- September 6, 2025
- Posted by: Tresmark
- Categories:
In 1258, Baghdad — once the beating heart of the Muslim world, alive with scholars, poets, and the great House of Wisdom — was invaded by the Mongols. Eyewitnesses wrote that the Tigris turned black with ink as priceless manuscripts were tossed into the river, and red with blood as its people were slaughtered. An empire’s pride and knowledge base was wiped out in a single blow.
It didn’t have to end that way. The Caliph, Al-Musta’sim, had been warned again and again. Instead of fortifying the city, he sent letters, made speeches, and reassured his people that “Allah will protect Baghdad.” His armies were weak, morale was low, and when the Mongols came, resistance crumbled and the city unravelled. His own fate was a cruel irony: rolled up in a carpet and trampled by horses, so that Mongol custom of not “spilling royal blood” was technically respected.
And still, the lesson wasn’t learned. Neighbouring rulers who had seen the carnage convinced themselves “it won’t happen here.” Then Aleppo fell. Damascus fell. One after another, cities repeated the same mistake — arrogance, denial, complacency — until finally, at Ain Jalut, the Mamluks broke the cycle by adapting.
Pakistan’s Floods – Repeated
In 2022, Pakistan lived its own catastrophe: one-third of the country under water, 33 million people displaced, and economic losses nearing $40 billion. It was a warning written in bold letters — strengthen embankments, reform disaster response, rethink urban planning. Yet three years later, in 2025, the same story unfolded again. Punjab was battered, millions evacuated, villages drowned. Decision-makers once more leaned on grand speeches, hollow plans, and the belief that “it won’t happen to us again.”
Like Baghdad’s rulers, they watched the waters rise and repeated the same mistakes. And as always, the second punishment is proving harsher — not just in lost lives and crops, but in the credibility of a state that vowed “never again” and then allowed “again” to happen.
Impact on Macros
While it’s too early to assess the financial impact, analysts are of the view that the bearing on inflation, interest rates and currency rates will be not be substantial
Dollar Index Slumps below 98
For long Tresmark has been flagging a potential drop of USD Index to levels as low as 92. This would signify a further 6% drop. In the next 3 months, our forecast for key currencies are as follows:
– PKR – 282.50
– EUR – 1.1850
– GBP – 1.3825
– JPY – 142.00
Jobs & the Fed
The August payroll print badly missed expectations, underscoring the fragility of the US economy. CME futures now price a 15% chance of a 50 bps cut at the September 7 FOMC — a sharp shift from zero only weeks ago.
Gold’s Relentless Bull Run
Gold has surged 38% in 2025, touching $3,570/oz in New York. This isn’t just central banks diversifying out of dollars or bets on a September Fed cut. It’s also a rational hedge against Trump’s open attacks on Fed independence and the rising risk of deliberate dollar debasement. The US Dollar Index is already down 13% in eight months — its worst run since the Carter era.
Why Investors Are Buying
Tariff-driven inflation, the ouster of Fed governor Lisa Cook, weak US jobs, and a violent global backdrop — Ukraine, Gaza, North Korea — have only reinforced gold’s safe-haven allure. Goldman Sachs notes that even a 1% shift from Treasuries into gold could push the metal to $5,000/oz by 2026.
Oil Slumps
Brent crude has collapsed to $65/bbl, with demand slowing across the US, Europe, China, and India. A winter glut looms, and in a US recession, $45 Brent is not unthinkable.
