Archive

US: Noisy November After Reopening

• US private payroll growth stayed steady through the government shutdown. Statisticians failed to collect much data for November, yielding a noisy surge in unemployment.
• The employment-to-population ratio is steady, as are job openings and layoffs. Churn is still low, with few quits or hires, but broad resilience appears to remain unbroken.
• Jobless claims are also stable into December, when headline data should improve. The Fed pre-empted bad news with past cuts and is unlikely to keep going in January.

By Philip Rush

Monetary Policy Tide Is Turning Up

• Markets are already pricing the return of rate hikes in 2026 for Canada, Australia and New Zealand, while policymakers elsewhere are starting to warn of the possibility.
• Transitional support to structural adjustments needs unwinding, as Canada signals most prominently. Broader activity resilience and inflation reveal the risk of overstimulation.
• The BoE already committed a policy mistake by easing too early, and is split by those recognising the persistent danger. Market pricing remains too dovish for 2026.

By Philip Rush

Dual Mandate, Divided Fed: 2026 Crossroads

• The Fed cuts by 25bp for the third time, but hawkish dissent is deeper than voting suggests. Six members judged rates should still be 3.875%, and three members are pencilling in rate hikes next year.
• Despite revising 2026 PCE inflation forecasts down to 2.4% (from 2.6%), the Committee still projects only one 2026 cut, making a hawkish shift in the reaction function.
• 2026 rate projections split, with seven dots above the 3.375% forward median, four at the median, and eight below. Policy will depend on labour market and inflation data.

China Re-rooting Rather Than Dumping

• China’s rising export growth to Europe in November demonstrates base effects around a steady trend that predates US tariff increases. It isn’t about dumping.
• Avoidance measures remain rife, with transhipping through Vietnam not dented by the provisions in their US trade deal. Effective tariff rates aren’t rising belatedly.
• Profit-maximising companies still seem to be working around US measures, keeping the impact on inflation and growth smaller than many other economists feared.

By Philip Rush