by Kim | Nov 10, 2025
The key events shaping the w/c 10 November 2025: Veterans Day, resolution on the US government shutdown, UK & Aus labour market reports, Euro area & UK GDP Q3
Recap from last week: Resilience Undermined by Policy Uncertainty in Oct
Momentum in the US economy remains difficult to assess, as we continue to rely almost exclusively on private sector surveys and data due to the government shutdown. Though at the time of writing, there are reports of a potential stopgap funding agreement that could see the longest US government shutdown end this week (source: Bloomberg).
The data we received last week reflected activity that remained surprisingly resilient, while sentiment became more pessimistic due to policy uncertainty. The US PMI survey data for Oct reflected still solid activity, but the outlook was undermined by elevated caution. Similarly, US consumer sentiment fell sharply again at the start of Nov amid shutdown concerns. The limited and mixed US data will likely remain a challenge for the FOMC as it grapples with the risks to its dual mandate. Last week, private sector data suggested little aggregate change in labor market conditions in Oct but highlighted pockets of weakness. Globally, both the Bank of England (BoE) and the Reserve Bank of Australia (RBA) kept policy unchanged, with both central banks signalling heightened uncertainty – but for structurally different reasons.
US Activity Tempered by Caution
The US headline PMIs mostly indicated a solid start to activity in Q4. The S&P PMIs showed moderate expansion in manufacturing and services, led by output and demand. Domestic activity led the way, while export demand remained in contraction. Finance and tech sectors were key drivers of the expansion, but reports noted signs of improving consumer demand. A question remains over the durability of manufacturing output growth, though, given the large increase in finished goods inventories. The price indexes still showed persistent inflation pressures, but provided little guidance on the magnitude of the pressures.
The stronger, unifying theme of the PMI surveys was the weaker/falling sentiment, citing trade policy (tariffs), political uncertainty (federal shutdown), and generally “mixed signals” from the economy. Reports suggested that weakening sentiment due to policy and political uncertainty during Oct (namely, the US-China trade flare-up and US government shutdown) may have held back activity and muddied the outlook for firms.
Consumer Sentiment: A Reaction to Policy
This pervasive uncertainty was clearly reflected in the prelim Michigan consumer sentiment survey for Nov. All three headline measures fell notably at the start of Nov, building on weaker readings from the two prior months. Declines in both the outlook and current conditions were widespread among consumers, citing “worries about the potential negative consequences of the ongoing federal government shutdown”. Importantly, since these primary sources of increased uncertainty are unlikely to be enduring, sentiment could rebound once the shutdown is resolved.
Labor Market Data Gap Challenges the FOMC
Ordinarily, this would have been the week for the Oct payrolls report. The absence of the US government data is particularly crucial now, as the FOMC continues to grapple with opposing risks to its dual mandate and internal division on the near-term policy path. Last week’s private sector data reflected some mixed signals on the US labor market, but little to suggest a material change from the cooling conditions. The PMI surveys showed little change in employment momentum across manufacturing and services, with some reports noting that the heightened uncertainty held back decisions on hiring in Oct. Conversely, the ADP payroll report recorded a stronger-than-expected increase in Oct at +42k (expecting +25k) – breaking a series of weaker payroll reports. Layoffs were mixed: the Challenger Job Cut Announcement survey recorded a notable increase in layoff announcements to 153k in Oct from 54k in Sept. The increase in layoffs in Oct was led mostly by ‘warehousing’ (UPS announcements), and technology. However, the technology job cuts (+33k) were offset by a notable increase in technology hiring announcements (+250k). Over the YTD, DOGE is still the largest contributor to job cut announcements. While the “DOGE” cuts are not a cyclical indicator, more cyclically related “cost-cutting” was cited as the top reason for layoff announcements this month.
US Fed speeches last week acknowledged the challenge of navigating the current environment with limited data. Fed Governor Cook supported the decision to cut at the last meeting, noting that she believed downside risks to the labor market were greater than the upside risks to inflation, and assessed policy as still ‘modestly’ restrictive. Meanwhile, Fed Vice Chair Jefferson indicated that the recent lack of progress on inflation might be due to “tariff effects,” and suggested underlying inflation may still be making progress toward 2%. He assessed policy as only ‘somewhat’ restrictive and agreed that it makes sense to ‘proceed carefully’ now as the Committee approaches the neutral rate.
Global Central Banks: Pause Amid Uncertainty
Caution and uncertainty were also themes reflected in the two key central bank decisions last week – but for different, structural reasons.
The RBA kept policy settings unchanged as expected, and the decision was unanimous. The recent higher-than-expected inflation, recovery in demand, still tight labour market conditions, and easing in financial conditions have now increased the uncertainty over the assessment that monetary policy remains a “little restrictive”. Guidance was further adjusted to now reflect a ”heightened level of uncertainty about the outlook in both directions”. The Governor suggested that the RBA “may cut rates, or we may not”. New forecasts for underlying inflation show the trimmed mean remaining above the target band through to H2 2026 – suggesting an extended pause is possible if data evolve as per the forecasts.
