Wonderful introduction:
Optimism is the line of egrets that go straight up to the sky, optimism is the thousands of white sails on the side of the sunken boat, optimism is the luxuriant grass blowing in the wind at the head of Parrot Island, optimism is the little bits of falling red that turn into spring mud to protect the flowers.
Hello everyone, today XM Forex will bring you "[XM Forex Platform]: The Federal Reserve's quantitative tightening will end on December 1. Will the policy officially shift to stabilizing or expanding the balance sheet?". Hope this helps you! The original content is as follows:
On Thursday, as investors prepared for the Federal Reserve to cut interest rates next week, the U.S. dollar index rebounded slightly, but was still close to the five-week low hit during the session. As of now, the U.S. dollar is quoted at 98.91.
The number of layoffs by challenger www.xmasseuse.companies in the United States dropped 53.4% month-on-month to 71,321 in November.
The number of initial jobless claims in the United States last week was 191,000, www.xmasseuse.compared with market expectations of 220,000.
Hassett: I think the Fed may cut interest rates at its next meeting, perhaps by 25BP.
U.S. regulators are investigating whether Pulte, director of the Federal Housing Finance Agency, may have abused his power.
World Gold Council: Gold prices are likely to fluctuate within a range next year, and a strong trend cannot be ruled out.
·Informed person: www.xmasseuse.commodity trader Mercuria has written off more than 40,000 tons of LME copper warehouse receipts, pushing copper prices to a record high.
U.S. Trade Representative Greer said that Trump is considering withdrawing from the U.S.-Mexico-Canada Agreement next year and does not rule out the possibility of breaking the three-country tie.
RevelioLabs: U.S. non-farm employment is expected to decrease by 9,000 jobs in November, and the October data was revised from a decrease of 9,100 jobs to a decrease of 15,500 jobs.
Mizuho Securities: Japan’s interest rate hike path will hit obstacles at this interest rate level
We believe that the initial momentum of wage negotiations is very likely to confirm the resilience of wage trends, thereby prompting the Bank of Japan to consider raising interest rates at its December meeting. Kazuo Ueda’s recent speech also strengthened this judgment. As its hawkish stance www.xmasseuse.comes to fruition, the OIS market has already priced in an 80% probability on December 1. If the Bank of Japan maintains clear www.xmasseuse.communication during the next monetary policy meeting, the financial market can basically avoid being passive, which will facilitate the smooth implementation of an interest rate hike.
The only real remaining potential headwinds www.xmasseuse.come mainly from political pressure on Takaichi's cabinet, although the recent weakening of the yen may have reduced this headwind. In the market, the yen strengthened against the US dollar, and yen interest rates of all maturities generally rose. This was the market's natural reaction to Ueda Kazuo's speech. Even if the Bank of Japan decides to raise interest rates at its December meeting, the policy rate will only be raised to 0.75%, which is a level that will be reached sooner or later. It does not mean that terminal interest rates will rise or that the tightening path will accelerate. In addition, the Takaichi cabinet may invoke Article 4 of the Bank of Japan Act to insist on maintaining loose financial conditions, thereby creating significant resistance to further raising interest rates to 1%, which is the lower limit of the neutral interest rate range estimated by the Bank of Japan. Against this backdrop, 2y forward1yrates, a measure of terminal interest rate expectations, has risen to nearly 1.5%, a level that we believe is too high. The short-term to long-term interest rate ranges that are sensitive to terminal interest rate expectations have limited room for further upside. As excessive interest rate hike expectations gradually recede, there is even some downside potential for these term interest rates in the medium term.
ANZ: Why is it necessary for the European Central Bank to restart interest rate cuts next spring?
Higher U.S. tariffs and www.xmasseuse.competitive pressure from Asia have put pressure on Europe’s external demand. To ensure that the Eurozone economy maintains sustainable growth above 1.0% in the next few years, domestic demand is bound to bear greater weight. At present, the cooling labor market coupled with a record high savings rate makes private sector spending remain weak. To strengthen domestic demand, business investment and government spending need to play a greater role. Although there is widespread discussion that the increase in European defense spending will push up the economy and inflation, we judge that the actual intensity of fiscal stimulus may be lower than market expectations.
Taken together, we expect the euro area’s real GDP to grow by 1.3% in 2026 and 1.5% in 2027, which are 0.2% and 0.4% lower than the previous forecast respectively. At the same time, the recovery momentum of credit growth to the non-financial sector has significantly weakened and has been sideways in recent months. The marginal effectiveness of monetary policy transmission has peaked. In such a growth, labor market and credit environment, even if there is no obvious inflationary pressure on the demand side or cost side, there is still a risk that inflation will continue to be below the target. We maintain our judgment that inflationary pressure has weakened, and weak employment, moderate wage growth and stable inflation expectations will continue to hold down overall inflation in the www.xmasseuse.coming quarters. The ECB needs to guard against deeper and more persistent undershoots of inflation, which meansCut interest rates to avoid a return to overly tight monetary conditions.
