On Thursday, the Nasdaq lost 2.6% in a single session. By Friday evening, Brent had risen above $117 and gold had closed at $3,999 an ounce. Fear climbed throughout the week, yet gold fell: safe havens switched sides. And five central banks will speak in the coming days.
In brief
- Brent rose above $117 on Friday, its highest level since May: markets fear a new US operation against Iran. WTI closed at $103.47.
- On Thursday, the US 10-year yield fell below its key threshold for the first time in a month, before rising to 4.999% on Friday. The Nasdaq lost 0.7% over the week.
- On Wednesday, October 28, the Fed (4.00% expected, unchanged) and the Bank of Canada (2.50% expected, versus 2.25%) announce their decisions on the same day. The ECB follows on Thursday, and the Bank of Japan on Friday.
Oil takes back control
It all started in the Gulf. A drone attack on Saudi Arabia's Shaybah oil field, operated by Aramco, killed two people. Crude jumped immediately. On Friday, Donald Trump added fuel to the fire.
At a rally just before the close, he referred to a small-scale “Epic Fury”: in other words, a short campaign of strikes against Iranian nuclear sites and infrastructure, according to investingLive's end-of-session report. Brent touched $117, its highest level since May. WTI gained $4.01 during the session to $103.47.
Wall Street followed the barrel higher. On Friday, the Dow Jones fell 652.82 points to 52,215.16, while the S&P 500 slipped 0.52% to 7,623.68. The rotation is obvious: according to CNBC, the S&P 500 excluding AI is up about 6.6% for the month, while the full index is down 0.4%.
Gold misses its moment
In theory, a Middle East crisis benefits gold. Not this time. On Thursday morning, the metal fell below $4,100 an ounce. On Friday, it lost another $24 to close at $3,999.
The explanation has three parts. A more expensive barrel fuels inflation. Higher inflation pushes any rate cut further away and brings a hike closer. Gold pays no income: when rates are expected to remain high for a long time, it becomes less attractive.
A hedge that works nine weeks out of ten will not protect you in the tenth. The tenth is the one that matters.
If you bought gold to hedge against geopolitical risk, you suffered a double blow: the risk materialized, and your hedge lost value.
Tech cracks, Treasuries catch their breath
The second shock came from earnings. Meta fell 7% after reporting: its plan to issue non-voting shares to fund AI revived doubts about its spending, reports 24/7 Wall St. On Thursday, the Nasdaq plunged 2.6% to its lowest level since September, notes MUFG Research. The VIX jumped 14% during the session and was heading toward a weekly close above 20, its first since early June.
Capital fleeing tech moved into US government bonds. On Thursday, the 10-year yield fell 19.3 basis points to 4.953%, its largest daily drop since March 2023. On Friday, oil reversed the trend: the 10-year rose 5 basis points to 4.999%, the 2-year to 4.686%, and the 30-year to 5.312%, according to CNBC. An economist quoted by the network described bond investors as “dazed and confused.”
For the week, the result looks calm: Nasdaq −0.7%, Dow Jones +0.4%. The individual sessions were anything but.
The yen becomes a safe haven again, while the euro pays for France
In foreign exchange, the yen was the strongest currency against the dollar. According to FXStreet, USD/JPY fell over the week after hitting an intraday low of 156.08 on Friday during the Asian session. Commodity currencies also performed well: MUFG ranks the Norwegian krone, Australian dollar, and Canadian dollar at the top of the G10. The Australian dollar also rose against the greenback.
The euro, meanwhile, is paying France's bill. On Wednesday, the 10-year OAT yield crossed a key threshold for the first time since 2002, amid debate over a 2027 budget in which Sébastien Lecornu is seeking €54 billion in savings. The protests are weighing on the single currency. On Friday, PMI figures confirmed France's slowdown: services at 48.4 versus 50.7 expected, and manufacturing at 49.3 versus 50.5 expected. Below 50, activity is contracting. Germany fared better, with manufacturing PMI at 54.2 versus 53.5 expected. Over the week, the euro lost 0.56% against the yen.
