Daily Newsletter 11/3/25
Global stock markets began November with strength, buoyed by robust corporate earnings and new trade agreements, especially between the U.S. and China. Notably, China announced it would ease export limits on rare earth elements and halt some investigative actions against American semiconductor firms; however, U.S.-made advanced AI chips remain prohibited from export to China.
Seasonality supports a rising market trend. The U.S. and China have agreed to a tentative one-year trade truce, recognizing their mutual economic dependence—a fact the government was slow to acknowledge. Holding the leverage of rare earth elements, China’s agreement to the truce has removed a significant barrier to the market’s progress. The main remaining macroeconomic risk appears to be the government shutdown, though the timing of its resolution remains uncertain.
Interest rate advocates have eased off somewhat, though markets still lean toward a favorable outlook for the Federal Reserve. It appears the government’s influence over the Fed will grow with the appointment of the next chair, which may put upward pressure on the term premium. If the economy slows sufficiently, longer-term yields could decline, but in the short term, if the economy remains stable, those yields might rise again. These are just observed possibilities based on available data and not official forecasts.
Today, U.S. stock index futures are trading higher, but the Dow Jones Industrial Average is opening in negative territory, reflecting a mixed start for major benchmarks despite the broader positive mood in markets. This optimistic start follows a strong October for equities, driven by positive sentiment around easing trade tensions and ongoing momentum in artificial intelligence and technology shares.
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