This week, traders have the Fed’s last monetary policy meeting of the year in focus (a decision will be made by Wednesday). The Fed has a duty to cater to their dual mandate of stability in price growth and maintain strength in the labour market. In recent times, the lack of data caused by the government shutdown has caused clarity issues for policymakers that may still show in Wednesday’s meeting, even as markets are expecting a cut to end 2025 of 25 basis points. In October, Chair Jerome Powell described this as “slowing down while driving in the fog”. Fresh U.S jobs data that is an indicator of labour turnover and strengthened the dollar on Tuesday, however, may help the Fed decide. It was revealed that more job openings were added in September and October than anticipated even while a moderate weakness in hiring showed in the breakdown of the data.
Shortly after China reported a $1 trillion trade surplus, authorities urged their trading partners to avoid protectionist measures in order to keep international relations productive and mutually beneficial. China’s Premier, Li Qiang, appealed to the IMF, World Bank, and World Trade Organization, calling for stronger oversight of economies considering new tariffs on Chinese imports. This comes amidst economists noting that the scale and strength of China’s export sector (combined with its seeming reluctance to shift away from this growth model) makes it difficult for other countries to justify lower or zero tariffs. There is also little evidence that President Trump’s efforts have meaningfully slowed China’s production or its distribution to global markets outside the U.S., rendering even less incentive for China to reduce its trade surplus meaningfully.
In the UK, it emerged on Tuesday that measures announced in the recent Autumn Budget could have a deflationary impact, reducing the UK’s inflation reading by 0.4 to 0.5 percentage points as early as Q2 2026. Policies aimed at easing housing costs and freezing rail fares may help the Bank of England reach its 2% inflation target earlier than the previously forecast date of 2027 although policymakers maintain that they will assess the data on a consistent basis before making any decisions. The Bank’s next meeting is scheduled for the 18th December, where markets are currently pricing in one further rate cut to finish the year.
Still to come this week we have UK GDP and U.S. exports, imports and trade data.
Nicola Tune, Portfolio Specialist
