Wall Street Seeks Catalysts After Hitting New Records: Oct. 7, 2025

Wall Street is searching for catalysts today as the ongoing government shutdown continues to cloud the outlook for investors. Market bulls benefited significantly in the past few days amidst a lack of economic figures, however, as multibillion dollar AI deals strengthened sentiment regarding modern technology’s growth potential. While that exuberance has quelled, further upside may emerge from Fed speakers acknowledging that decelerating labor conditions warrant imminent rate cuts across several meetings. Animal spirits could also be reignited by incremental progress in Washington’s grapple even as the chances of a prolonged standoff remain elevated by historical standards. Indeed, President Trump is now considering negotiations with Democrats, although messaging has been quite mixed, as possible concessions coincide with threats of federal layoffs and suspended backpay for furloughed workers. And as we’ve been navigating an uneventful calendar due to little teamwork on Capitol Hill while appreciating data from private sector providers, Carlyle reported that September job gains were 17k, pretty bad, but not as awful as ADP’s -32k or as good as Revelio Lab’s 38k additions. Stocks and Treasuries are near their flatlines overall as there’s more activity in the currency, commodity and prediction markets. US tender and gold are rising sharply due to political and fiscal worries in London, Paris and Tokyo driving bids for the greenback and bullion, which reached a fresh record again this morning alongside the S&P 500 and Nasdaq 100 benchmarks. Copper, natural gas, and forecast contracts are also experiencing strong interest. On the other hand, crude oil, lumber and silver are retreating. Bitcoin is descending as well, as speculative winds take a break.

Monetary Easing Is Needed

The continuing government shutdown coincides with mounting evidence of decelerating employment conditions. The risk of Washington’s standoff extending alongside additional incremental labor market weakening justifies an accommodative tilt by Fed officials at this juncture. Meanwhile, price pressure have neutralized in the 2s and while they are not at the central bank’s target, job vulnerabilities are top of mind today. This familiar trap is occurring across global economies, as cuts are needed despite cost forces remaining too elevated. It’s the reason gold keeps rallying and is up 51% year to date.

International Roundup

Japan Household Spending Growth Slows

Household spending in Japan decelerated in August relative to July but was up considerably relative to the year-ago period, according to data from the Ministry of Internal Affairs and Communications. Spending grew 0.6% month over month (m/m), missing the economist consensus estimate of 0.1% and weakening from 1.7% in the preceding month. Relative to August of 2024, cashier activity was up 2.3%, surpassing expectations that the pace would be unchanged from July’s 1.4% y/y print. Japan also reported that real income based on the Consumer Price Index (CPI) climbed 3.2% year over year (y/y). When excluding imputed housing costs based on rent from the CPI, real income advanced up 2.8%. The economic releases come as the country’s newest prime minister, Sanae Takaichi, is expected to propose measures to help households deal with inflation, which eased from 3.1% in July to 2.7% in August.

Canada Trade Balances Weaken

Canada’s goods trade deficit increased and its services surplus sank during August, according to Statistics Canada. Merchandise exports slipped 3% and purchases of products from other countries expanded 0.9%, resulting in the country’s trade deficit expanding from $3.8 billion in July to $6.3 billion in August. It was the first decline in shipments to other countries in three months. Conversely, the year-to-date metric is up 0.3% y/y. For August, lumber and sawmill exports dropped 25.4%, largely a result of US tariffs. It was the lowest level of shipments since May 2020. Other considerable drags on the trade balance and the extent of their declines were as follows:

• Unwrought gold, silver, and platinum group metals, and their alloys category, 11.8%
• Industrial machinery, equipment and parts, 9.5%
• Metal and non-metallic mineral products group, 7.6%.

Also in August, the country’s export of services fell 0.2%, which contributed to the sector’s trade surplus contracting from $400 million in July to $300 million.

But PMI Picks Up

Economic activity in September grew at its fast pace in 15 months with Canada’s employment conditions helping to push the Ivey Purchasing Managers Index up to 59.8 from August’s 50.1 result. Within the gauge, the employment subindex climbed from 46 in July to 50.2, although the price metric sank from 65.1 to 63.2.