Archive

Fed Cuts Amid “Data Fog”; Path Ahead Uncertain

• The Fed’s 25bp rate cut to 3.75–4.00% was anticipated, with the decision reflecting rising labour market risks amid the data fog.
• Policy outlook hinges on future data. Inflation remains sticky, but the labour market weakening drove today’s pre-emptive move.
• A pause in QT’s asset runoff demonstrates heightened caution. December’s decision is “not on a preset course”.

China/US: Sauce For The Goose…

• Donald Trump and Xi Jinping’s 30 October summit will likely stave off, for now, any further escalation of trade tensions between China and the US.
• However, thanks to its monopoly on strategic minerals and Xi Jinping’s willingness to play a long game — even beyond ‘mere’ trade — China holds the stronger hand.
• Irrespective of whatever Mr Trump concedes this week to secure a ‘headline grabber’, Xi Jinping will therefore come back for more, not least on Taiwan.

By Alastair Newton

HEW: Heavy Hitters Pulling Punches

• Sentiment stabilised this week as credit issues are realised to be more of a long-term problem than an imminent issue. Indonesia and Korea hawkishly held their policy rates.
• Inflation undershot final expectations in the UK and US, yet constitutes less excess rather than outright weakness, and merely aligns with slightly earlier forecasts.
• Next week’s release calendar has some heavy hitters, but pulling their punches. The Fed cut and ECB hold are widely expected, as is a marginal slowing in EA inflation.

By Philip Rush

Korea Holds at 2.50%: Stability First

• The BoK held at 2.50%, as expected. Housing is overheating, and Won weakness above 1,400 constrains the scope for near-term cuts despite weak growth.​
• Four of six board members support further easing. November's decision hinges on trade talks, real estate trends, and exchange rate stability.​
• Semiconductor exports surge 22% but US tariffs weigh on outlook. The GDP growth forecast is unchanged at 0.9% for 2025, the slowest since 2020.​