The BoE also kept policy unchanged, but it was an extremely divided 5-4 decision, with four members voting for a 25bps cut. Risks of greater inflation persistence have become less pronounced recently, while the risk to medium-term inflation from weaker demand has become more apparent (concerns over slack building in the economy) – such that these risks are now more balanced. Amid the voter split, the Committee agreed on “waiting for additional evidence before reducing Bank Rate further”. While settings were deemed as ‘restrictive’, the internal division highlighted different views on the degree of restrictiveness. The decision noted that inflation was deemed to have peaked – an important signal for the outlook on rates. The extent of further cuts will depend on the inflation outlook – as disinflation continues, restrictiveness will be removed.
Outlook for the week ahead: Awaiting Shutdown Resolution
The expected resolution of the US government shutdown this week will see a shift from political gridlock. While the immediate policy risk of the shutdown may be receding, market participants must now brace for the uncertainty of when and how the official data flow will normalize – and importantly, what the data will say.
Assuming the shutdown ends this week, we’ll await guidance from statistical agencies over the timeline for scheduled releases.
For the immediate week, the US economic calendar remains minimal, keeping private sector surveys in focus. Outside of the US, key data releases in the UK and Aus will serve as essential validation (or challenge) to the recent policy decisions by the BoE and the RBA.
Tuesday, 11 Nov is Veterans Day.
Key factors & events to watch this week:
US Government Shutdown
Resolution of the US government shutdown and the resulting schedule of data releases.
US Data
Private sector reports are still in focus for this week, but will offer little further insight into the near-term outlook.
- NFIB Small Business Optimism Index will gauge sentiment in the small business sector, which, as highlighted in Part 1, may have been dampened by policy uncertainty in Oct and early Nov.
- The ADP preliminary 4-weekly payroll change will be updated now each week on a Tuesday. The prior 4-weekly change at the week ending 11 Oct was +14k. The note from ADP on the new release is here.
- If the shutdown ends early in the week, the initial jobless claims series could be released this week.
- There will be numerous Fed speeches through the week – see the official Fed calendar. Fed Governor Waller is scheduled to speak this week on “Payments” at a Fintech conference hosted by the Philadelphia Fed.
UK data
- UK labour market data for the 3-months ending Sept is expected to see the unemployment rate edge higher to 4.9% – this may not allay concerns over slack building in the economy.
- GDP for Q3 is expected to edge down to +0.2% QoQ, from a modest +0.3% in Q2.
Australian Labour Market for Oct
- Employment growth is expected to edge higher to +20k from +15k in Sept. The unemployment rate is expected to fall to 4.4% from 4.5% in Sept. This may also support the assertion that some tightness remains in the labor market.
Euro Area Data
Euro area GDP growth for Q3 is expected to be confirmed at +0.2%.
China Activity Data
The remaining activity data from China will be released this week. This comes on the heels of the step down in Chinese export and import growth in Oct. The activity data is expected to moderate slightly, with retail sales slowing to +2.8% in Oct from +3% in Sept and industrial production slowing to +5.5% from +6.5% in Sept.
This week, the US Treasury will auction and settle approx. $532bn in ST Bills, raising approx. $37bn in new money. The US Treasury will also auction the 3-year and 10-year Notes, and the 30-year Bond this week – they will settle early next week.
QT this week: Approx $17.2bn in ST Bills will mature on the Fed balance sheet and will be reinvested.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Nov 3, 2025
The key events shaping the w/c 3 November 2025: US labor market data for Oct, RBA & BoE meetings, PMIs for Oct.
Recap from last week: Review of FOMC, BoC, ECB, and BoJ Decisions
While last week’s central bank decisions played out mostly as expected, the FOMC decision was the highlight. It introduced a notable shift in guidance for Dec and revealed an FOMC divided on the outlook. The Australian Q3 CPI was much higher than expected, with implications for the RBA meeting this week. Finally, the meeting and agreement between US President Trump and Chinese President Xi provided a more constructive geopolitical backdrop for now.
FOMC: Shifts Guidance for Dec
The FOMC cut by 25bps last week, with the decision remaining in the realm of a ‘risk management’ cut, given the rising downside risks to the labor market noted at the Sept meeting. The Fed also announced the end of QT next month. The Fed Chair continued to emphasize the challenging situation of “no risk-free path” as the Committee navigates the tension between its employment and inflation goals.
