Black Friday Selloff…I told You So

Market Recap: 6 – 10 October 2025

Financial Markets

US Stock Market

This week the news of China rare earth restrictions and the US retaliation brought the stock market to a halt. For the week, the S&P500 and the NASDAQ 100 fell 2.4% and 2.3%, respectively, with the selloff concentrated on Friday. The small cap index (Russel 2000) fell 4.1% after hitting the historic maximum. Trading volumes were slightly above average.

COMMODITIES

Precious metals continued climbing. Gold and silver gained 3.4% and 4.5%, respectively. Gold is at a new all-time high of 4018$. Silver continues strong and will likely have some resistance around 50$.

WTI crude oil fell 4% down to 58.2$/bbl. In the short term, 55$ should be support.

Bitcoin’s new all time high was rejected and it retreated to 113k$. If bitcoin falls more, 100k$ and 93k$ should act as supports for the cryptocurrency.

US DOLLAR, MONEY SUPPLY

The relative strength of the US dollar (DXY) rose to 98.9. The EUR/USD is around 1.162$, the GBP/USD is at 1.336$, and the USD/JPY is at 151.13 JPY.

US M2 money supply at the date of 25th August 2025 was up by 0.36%, showing a continuous increase in the money supply since December 2023. Banks didn’t stop lending so far – if the money supply was going down, it would be a warning sign for the economy and equities.

The national financial conditions index (NFCI) released on 29th September 2025 loosened by 0.86%. Note that this indicator is delayed by two weeks. Positive numbers in the NFCI mean tighter financial conditions, while negative numbers indicate looser financial conditions.

BONDS AND OPTIONS

US bond yields fell slightly this week. Yields now sit at 3.531% for the 2-year and 4.059% for the 10-year. The yield curve has uninverted since a year ago, an expression of expectations for low growth, low inflation, and short-term interest rate cuts. Long-term growth and inflation expectations are at ~4.6%.

The VIX jumped and closed the week at ~21.7, showing investor adjustment but not pessimism. Option premiums are becoming more attractive, but the market is still very expensive – option sellers need to remain patient and selective regarding which contracts to sell.

Comment Section

On Friday, during trading hours, we watched the market melt down as the China-US discussions started again.

In “announcement number 61 of 2025”, China said it was increasing export controls for five rare-earth metals in addition to the seven it announced in April this year. The five metals added to the list are holmium, erbium, thulium, europium and ytterbium. The seven minerals China placed export restrictions on earlier this year are samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. There are 17 rare-earth metals in total – the 15 lanthanides (metallic elements) on the periodic table; scandium; and yttrium. China now has export restrictions on 12 of them. China cited national security interests as the reason for these new restrictions. “Rare-earth-related items have dual-use properties for both civilian and military applications. Implementing export controls on them is an international practice,” a Chinese Ministry of Commerce spokesperson told reporters on Thursday.

As a retaliation, President Donald Trump announced he will impose an additional 100% tariff on goods from China, on top of the 30% tariffs already in effect, starting November 1 or sooner. The threat is a massive escalation after months of a trade truce between the two nations. “The United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying,” Trump said in a post on Truth Social Friday afternoon. “Also on November 1st, we will impose Export Controls on any and all critical software.”

Tariff charades and high stakes negotiations will continue to shake the markets, so buckle up! Have a nice weekend, and good luck!!!

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