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Daily Economic Update
13.10.2025US-China: Trump and Vance strike a reconciliatory tone following fresh China trade tensions. President Trump on Sunday struck a de-escalatory tone on the fractious trade relationship with China, saying, “don’t worry about China, it will all be fine” and downplayed the November 1 deadline for imposing these tariffs, calling it “an eternity.” VP Vance also seemed to temper tensions, hoping that China would “choose the path of reason” and that the US would reciprocate if “they are willing to be reasonable”. Trump and Chinese President Xi are expected to meet in South Korea during the October 31-November 1 Asia-Pacific Economic Cooperation summit, and it appears that both parties are trying to leverage their respective positions to extract more favorable terms ahead of their talks. Following a sharp market sell-off last Friday, the latest comments helped spur a rebound this morning, with US equity futures jumping by over 1% but most Asian markets were in the red. Meanwhile, China’s trade data for September shows that exports and imports surged, marking their strongest increases in months. Outbound shipments rose 8.3% y/y in September, beating expectations of a 6% gain and rebounding from August’s six-month low of 4.4%, according to recently released customs data. Meanwhile, imports surged 7.4% y/y in September, far exceeding expectations and the highest increase since April 2024.
Japan: LDP leader Takaichi’s PM bid shaky as Komeito leaves coalition. The campaign of Sanae Takaichi, the new leader of the ruling LDP party, to become the country’s next prime minister came under threat with the junior coalition partner, the Komeito party, breaking its long-standing coalition with the LDP. Despite being the largest party in the current parliament, LDP lacks a majority on its own and would have to seek support from minor coalition and opposition parties to push through Takaichi’s candidacy when the lower house votes on PM nominations later this month. Takaichi supports a more fiscally stimulative policy, while she previously urged the Bank of Japan to avoid raising interest rates and maintain a loose monetary stance.
Oil: Prices decline on Friday on Trump China tariff threats and amid easing geopolitical risk. Brent closed lower for the second consecutive week on Friday, dropping to a five-month low of $62.7/bbl (-2.8% w/w; -16% ytd) after President Trump threatened additional 100% tariffs on China. Geopolitical risk was perceived to be markedly lower as well, as the Gaza-Israel ceasefire came into effect, while a larger-than-expected buildup in commercial crude oil inventories in the US (+3.7 mb w/w, according to EIA data) only reinforced worries about a potential supply glut. In focus this week are the monthly reports from both OPEC and the IEA, due today and tomorrow, respectively. Market participants will be closely watching OPEC’s oil production figures, a key focus given OPEC+’s ongoing policy of easing output restrictions amid an uncertain demand outlook. Brent futures rose 1.6% this morning in Asian trading to back of above $63/bbl on President Trump’s more positive rhetoric vis-à-vis a China trade deal.
Global: US-China trade tensions, US government shutdown, and political developments in France/Japan key matters this week. Any developments on the latest eruption of the US-China trade tensions would take center stage, especially following the markets’ sharp reaction last Friday. In the US specifically, developments regarding the government shutdown, which enters its third week on Wednesday, will continue to be key. Finally, numerous Fed officials, including Chair Powell on Tuesday, are scheduled to speak this week, providing clues on their thinking ahead of the FOMC meeting on 28-29 October amid fewer economic data releases given the ongoing government shutdown. In the Eurozone, political developments in France around the budget and the government’s formation should continue to attract attention. In terms of data releases, industrial production figures for the Eurozone, on Wednesday, are expected to show a 1.5% m/m decline in August, more than reversing a modest 0.3% gain in July. In the UK, August’s GDP data is due on Thursday and is expected to show 0.2% m/m growth following July’s no change. Job indicators will be released on Tuesday, with the street forecasting a steady unemployment rate of 4.7% for the June-August period but slightly softening regular pay growth of 4.7% y/y for that period down from 4.8% in the May-July period. In China, inflation data is due on Wednesday with the headline rate forecast at -0.1% y/y in September after the -0.4% reading in August. Finally in Japan, political developments should remain in focus, as the new LDP leader Takaichi continues trying to consolidate her PM bid by seeking support from minor opposition parties ahead of an imminent vote by the parliament.
