EM currencies are generally ending the year on a strong footing – enjoying the benefits of lower core policy rates, a modestly weaker dollar and many offering high carry. There is a lot of focus on the renminbi at the moment and whether China's $1tr trade surplus will drive the renminbi much stronger. For today, the focus is on US jobs and eurozone PMIs
Wage growth is slowing quickly, at a time when the wider jobs market keeps cooling. The UK is becoming less of an outlier on inflation, and we expect a rate cut on Thursday and two further moves next year
The composite PMI dropped from 52.8 to 51.9 in December, with manufacturing output declining again. Overall, this reading still corresponds to decent GDP growth for the eurozone in the fourth quarter of 2025
A 25bp cut is practically certain. It's 90% discounted. Not delivering is not really a viable option, given the way the Fed behaves. But, expect a hawkish cut, with a pause to be heavily intimated for the January meeting. It will be interesting to see next Fed liquidity management steps; likely they will need to buy more bills than the MBS roll-off requires
France passed its social security budget, but the state budget remains unresolved, and the deficit outlook is worsening
Oil prices traded to their lowest level since late October amid expectations of a surplus, while European gas prices appear to have found a floor for now
A surge in fresh vegetable prices helped propel China’s food inflation back to positive territory and headline CPI inflation to a 21-month high of 0.7% year on year in November
After this week's 'rate ripple', the focus today switches to North America. Here we have policy meetings for both the Fed and the Bank of Canada. The Fed is widely expected to deliver a hawkish cut, which leaves the risk on short-dated US rates and the dollar skewed to the upside. For the BoC, there could be some pushback against rate hikes priced for 2026
Italy’s industrial production data for October points to renewed weakness, tempering expectations of a stronger economic pickup in the final quarter of the year
Inflation in Hungary decreased in November, but this was mainly due to base effects and government measures. We might be starting on the downward part of the rollercoaster right now – but that means the ride may be set to shoot upwards next
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Global supply chain problems and geopolitical concerns may have triggered debate among businesses about reshoring production closer to home, but the numbers tell us a different story. Reported euro area reshorings have steadily declined after being surpassed by offshorings in 2019, suggesting global supply chains remain deeply integrated
The UK Budget announcement (12.30 GMT) will see markets weigh both fiscal and inflationary implications. Sterling faces moderate downside risks in a non-inflationary, fiscally tight scenario, and severe risks if fiscal sustainability is called into doubt. Elsewhere, the dollar has more potential to depreciate despite yesterday’s correction
The UK government's budget announcement will need to show fiscal discipline to satisfy gilt investors, and while our baseline sees enough credibility to nudge the risk premium in gilt yields lower, we are well aware of significant upside risks too. Foreign gilt investors are relatively important and could even gain in importance in the future
Positive signals from both the US and Ukraine regarding a Russia-Ukraine peace deal continue to put pressure on energy markets. However, there’s little clarity on where Russia stands on the current plan
The November FX Report has been delayed but should be released soon. We expect an emphasis on the changing approach towards a tighter scrutiny on US partners’ FX practices, but we don’t think we’ll see any FX manipulator designation by Treasury. Thailand should, however, join the Monitoring List, and Switzerland will remain a focus point for markets
Combine rebounding investment with continued strength in private spending and you have a recipe for stronger economic growth. October's set of data suggests that GDP growth in the fourth quarter is likely to beat the 3.7% year-on-year rate posted in the third. At the same time, inflation is declining, which paves the way for another rate cut in December
Intuitively, a deal with Russia would help euro rates higher, but falling gas futures are already pushing down the curve through lower inflation expectations. Tensions with Russia are likely to stay, which means risk sentiment should remain fragile
Same old story: Germany’s longest stagnation has now been confirmed. The economy will remain stuck until fiscal stimulus begins to take effecta
Oil prices rose yesterday, in step with a global equity rally. However, peace talks remain a crucial area of uncertainty for the market