Global Economy Briefing — October 7, 2025

Holiday closures across China, Korea, and Hong Kong kept Asian liquidity thin, while fresh data showed softer German factory demand, slower U.S. consumer credit, and mixed price and wage signals in Japan.

Rates markets absorbed steady-to-higher auction yields in Europe and the U.S., and commodities took their cue from a U.S. crude build and weaker global dairy prices.

United States

Household sentiment eased as IBD/TIPP fell to 48.3 (from 48.7) and one-year consumer inflation expectations rose to 3.4% (from 3.2%).

Redbook sales growth held at 5.8% y/y, but consumer credit nearly stalled at $0.36B versus a $12.9B consensus and $18.05B prior, hinting at tighter credit creation.

A 3-year Treasury auction tailed higher at 3.576% (prior 3.485%), while GDPNow stayed at 3.8% for Q3.

Fed speakers (Bostic, Bowman, Kashkari) remained in focus as energy dynamics and credit conditions interact with the soft-landing narrative. API reported a crude inventory build of 2.78M barrels.

Europe & UK

German factory orders fell 0.8% m/m in August (after −2.7%), reinforcing a hesitant manufacturing pulse. France’s external accounts improved at the margin: current account +€1.5B, trade deficit −€5.5B (from −€5.7B), and reserve assets rose.

Spain’s Treasury sold 6- and 12-month bills at 1.937% and 2.006%, respectively, while Germany’s 5-year Bobl auction printed at 2.310%.

In Switzerland, FX reserves increased to $726.7B. UK housing cooled on Halifax data (−0.3% m/m; +1.3% y/y) as average mortgage rates eased to 6.78%, but construction headwinds linger.

Asia

Japan’s near-term activity signal softened (coincident index −0.7% m/m), while forward momentum improved (leading index 107.4).

Wage growth decelerated sharply (average cash earnings 1.5% y/y; overtime 1.3%), even as the current account widened seasonally (n.s.a. ¥3.776T; adjusted ¥2.46T).

Business sentiment cooled (Reuters Tankan 8 from 13). Australia’s housing pipeline remained weak (building approvals −6.0% m/m; private houses −2.6%).

The RBNZ eased policy to 2.50% (consensus 2.75%), signaling greater-than-expected support as New Zealand’s GlobalDairyTrade index fell 1.6%. Regional liquidity stayed thin amid holidays across North Asia.

Other Markets

Canada’s trade deficit widened to C$6.32B as exports slipped to C$60.58B and imports rose to C$66.91B, but domestic activity gauges surprised to the upside (Ivey PMI 59.8; 61.6 n.s.a.).

Singapore’s FX reserves edged up to $393.1B. Brazil’s IGP-DI inflation quickened to 0.36% m/m.

South Africa’s gross reserves dipped to $69.74B even as net reserves improved to $67.87B. Norway’s manufacturing output rose 0.7% m/m.

Commodities & Flows

Energy sentiment softened on the U.S. crude build (+2.78M), while upcoming DOE data will refine the balance view.

Higher front-end yields in Spain and Germany, alongside a firmer U.S. 3-year auction rate, signaled stable-to-tighter funding costs.

Dairy prices fell again, a headwind for New Zealand’s terms of trade.

Risks and Framing

Policy divergence remains the anchor: Europe’s industry is fragile, the U.S. consumer is resilient but credit creation slowed sharply, and Japan faces softer wages with improving external balances.

A surprise-size RBNZ cut underscores uneven regional growth. The next catalysts are U.S. wholesale and labor indicators, China’s post-holiday high-frequency prints, and core inflation signals that could reprice front-end curves into Q4.

Energy inventories and shipping costs remain the quickest channels to re-accelerate headline inflation.