Global markets are reacting to fresh Federal Reserve signals and a renewed flare up in the U.S.-China trade row, with immediate moves in yields, the dollar and gold. The Fed chair flagged a likely pause in balance sheet run down and noted signs of a softer labor market, driving bets toward policy easing in the near term. That pushed U.S. yields lower and sent spot gold above $4,200. In the short term investors may see calmer risk appetite, while the longer term outlook hinges on how tariff policy and Chinese demand respond. The story matters for the United States, Europe, Asia and emerging markets because trade policy, monetary settings and Chinese price weakness can quickly alter global growth and capital flows. Recent bank earnings show fee resilience, but headline risk from trade policy could still revive volatility when government data resumes.
Fed signals and market reaction
Policy language cools rates and lifts safe havens
Federal Reserve Chair Jerome Powell said the labor market is softening and that the central bank may soon halt the reduction of bonds on its balance sheet. Powell said the balance sheet rundown may approach a stopping point in coming months. Markets reacted fast. U.S. Treasury yields fell. The dollar weakened. Equity futures rose and the VIX fell.
Investors priced in easier Fed bets for the near term, with markets leaning toward reductions in the policy rate by year end. That repositioning supported higher gold prices, which moved above $4,200 on the dynamics of lower yields and a weaker dollar. Liquidity concerns Powell flagged are appearing in markets through these flows, even as core risk assets steadied in early trading.
U.S.-China trade row returns to centre stage
Tariff threats and new port fees keep global trade on edge
The trade dispute has reignited. U.S. statements about potentially severing some trade ties with China and fresh tariff threats have put export and shipping costs under scrutiny. Both the United States and China began applying new port fees on ocean shipping. That makes the high seas a key front in the dispute between the two largest economies.
Analysts warn that recent tariff moves may only show a full impact next year because much of this year’s trade was front loaded to avoid higher levies. The World Trade Organization cut its forecast for goods trade growth next year to 0.5 percent. The International Monetary Fund nudged its 2026 world outlook higher but flagged that policy uncertainty and rising trade frictions pose material downside risks. Meanwhile deflationary signals from China add to the pressure and point to a higher chance of fresh stimulus steps in Beijing.
Corporate results and fee income lend support
Big banks report solid capital markets performance but watch headline risk
Recent quarterly reports from major banks show a generally upbeat story on fees and capital markets activity. Wells Fargo (NYSE:WFC) rallied on its results. Citigroup (NYSE:C) posted profit gains on record revenue. BlackRock (NYSE:BLK) reported assets under management at a record level. At the same time JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) saw profit taking after early gains.
The read across for markets is that investment banking and advisory fees are providing a tailwind into year end. Management teams however remain conscious of headline risk from trade policy and the fog created by the recent government shutdown, which paused a swathe of economic data. Investors will watch whether capital markets activity can keep its momentum if trade measures tighten or if macro data prints weaken when releases resume.
More corporate updates are scheduled for the session. Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), PNC (NYSE:PNC), Citizens (NYSE:CFG), Synchrony (NYSE:SYF), Abbott Laboratories (NYSE:ABT), Prologis (NYSE:PLD), United Airlines (NASDAQ:UAL) and JB Hunt (NASDAQ:JBHT) are among names due to report. These results will give further colour on consumer demand, credit costs and fee trajectories.
What to watch today and possible trading scenarios
Beige Book, Fed speakers and a packed economic calendar could move prices
Traders face a fuller slate of central bank commentary and surveys. The Federal Reserve releases the Beige Book in the afternoon and several Fed governors and regional presidents speak during the day. New York Fed manufacturing data and weekly earnings prints will also arrive. International meetings such as the IMF and World Bank sessions and the Institute of International Finance conference may shape cross border capital flows and headlines.
Oil prices edged lower as the International Energy Agency flagged a potential supply surplus in 2026 while trade frictions could curb demand. China’s consumer and producer prices continued to show deflationary pressure, supporting the case for further policy measures in Beijing and explaining stronger risk asset moves in Shanghai and Hong Kong on hopes of stimulus ahead of a major party meeting.
In the short run easier Fed expectations and solid bank fees could keep risk assets steady. However, tariff policy remains a live variable that can swing sentiment quickly. When government data resumes after the shutdown, several releases may hit markets at once and increase volatility. Market participants should therefore monitor Fed communications, the Beige Book, the flow of corporate earnings and any new U.S. tariff moves that could change export economics or shipping costs.
Overall, the session may begin with calmer risk appetite on central bank cues, but headline risk from trade policy and the timing of economic data returns means volatility can reappear. Watch the interplay between monetary expectations, trade announcements and corporate results to read how traders price risk across equities, bonds, currencies and commodities.
