Weekly Investment Observation (October 26, 2025)

Period

October 19–25, 2025

1. Key Economic Indicators

  • US CPI (September): +3.0% y/y / +3.1% forecast / Inflation remains above Fed target, limiting policy easing scope.

  • US S&P Global Composite PMI (flash): 54.8 / flat vs. expectations / Services-led growth, sentiment soft.

  • Japan Core CPI (September): +2.9% y/y / In line / Energy and food costs pushing inflation up despite demand weakness.

  • Japan PMI (October flash): Manufacturing 48.3; Services 52.4 / Flat vs. forecasts / Manufacturing remains weak, cost pressures persistent.

  • Eurozone Composite PMI (October flash): 52.2 / Consensus 51.0 / Demand rebound underway albeit with regional disparity.

2. Major Economic & Geopolitical News

  • US: Government shutdown affecting many statistics, but CPI release proceeded. Implication: Inflation still sticky, limiting Fed flexibility. Spillover: Risk assets may see increased volatility.

  • Japan: Inflation has re‐accelerated while manufacturing is flagging. Implication: Policy dilemma deepening. Spillover: Yen and Japanese assets under scrutiny.

  • Eurozone: PMI improvement suggests economy is stabilizing. Implication: ECB less likely to tighten further. Spillover: Euro’s upside potential may be constrained.

  • China: Lending rates unchanged, indicating cautious policy stance. Implication: Growth engine remains fragile. Spillover: Global risk appetite impacted via commodity/import channels.

  • Inflation composition: US gasoline rose 4.1% in September; owner’s equivalent rent increase slowed. Implication: Component shifts matter for real‐income impact. Spillover: Consumer behaviour may adjust, dampening some inflation transmission.

3. Investment Stance

  • Equities: Neutral to cautious — Valuation support exists, but macro uncertainties (inflation, policy shifts) weigh.

  • Bonds: Neutral — With inflation not clearly trending downward, yields may find a floor.

  • Commodities: Neutral — Demand signals improving but offset by inflation risks and policy ambiguity.

  • FX: Range‐bound — USD supported by higher inflation and yield; JPY/EUR remain policy‐sensitive.

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