Monthly letter October 2025

KEY EVENTS

In the days immediately preceding mid-October, the firm resolve of U.S. President Donald Trump led to the achievement of a ceasefire in the Gaza Strip.

The global geopolitical landscape has therefore finally shown signs of improvement. How lasting this balance will be remains to be seen; however, the fact that some violations of the agreement did not reignite the conflict represents a relative element of stability. The progress made in the Middle East takes on an importance that could extend well beyond the region.

The ability to prioritize dialogue over military confrontation is a quality that, if consolidated, could serve as an example for other areas of global tension.

Conversely, a potential failure of the ceasefire risks acting as a detonator, intensifying the tensions already present on other geopolitical fronts, particularly in Eastern Europe.

From a broader perspective, the dynamic observed in the Middle East shows similarities with what has recently occurred in relations between the United States and China.

After weeks of tensions and threatening measures from both sides, it has become clear that escalation is merely a prelude to the need for compromise. In both cases, a clear principle emerges: the shared recognition that dialogue, however complex, remains the only sustainable path to avoid more serious economic and political consequences.

The impression is that in South Korea, Trump and Xi Jinping did engage in direct talks, looking each other in the eye, but without yet managing to lay the groundwork for a reversal in the months- long confrontation between the United States and China.

The only tangible progress, as mentioned, seems to lie in the mutual awareness that any further deterioration of the situation, at this point, would be unsustainable for each side—not only for the counterpart.

“We’re both going to work together to see if we can get something done.”
US President Donal J. Trupm speaking with journalists aboard Air Force One after the meeting with his Chinese counterpart Xi Jinping.

The Federal Reserve meeting was awaited with particular interest, especially in light of recent statements by Chairman Jerome Powell regarding the growing difficulties in the labor market.

These comments had fueled concrete expectations of an interest rate cut, while persistent pressure from Donald Trump to lower the cost of borrowing inevitably reignited the debate over the independence of the central bank. The press conference following the meeting attracted considerable attention.

Powell did not hide the fact that the state of the U.S. economy poses complex challenges: inflation remains above the Fed 2% target, while the introduction of new tariffs represents an additional upside risk to prices. On the other hand, the deterioration in the labor market is emerging as an even more pressing concern.

Overall, the central bank now appears more oriented toward supporting employment than containing inflation, suggesting that further reductions in the policy rate may become necessary in upcoming meetings.

It is also worth noting that the Federal Government shutdown, which began at midnight on October 1st, remains in effect. The suspension of activities across several government agencies — including those responsible for collecting macroeconomic data — significantly limits visibility on the country’s economic trajectory.

As for Europe, the ECB meeting of October 30 proceeded in line with expectations: no change to interest rates and no significant new developments on the macroeconomic front.

PROSPECTS

The various concepts expressed in this letter must be placed within a narrative that is unlikely to change in the near term.

We place particular emphasis on two aspects: the Fed view of the need to continue supporting the economy, accompanied by the generally constructive stance of the other major central banks, and the growing awareness among political authorities (first and foremost in the United States and China) that a trade war at this juncture would result in significant damage for all parties involved.

It remains fundamentally important to continue managing financial market volatility while at the same time being prepared to intervene when necessary.