In October, the U.S. government shutdown created a data vacuum. October PMI readings remained expansionary and improved from September. September CPI came in below expectations, with core goods rising modestly while shelter costs declined, dragging on core inflation.
The Fed delivered an expected 25bp rate cut but Powell’s hawkish commentary suggested December may see a pause unless employment deteriorates significantly. Inflation remains well above target at 2.8% PCE, eroding the Fed’s credibility after five consecutive years above 2%.
Gold surged to $4,381 on rate cut expectations and ETF inflows before plunging 5% and settling around $4,000. The selloff appeared driven by index fund liquidation rather than long-term holders. Our portfolio outperformed all mining indices, benefiting from copper and uranium rotations and private placement gains. Gold should consolidate through year-end, though December rate cuts remain probable. Continued Fed easing and improved liquidity post-shutdown should support prices. We are optimizing allocations based on Q3 mining company results.
Domestic wise, Q3 GDP growth decelerated to 4.8% year-over-year as investment contributions declined. The GDP deflator improved marginally to -1.1% but remains negative for ten consecutive quarters, indicating weak demand.
The Fourth Plenary Session maintained 2035 targets while adjusting priorities: emphasizing technological innovation, domestic demand expansion, and greater openness. Achieving the annual growth target requires Q4 growth of 4.6%+, which appears manageable. The Fed’s rate cutting cycle expands PBOC policy space, while the Xi-Trump meeting in South Korea produced trade de-escalation measures aligned with expectations.