Based on the above analysis, we believe that it is necessary for the European Central Bank to restart interest rate cuts next spring against the backdrop of moderate growth, a cooling labor market, and a weak credit pulse in the corporate sector. Its estimate of the neutral real interest rate is about 0%, and with nominal interest rates already close to this level, if inflation continues to decline, monetary conditions will become further tight. The current low inflation and weak demand are not consistent with the tightening stance, so we expect the European Central Bank to cut interest rates by a cumulative 50 basis points in 2026, lowering the policy rate to 1.50%.
Mitsubishi UFJ: The Bank of Japan is expected to raise interest rates in December, and Kazuo Ueda is "weighing the pros and cons" of expectation management
Board members Junko Koeda and Kazuyuki Masu have made it clear that the conditions for raising interest rates are gradually being met. In a speech to business leaders in Nagoya on December 1, Governor Ueda Kazuo said: "The uncertainty about Japan's economic outlook related to U.S. tariffs appears to be gradually fading," and "the central bank believes that the possibility of economic activity and prices achieving the baseline scenario is gradually increasing." At the same time, he specifically talked about the issue of exchange rate fluctuations and pointed out: "We also need to pay attention to the possibility that exchange rate changes will affect potential inflation by affecting inflation expectations." Regarding the 2026 spring wage negotiations, he emphasized: "Given that the next monetary policy meeting will be held on December 18-19, the central bank is actively collecting www.xmasseuse.comrmation on enterprises' attitudes towards salary increases through the head office and branches." He also made it clear that the central bank will weigh the pros and cons of raising interest rates and make appropriate decisions.
The Bank of Japan usually says in its statement that it "makes monetary policy decisions in a timely manner based on the www.xmasseuse.comrmation and data available at the time of each meeting." This time, Governor Ueda specifically pointed to this month’s meeting and rarely used the phrase “weighing the pros and cons of raising interest rates.” The market generally interpreted it as: As speaker, he is very likely to formally propose a motion to raise interest rates at the December meeting.
Societe Generale: The main short-term risk events in Europe and the United States are concentrated in...
The euro is calmly consolidating this week's gains. Fundamentals remain supportive as interest rate differentials reflect expectations that the Federal Reserve will resume easing policy while the European Central Bank's policy outlook remains neutral. Yield spreads widened this week to a fresh 14-month high and could breach levels last seen in mid-2023.
We noticed that the market did not have any substantive reaction to the release of October Eurozone retail sales data (0.0% month-on-month, in line with expectations), and the main risk events in the short term will focus on the European Central Bank. The euro's recent gains have seen it break above key moving averages as well as mid-November highs around mid-1.16. The euro is expected to fluctuate within the range of 1.1650 to 1.1750 in the near future.
Michael HewsonMSTACFTe: The British economy is on the brink of recession, and October GDP data may continue to confirm economic weakness
The growth momentum of the British economy has declined significantly in the past few months. The GDP growth rate in the third quarter was only 0.1%, a sharp decline from the 0.5% in the second quarter. Looking at monthly data, the economy contracted by 0.1% month-on-month in September, and was also revised down to 0% in August.
The manufacturing industry has become the main drag. Manufacturing output fell by 1.7% month-on-month in September, with the suspension of production by Jaguar Land Rover (JLR) being the main reason. Corporate investment also turned negative, down 0.3% from the previous quarter. This was another weakening after a 1.1% decline in the second quarter, reflecting a clear lack of corporate confidence and investment willingness.
Although the resumption of production by Jaguar Land Rover (JLR) may provide support in October, the overall economy lacks growth momentum. Judging from the latest PMI data, the service industry has also begun to join the ranks of economic weakness. Budget uncertainty in November led businesses to take a wait-and-see approach, further depressing economic activity.
October GDP data was released on December 12, and the expectations can hardly be called optimistic. This data will be a key indicator for the market to assess whether the British economy has entered recession, and may put pressure on the pound and British asset valuations.
The above content is all about "[XM Foreign Exchange Platform]: The Federal Reserve's quantitative tightening will end on December 1, will the policy officially shift to stabilizing or expanding the balance sheet?" It was carefully www.xmasseuse.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
Spring, summer, autumn and winter, every season is a beautiful scenery, and they all stay in my heart forever. Slip away~~~