Another heated week for US market data with the American government shutdown nearing to become the third longest governmental shutdown in the country’s history, as well as the emergence of a credit crisis among several US regional lenders. We will also address other important market drivers that have affected all markets and instruments in this report.

Markets are also anticipating an inflation report that will be released under the exceptional circumstances the United States’ government is witnessing. This report will be crucial for the Federal Reserve ahead of next week’s meeting.

Key takeaways:

A credit crisis took the US markets by storm
The third-longest US government shutdown in modern times
The French economy still keeping the EU back
An anticipated US-China meeting

Financial markets: A US credit crisis ahead of the US Inflation report (CPI) today

The US economy

For the tenth consecutive time, the US Senate fails to pass a proposal to end the ongoing government shutdown, speeding toward becoming the third-longest government shutdown in modern US history. The House of Representatives to cancel all of its meetings scheduled for this week if the Senate fails to take quick and decisive action to end the accelerating government shutdown.

The government shutdown was not the only news header last week. Markets were thrown back three years in memory to the United States’ credit crisis when several regional lenders reported issues involving fraudulent loan activity, igniting fears of US creditworthiness.

Adding to these fears, the growing trade tensions between the US and China were another reason for the market freakout, as fears of high tariffs exceeded those back in April.

However, President Trump and Treasury Secretary Scott Besant delivered reassuring statements on Friday, which helped ease market panic. Fears that have previously dragged several markets down while driving gold to its highest levels in history.

Trump reinstated his willingness to meet his Chinese counterpart in South Korea in the coming two weeks. While Besant stated his interest in meeting his Chinese counterpart as well in Malaysia this week with the aim of easing tensions between the two nations.

The US markets are anticipating this week’s inflation data report for October under the current excruciating conditions. Primary inflation expectations place annual CPI to come at 3.1%, up from 2.9%. While the monthly CPI is expected to go down to 0.3% from 0.4%.

Meanwhile, the Magnificent 7 companies will be releasing their earnings reports on the 22nd, this week. Netflix is also to release its earnings amidst overall strains due to the ongoing US government shutdown.

Tesla’s stock will be under the microscope, especially with the rise in consumer confidence towards it in the last quarter on the car delivery front, as well as the cars' affordability and a record energy storage capacity of 12.5 gigawatt-hours last quarter.

This optimism will be put to the test, as the company’s revenue is expected to grow by 4% to $26.3 billion, and a 24% year-over-year decline in earnings. This will mark Tesla’s fourth consecutive quarterly profit drop, down to $0.54 per share.

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The EU economy

The French crisis continues to be a challenge to the European Union’s economy. This political uncertainty has caused France to fall back by 0.2 percentage points from national growth.

Meanwhile, Germany is undergoing its third consecutive year of recession, while the UK struggles with stubborn inflation and a budget deficit comparable to that of France.

These large European economies are facing opposing circumstances to smaller European economies, like those of Lithuania and Ireland.

The EU is to have several important economic data releases this week, most notably, inflation data in a struggling UK, pausing further challenge to the Bank of England’s job to manage interest rates.

The Japanese economy

The Japanese economy is living out an entirely new era, following the historic appointment of Sanae Takaichi as the country’s first female prime minister. Her Liberal Democratic Party (LDP) formed a coalition with the Japan Innovation Party, paving the way for a more accommodative monetary policy.
Takaichi’s appointment is expected to delay the Bank of Japan’s interest rate hike temporarily, reflecting the new prime minister’s emphasis on the need to let market forces play a greater role in tackling inflation rather than relying on premature policy shifts.

The Chinese economy

China is to host the country’s 15th National Congress to approve the Five-Year Plan (2026–2030). The plan is set to tackle many challenges facing the Asian giant, whether on the foreign front, in production, in global competition, or in weakening domestic demand.

The country has also reported its weakest economic growth in a year, with GDP growth recording a 4.8% growth rate in the third quarter, coinciding with ongoing deflationary pressures and a decline in consumer demand.

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