The week's figures
Inflation remains sticky, and so does US employment.
| Release | Actual | Forecast | Previous |
|---|---|---|---|
| UK inflation (year-on-year) | 3.5% | 3.4% | 3.1% |
| UK retail sales (month-on-month) | −0.4% | −0.1% | 0.5% |
| US unemployment claims | 194,000 | 200,000 | 199,000 |
| US flash manufacturing PMI | 56.0 | 55.4 | 57.0 |
| French flash services PMI | 48.4 | 50.7 | 51.4 |
| University of Michigan consumer sentiment (final) | 48.0 | 46.3 | 46.3 |
| New Zealand inflation (quarter-on-quarter) | 0.7% | 0.8% | 1.5% |
Two figures stand out. At 194,000, unemployment claims remain low: nothing is forcing the Fed to ease. And in the Michigan survey, US households still expect 4.7% inflation. In the UK, rising inflation and falling sales make the Bank of England's task more difficult.
Next week: five central banks, two budgets
Paris time (the switch to winter time takes place this Sunday).
| Date | Event | Forecast | Previous |
|---|---|---|---|
| Tuesday 27 | US consumer confidence (Conference Board) | 80.5 | 81.9 |
| Wednesday 28, 2:00 a.m. | New Zealand central bank rate | 3.00% | 2.75% |
| Wednesday 28, 1:30 p.m. | UK budget | — | — |
| Wednesday 28, 2:45 p.m. | Bank of Canada rate | 2.50% | 2.25% |
| Wednesday 28, 7:00 p.m. | Fed rate | 4.00% | 4.00% |
| Thursday 29, 1:30 p.m. | US GDP (first estimate, quarterly) | 3.0% | 1.5% |
| Thursday 29, 1:30 p.m. | US core PCE (month-on-month) | 0.3% | 0.2% |
| Thursday 29, 2:15 p.m. | ECB refinancing rate | 2.65% | 2.65% |
| Friday 30, 3:30 a.m. | Bank of Japan decision | — | — |
According to the consensus, the Fed may leave rates unchanged on Wednesday. The real issue is December: futures markets put the probability of a hike at nearly 78%, according to 24/7 Wall St. The Fed chair's tone in response to oil above $100 a barrel will matter more than the decision itself. Beware the trap: core PCE, the Fed's preferred inflation measure, is released the following day. A reading of 0.3% or higher could reignite the rise in long-term yields.
For crypto, the key event is the same: Wednesday evening. A Fed that hinted at a December hike would further drain the liquidity that bitcoin depends on.
This week's lessons for traders
First lesson: the weekend. Markets closed on Friday with the threat of a strike hanging over them. A position held for two days can have its stop triggered by a gap at the open, and your loss may no longer resemble the one you planned for.
Second lesson: correlations. Gold did not protect against oil risk; the yen did. Open your trading journal: how many of your positions this week were ultimately betting on the same thing—a controlled inflation environment?
Third lesson: position size. A week packed with five rate decisions, GDP, PCE, and two budgets calls for a different level of exposure than a quiet week. It is better to adjust your size before the announcements than to bet on their outcome. Record each trade's catalyst in your journal: a month from now, you will know whether you made money because of the data or despite it. The Edgyx economic calendar shows, for each release, how the market reacted to previous ones.
The essentials
- Brent touched $117 on Friday, its highest level since May, and oil pulled everything in its wake: inflation, rates, and gold.
- Gold ended below $4,000 despite the tensions: expensive oil brings a rate hike closer, hurting the metal.
- The real safe havens were the yen and US government bonds, with the 10-year yield briefly falling back below its key threshold.
- Wednesday 28 and Thursday 29 October bring the Fed, the Bank of Canada, the ECB, PCE, and the UK budget: position size should be adjusted before these dates.
