 46.7;

2. France's trade balance (August): value -5.5B; forecast -5.2B; previously -5.7B;

3. France's current account (August): value 1.50B; forecast -; previously -1.90B;

United Kingdom

1. Construction sector PMI (September): value 46.2; forecast 46.1; previously 45.5;

2. Mortgage interest rates (GBP) (September): value 6.78%; forecast -; previously 6.86%;

3. Halifax house price index (y/y) (September): value 1.3%; forecast 2.2%; previously 2.0%;

4. Halifax house price index (m/m) (September): value -0.3%; forecast 0.2%; previously 0.2%;

USA

1. Crude oil inventories: value 2.250M/3.715M; forecast 3.715M; previously 1.792M;

2. Crude oil imports: value 0.731M; forecast -; previously 0.071M;

3. MBA mortgage applications (w/w): value -4.7%; forecast -; previously -12.7%;

4. EIA short-term energy outlook: value -; forecast -; previously -;

5. Consumer inflation expectations (September): value 3.4%; forecast -; previously 3.2%;

6. Redbook index (y/y): value 5.8%; forecast -; previously 5.9%;

7. API weekly crude oil inventory report: value 2.780M/2.250M; forecast -; previously -3.674M;

8. Consumer credit (August): value 12.90B/0.36B; forecast -; previously 18.05B;

9. 10-year Treasury note auction: value 4.117%; forecast -; previously 4.033%;

10. FOMC meeting minutes: value -; forecast -; previously -;

China

1. Foreign exchange reserves (USD) (September): value 3.339T; forecast -; previously 3.322T;

2. Thomson Reuters IPSOS PCSI Index in China (October): value 74.19; forecast -; previously 72.82;

Foreign exchange market:

This week, the euro (EUR) strengthened against the Polish zloty (PLN) by 0.14%, particularly after Friday's tariff announcements for China. The euro price fluctuated in the range of 4.2492 – 4.2740.

Similarly, the dollar (USD) strengthened against the Polish zloty (PLN) by 1.27%. The dollar price fluctuated in the range of 3.6231 – 3.6856.

Oil and gold market

The price of BRENT crude fell by 3.34%. The price fluctuated in the range of 62.21 – 66.54 USD/barrel.

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Gold, on the other hand, rose by 3.13%, breaking through the historic value of $4,000. The gold price fluctuated in the range of 3,912.65 – 4,079.90 USD/ounce.

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Stock Exchange

The WIG index fell by 0.06%. The WIG index price fluctuated in the range of 106,758 – 108,830.

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Cryptocurrencies

The price of Bitcoin (BTC) fell by 4.25%, dropping particularly after the US warning of tighter tariffs on China. The Bitcoin price fluctuated in the range of 411,000 – 452,720 zlotys.

Important events from last week

Trade war escalation: On Thursday, October 9, 2025, China's Ministry of Commerce (MOFCOM) announced tightened export controls on technology and products made from rare earth metals and advanced semiconductors/AI. China applied the *De Minimis* Rule for the first time, subjecting to control foreign products (e.g., magnetic materials) containing at least 0.1% Chinese materials. In response to the announcement of additional tariffs on China, on Friday the Middle Kingdom responded with an antitrust investigation against Qualcomm (QCOM) and new port fees for US vessels. In reaction to China's "extraordinarily aggressive" position, President Trump announced the imposition of an additional 100% tariff on Chinese goods and export controls on "critical software," taking effect November 1, 2025. Friday's escalation caused the largest drops in US stock markets since April and record liquidations in cryptocurrency markets.

Interest rate cut: The Monetary Policy Council (RPP) decided to lower interest rates by 0.25 percentage points, marking the fourth cut in 2025 and setting the reference rate at 4.50% annually. This decision, although partially surprising to the market, signals readiness for further monetary policy easing, which directly affects the zloty (PLN) exchange rate. NBP President Adam Glapiński stated that there is room to gradually lower rates toward 4.00%, provided inflation remains around 2.9% and macroeconomic data remain favorable. The immediate effect on the domestic market is already a decline in interest rates on savings accounts, where the highest rates in October are 8% or 7%.

US government shutdown: The US federal government shutdown, ongoing since the beginning of the month, deepens uncertainty as both parties in the Senate remain at a negotiating standstill regarding funding. The consequence of the shutdown for financial markets is primarily the lack of publication of many official government macroeconomic data from the American market. This situation poses serious risk if the shutdown exceeds four weeks, though investors generally assume politicians will ultimately reach a compromise. Moreover, the current paralysis has a direct negative impact on the economy, costing the American tourism industry an estimated $1 billion in lost spending every week.

Further increases in gold value: The price of gold broke an all-time historic record, decisively breaking through the $4,000 per ounce barrier, just a week after breaking the $3,800 barrier. Recording a staggering 135% increase since 2022, gold quotes continued their upward march, reaching levels exceeding $4,080 in subsequent days before a correction occurred. This dynamic rally is interpreted as a sign of lost confidence in the existing political and monetary order.

Events worth watching this week

Outlook for the zloty: The zloty's valuation will be closely tied to the publication of macroeconomic data that may determine the direction of future Monetary Policy Council (RPP) policy. Key readings include the CPI Index (y/y) and Industrial Production (m/m) (Wednesday, October 15), with a consumer inflation forecast at 2.9%. Additionally, investors will learn GDP data (y/y) for Q3 (Thursday, October 16), which will indicate the condition of the Polish economy. The RPP, after the recent rate cut to 4.50%, may continue gradual reductions toward 4.00% if inflation remains at a favorable level.

Outlook for the euro: The euro will react to data from the largest eurozone economies, especially ZEW Economic Sentiment in Germany (Tuesday, October 14) and price indicators. Markets will learn the detailed HICP Index in Germany (y/y) (Tuesday, October 14) and CPI Index in France (y/y) (Wednesday, October 15), which are crucial for European Central Bank (ECB) policy. After dismal industrial production data from Germany, attention will also focus on speeches by ECB members, including Guindos (Wednesday, October 15; Thursday, October 16) and President Lagarde (Thursday, October 16), which will indicate the future rate path.

Outlook for the dollar: The dollar's valuation will remain sensitive to the US government shutdown ongoing since the beginning of the month, which increases uncertainty and disrupts the publication of macroeconomic data. Investors will eagerly await the Core CPI Index (y/y) and CPI Index (y/y) for September (Wednesday, October 15) and Retail Sales (m/m) (Thursday, October 16). A critical market-adjacent event is the approaching date of October 15, when military families and federal employees may not receive scheduled payments, intensifying political pressure to resolve the impasse.

Outlook for the pound: The pound sterling will react to key reports on the labor market and the dynamics of the British economy. Early in the week, data on Average Earnings (excluding bonuses) and the Unemployment Rate will be published (Tuesday, October 14). Most important for GBP, however, will be preliminary GDP readings (y/y) and GDP (m/m) for August (Thursday, October 16). Additionally, markets will monitor speeches by BoE Governor Bailey (Tuesday, October 14) and MPC members, including Mann (Monday, October 13; Thursday, October 16), seeking signals regarding further bank decisions.

TREASURY DEPARTMENT

AFORTI.BIZ

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