Authored by Stefan Koopman, Senior Macro Strategist at Rabobank
Steel Remains Essential
“Steel is real” is not just a slogan for cycling enthusiasts who prefer the ride quality of classic steel frames. It also holds true in geopolitics and economics. As we have emphasized repeatedly: without steel production capacity, there is no military strength, no industrial foundation, no influence in global affairs – and consequently, no sovereignty. Whether it’s for manufacturing tanks, turbines, or bicycles, steel and other basic industries are fundamental.
This reevaluation of industrial strategy comes at a time when Europe is facing increasing geopolitical challenges. Our latest Monthly Outlook provides further insights into the evolving global landscape, where hybrid warfare, supply chain weaponization, and economic statecraft are increasingly replacing traditional diplomatic tools. From military actions to economic strategies, the boundaries are becoming blurred at a rapid pace.
Despite these efforts, the Treasury Secretary Bessent mentioned on CNBC that significant financial aid for US soybean farmers will be disclosed on Tuesday, expressing concerns about China’s shift to sourcing soybeans from Brazil and Argentina instead of the US since May (oops!). This move mirrors the previous $32 billion bailout of the sector during Trump’s first term, with new tariff revenues circulating in the economy. In our opinion, this announcement indicates that a quick resolution in US-China agricultural trade is unlikely in the near future. For more on agricultural markets, refer to our latest ACMR Monthly Outlook.
Brent crude prices dropped to a 4-month low of USD 64 per barrel before rebounding to USD 64.80, following indications from OPEC+ about potential supply increases in November. With already restored production and growing output from other countries, concerns about oversupply are rising. China’s stockpiling efforts have helped stabilize prices, but market sentiment remains pessimistic for the fourth quarter of 2025 and beyond. We anticipate that supply will outpace demand, although not to the extent predicted by market consensus. The US production, currently plateauing around 13.4 million barrels per day, is a key factor in supporting prices. We predict that Brent will average USD 61 in the first quarter of 2025, and then fluctuate between USD 58 and 60 throughout 2026.
Despite the ongoing US government shutdown, markets seem unaffected, with stocks rising, Treasuries steady, and the dollar strengthening against major currencies. Gold briefly reached a record high before retracting. The prevailing sentiment is that the shutdown has limited impact on macroeconomic or monetary policies. However, there are underlying risks that are worth noting. President Trump is openly endorsing the Project 2025 plan and considering permanent cuts to federal jobs, with the budget director advocating for significant downsizing. While the markets remain optimistic, viewing this as a political maneuver, such actions could trigger a chain reaction: news of job cuts may reduce consumer confidence and spending, leading to further cutbacks in the private sector. Given the stagnant job growth, this domino effect could accelerate an economic downturn sooner than anticipated.
According to the September Challenger report, hiring intentions have decreased to 117k, significantly lower than the previous year’s 403k. Retail and transportation companies, in particular, are cautious as the holiday season approaches. Simultaneously, planned job reductions have also declined, indicating a labor market with minimal hiring and firing activities, aligning with the JOLTS report and Powell’s recent statements. Additionally, newcomer Revelio Labs reported a 60k rise in employment for September, driven by gains in education, healthcare, and retail sectors. However, leisure, hospitality, and business services experienced declines. This contrasts with ADP’s estimate of a 32k decline. Until the BLS releases its report, it remains uncertain whether the US gained or lost jobs last month – and even then, revisions may prolong the uncertainty. In this job market, one thing is certain – the presence of uncertainty.
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