Between worries and relief: ten days of "saddle" for global markets

Over the past ten days, investors have experienced a veritable "saddlebag": a alternating wave of fear and relief, with stock markets first falling sharply, then rising just as quickly. The tension arose from an explosive combination—the fear of a new tech bubble, the US government shutdown, and the rekindling of international conflicts—but it has since dissipated partly thanks to a political clearing in the United States and new expectations of looser monetary policy.

Stocks slow amid fears of a bubble and shutdown

Last week opened in the red: the main global indices lost between 1% and 3% in a few days, hit by a double wave of mistrust. On the one hand, the correction in artificial intelligence stocks , protagonists of the rally throughout 2025, fueled the feeling that the market was about to lose confidence. The sell-off in some tech giants, partly due to profit-taking after record quarterly results, dragged down the entire sector.

On the other hand, the American political crisis—with the longest federal shutdown in history —has contributed to a frozen sense of confidence. With over 900,000 public employees without pay and statistical agencies at a standstill, the lack of official macroeconomic data has created a veritable information gap. The idea of a paralyzed government, in an already fragile context, has spooked the markets.

Geopolitical tensions reignited

As investors looked to Washington, the geopolitical landscape deteriorated again. In the Middle East, tensions between Israel and Hamas flared again after a few weeks of apparent truce. Clashes in the Gaza Strip and cross-border attacks along the Lebanese border have reignited the risk of regional escalation, with immediate effects on energy prices and risk aversion. Meanwhile, on Europe's eastern front, the conflict in Ukraine has escalated again: more frequent bombings and harsher rhetoric from both sides have brought the issue back to the center of the European political agenda.

The result? A return of volatility in commodities—oil rebounded to $61 a barrel; natural gas exploded—and a temporary strengthening of safe-haven assets.

Distrust in governments and tensions over interest rates

The climate of mistrust has also spread to Europe. Contradictory statements from Brussels and Berlin on the joint budget plan and spending rules have raised fears of a new period of fiscal uncertainty in the eurozone . Yields on ten-year German and Italian bonds have reached 2.7% and 3.45% , respectively, signaling tension.

Across the Atlantic, the prolonged shutdown fueled doubts about the U.S. government's financial credibility . The yield on the 10-year Treasury note temporarily rose above 4.16% , a sign that investors were demanding a premium for holding American debt amid political chaos.

Then the turning point: political agreement and a more "dove-like" Fed

But midweek, the tide shifted. The U.S. Senate approved a bill to refinance the government through January 2026 , breathing fresh air into the system and dissipating some of the pessimism. The agreement isn't yet final—it still needs the president's signature—but the mere step forward triggered a relief rally: the S&P 500 recovered about 1.8% in two sessions, while the Nasdaq returned above 23,500 points.

At the same time, some members of the Federal Reserve have hinted that, in light of the cooling inflation (CPI +3.0% in September) and the rising unemployment rate towards 4.4%, a rate cut in 2026 is becoming increasingly likely. This prospect has pushed investors back into risky assets and into buying bonds, pushing real yields down.

Gold and stocks together: a rare combination

Precisely the drop in interest rates and the weakness of the dollar have sparked a rush to gold: in three days, the metal has gained 5.25% , climbing above $4,200/oz . This is an unusual move, but one that can be explained by the search for a balance between risk and defense. At the same time, stocks have continued their rebound, buoyed by the belief that the worst of the political situation is over and that the Fed may soon ease its monetary tightening.

"Ten Days in the Saddle": What it Means for Investors

These past ten days have shown how quickly sentiment can shift: from panic and technical selling to relief and opportunistic buying. The market remains suspended between two forces : on the one hand, geopolitical instability; on the other, the prospect of more favorable monetary policy and domestic political agreements.

For now, the stock markets have chosen to believe in the glass half full.