Global Equities Rally Broadens as Key Earnings and Central Bank Meetings Loom
Global financial markets paused their recent rally on October 28, 2025, but not before major indices—including the S&P 500, Nasdaq, Dow, and Russell 2000—all set new record highs. Notably, the participation of small-cap stocks in the Russell 2000 suggests the rally is broadening beyond the usual technology giants, signaling increased investor confidence across the market spectrum. This bullish sentiment was not confined to the United States: record closes were also seen in Brazil, Germany, Japan, Mexico, and Taiwan, while Shanghai’s CSI 300 reached its highest level in a decade. The Argentine Merval surged 22% following a decisive election outcome, underscoring the impact of political developments on emerging market equities.
Central Bank Policy and Currency Markets
Market participants now expect the Federal Reserve’s terminal interest rate to settle near 3%, reflecting a consensus that the tightening cycle is nearing its end. Falling real yields are forecast to further weaken the US dollar in 2026, although the depreciation is expected to be gradual. The Bloomberg consensus projects the euro at 1.18 and the yen at 148 by the end of 2026, both close to current levels. In Europe, the Stoxx 600 edged lower after a record close, with basic resources leading the decline. The euro firmed slightly against the dollar, trading at 1.1662, while euro-area inflation expectations remained stable, with consumer prices expected to rise 2.7% over the next year.
Bond Markets and Monetary Developments
European government bond yields dipped slightly, with the 10-year Bund yield at 2.61%. In China, bond yields continued to decline as the central bank signaled a resumption of bond buying. The People’s Bank of China also indicated it would explore mechanisms to provide liquidity to non-bank financial institutions in specific scenarios, while expressing concerns over stablecoins related to customer identification and anti-money laundering. Sovereign bond yields in major markets were mixed, with the 2-year US Treasury yield down 3 basis points to 1.45%, the 10-year up 1 basis point to 1.81%, and the 30-year down 1 basis point to 2.17%.
Emerging Markets: Optimism and Challenges
Emerging markets showed mixed performance. Argentina’s market rally followed a ruling party election victory, while Türkiye continued to issue eurobonds amid strong demand, reflecting broader optimism in the asset class. However, the Turkish lira weakened further against the dollar, depreciating 18.7% year-to-date. Türkiye’s latest eurobond issuance—$2.25 billion over 11 years at a 6.8% yield—was well received, following a similar $2 billion 10-year bond last month.
Agricultural and Commodity Markets
In agricultural news, funds were net buyers across major US grain contracts, signaling bullish sentiment in commodities. Brazil’s crop harvest progressed, with 37.8% of the 2025 crop area harvested, though wheat prices paid to farmers declined in several regions. The US dollar fell 0.26% against the Brazilian real, trading at BRL 5.392. Brazil’s wheat imports through the third week of October were down 49% year-over-year. Meanwhile, the European Union’s Monitoring Agricultural Resources unit revised down its estimates for corn and sunflower yields, while winter-grain planting conditions remained favorable.
Geopolitical and Economic Diplomacy
On the geopolitical front, Canadian Prime Minister Carney is expected to meet Chinese leader Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation summit in South Korea, highlighting ongoing efforts to strengthen international economic ties.
Outlook and Key Themes
The global financial landscape on October 28, 2025, was characterized by record equity highs, cautious optimism in emerging markets, and evolving central bank policies. While the rally appears broad-based, investors remain attentive to upcoming US tech earnings and central bank meetings, which could set the tone for markets in the coming weeks. Currency and bond markets are adjusting to shifting rate expectations, while agricultural markets face both supply challenges and favorable planting conditions. As always, geopolitical developments and election outcomes continue to play a significant role in shaping market sentiment across regions.