Relief Rally on Wall Street Sends Stocks to All-Time Highs, Bullion Reaches Another Record, Greenback Strongest in 2 Months: Oct. 8, 2025

Investors are benefiting from a relief rally on Wall Street as traders brush off yesterday’s intraday turbulence. The sudden green to red move, which had occurred shortly after record highs were met, was driven by longer-term AI capital return concerns and valuation worries. Meanwhile, the government shutdown is on its eighth day, but the greenback has hit its highest level in two months, a result of angst about sovereign debt and political changes in Paris and Tokyo. Robust bids for US tender are emblematic of strengthening confidence in domestic conditions at this juncture, a significant turn from the “Sell America” trade that persisted in the first few months of the year. Additionally, although problems in Washington are challenging, participants perceive the situation to be superior to other nations. Nevertheless, the currency is still down 8.9% year to date. Bullion is also climbing today, pushing above $4,000, an all-time high. Yields are little changed, though, as fixed-income watchers wait for this afternoon’s release of minutes from the Fed’s September meeting. The publication will arrive after a $39 billion auction for 10-year Treasury notes, which will be followed by a $22 billion offering of 30-year bonds tomorrow. Stocks are advancing across all major benchmarks and most sectors as animal spirits make a comeback. Bitcoin and forecast contracts are taking part in the enthusiasm with strong buying too, while volatility protection instruments drop in price due to reduced hedging demand. In other developments, crude oil and silver are gaining while lumber, copper and natural gas descend.

From Sell America to Buy America?

Today’s new equity records amidst a 2-month high for the greenback signal greater confidence in domestic conditions going forward, a stark difference from the “Sell America” trade that transpired during the first few months of the Trump 2.0 administration. It’s a good day on Wall Street and US strength is being appreciated across global markets in light of trouble in other nations, this time, Paris and Tokyo. The relative gains are particularly significant for the ongoing notion that Washington isn’t as safe as it used to be; however, the gold rally points to uneasiness about the international trajectory and how it relates to fiscal situations, central bank’s tolerating above target-inflation and somewhat of a shifting world order. Is the dollar doing great because of itself, or due to the weakness of its counterparts?

International Roundup

Real Wage Growth in Japan Declines Again

Inflation-adjusted real wages in Japan slipped 1.4% year over year (y/y) in August, marking the eighth consecutive decline as inflation, which is trending north of 2%, continues to outpace workers’ raises, according to the Ministry of Health, Labor and Welfare. In August, nominal cash earnings and overall wage incomes climbed 1.5% y/y, missing the 2.6% economist consensus estimate and sinking from July’s 3.4% gain. In a related matter, overtime pay in August was up 1.3% y/y compared to 3% in the preceding period.

Views of Economy Improve, but Are Still Negative

The Economy Watchers Current Index strengthened from 46.7 in August to 47.1 last month, according to the Cabinet Office. Despite hitting an eight-month high and exceeding the economist consensus estimate of 47, the gauge was still below the pessimism-optimism threshold of 50.

The benchmark is based on surveys of individuals with careers that are closely tied to the economy. The August improvement is largely due to an increase in visits to the country from foreign tourists with the outlook component hitting 48.5, up from 47.5 in July and a nine-month high. The household-related activities benchmark and the corporate benchmark both climbed by half a point to 46.6 and 48.

Australia Building Permits

Australia’s number of building permits for dwellings fell 6% month over month (m/m) in August but was still up 3% y/y, according to the Australian Bureau of Statistics. The monthly change matched the economist consensus estimate and was slightly better than July’s 8.2% drop. Approvals for private homes, while matching the economist forecast for a 2.6% m/m decline, worsened from July, when the number climbed 1.1%.

Discovery of Accounting Error Improves UK’s Fiscal Picture

The UK’s debt issuance year to date as of the end of May was £2 billion lower than previously thought with the HM Revenue and Customs office reporting that it had revised the figure after discovery an accounting mistake. The announcement comes as Chancellor of the Exchequer Rachel Reeves is preparing a budget for a Nov. 26 presentation and is struggling to address an anticipated deficit. Meanwhile, Kemi Badenoch, a member of the opposition party, has pledged to slash the country’s spending if Conservatives win a majority in Parliament. The next general election isn’t until 2029, but the country’s prime minister can call for a special election prior to then. The UK’s outstanding debt is comparable to its annual GDP. Relative to GDP, debt is at its highest level since 1947.

ECB Member Says Rate Hike Is Possible

Policymakers with the European Central Bank (ECB) have no bias toward making additional rate cuts and could instead hike the key benchmark, says José Luis Escrivá, a member of the organization’s governing council and governor of the Bank of Spain. The ECB is expected to leave its 2% deposit facility rate unchanged when it meets Oct. 30 although some members have said they support lower the benchmark. He maintains that the most recent ECB statement lacks any information that would point to either a decrease or increase of costs for using the deposit facility.