The key feature of this decision, however, was the division among Committee members. Firstly, the decision to cut was not unanimous, drawing two notable dissents – one member (Schmid) preferred no change at this meeting, while another (Miran) argued for a deeper 50bps cut. Secondly, according to Powell, “there were strongly differing views about how to proceed in Dec”, which led to a distinct shift in forward guidance. While markets had priced in a follow-up rate cut in Dec, Chair Powell explicitly countered that expectation:
“A further reduction in the policy rate at the December meeting is not a forgone conclusion—far from it.” – US Fed Chair Powell, Press Conference, 29 Oct 2025
This shift in guidance appeared to be more than just an attempt to maximize optionality for the Dec meeting. Rather, it reflected the range of views that leaned against the expectation for a continued rate cut in Dec. During the press conference, Powell outlined some of these arguments, including tentative signs that labor market conditions may be stabilizing, as well as members noting “stronger economic activity”. Given inflation is still above target, Powell noted that while the “reasonable base case” assumes tariffs will cause a one-off shift in the price level, many on the board are not simply assuming that will be the case. He also cited lingering data uncertainty stemming from the government shutdown as a reason to pause: “What do you do in a fog? You slow down.” Finally, an argument for slowing down the cadence of easing emerged, noting that the policy rate was 150bps closer to neutral than a year ago:
“And so there’s a growing chorus now of feeling like maybe this is where we should at least wait a cycle, something like that. That’s what it is.”- US Fed Chair Powell, Press Conference, 29 Oct 2025
The post-meeting commentary underscored the committee’s division. Several members outlined their differing views; Schmid (dissent), Logan, and Hammack preferred a hold; Waller still supports a cut in Dec; and Miran (dissent) likely still supports a 50bps cut in Dec. There are more speakers scheduled this week. Overall, the outcome of the Dec meeting will largely be determined by how the data and momentum, especially for the labor market, evolve over the next few weeks. Assessing this momentum remains challenging given the continued lack of official government data. This week, we will continue to rely on private sector reports, instead of the official government data, to assess the US labor market momentum in Oct.
The BoC Signals a Pause
The BoC cut rates at this meeting as expected, based on ongoing weakness in the economy, while inflation pressures remained ‘contained’. The BoC signalled a possible pause, though, with the Governing Council noting that “the current policy rate [is] at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment”. The BoC noted that the current economic weakness wasn’t just cyclical, but that trade and tariff changes were leading to a structural adjustment in the Canadian economy.
The domestic picture still poses a challenge for monetary policy. Like the ECB, the BoC noted that some uncertainty over trade and tariffs had receded – but that growth remained under pressure due to tariffs. In Sept, the unemployment rate remained high at 7.1% while headline inflation was +2.4%, slightly higher than the BoC anticipated. While the preferred measures of core inflation have been sticky around 3%, the “upward momentum had dissipated”.
The ECB: Still in a ‘Good Place’
The ECB kept policy settings unchanged as expected. The Governing Council noted that inflation is close to the 2% target, and the inflation outlook was broadly unchanged. Although the growth backdrop remained challenging, growth risks had abated. Past rate cuts were cited as an important source of resilience, with the ECB President stating that “Policy is still in a good place”. The ECB maintained its meeting-by-meeting approach to its assessment.
The broader Euro area continues to show resilience. The latest prelim GDP for Q3 was better than expected at +0.2%, boosted by some stronger country-level results despite political disruption in France, and the challenging manufacturing and trade backdrop facing Germany and the broader Eurozone manufacturing sector. Meanwhile, the latest prelim Oct CPI for the Euro area was little changed from Sep.
The BoJ Maintains its Policy Rate
The BoJ kept rates unchanged as expected, maintaining its normalisation bias. However, the decision was marked by two dissenting votes preferring a rate hike. The dissenters cited “a shift away from the deflationary norm and the price stability target had been more or less achieved”, and “with risks to prices becoming more skewed to the upside, the Bank should set the policy interest rate a little closer to the neutral rate” as reasons for preferring to hike at this meeting.
On the outlook, Governor Ueda reiterated the need for patience, stating: “We held today as we want to see more data on domestic wage-setting behaviors, while uncertainty remains high in overseas economies. If we’re convinced, we’ll adjust rates regardless of the political situation.”
Via Bloomberg: Governor Ueda also made clear that the central bank does not need to see the full results of the wage talks before deciding. He repeatedly emphasized that the BoJ wants only to confirm the initial momentum of wage talks before adjusting policy—a signal that a rate hike may be closer than market reactions might suggest.
Outlook for the week ahead: US Labor Market data for Oct, RBA & BoE meetings, PMIs for Oct
The focus shifts this week to the US labor market for Oct, several central bank decisions, and the full suite of Oct PMIs to assess growth momentum at the start of Q4.
Progress on the resolution of the US government shutdown will also remain in focus this week.
The geopolitical backdrop is expected to remain constructive for now, given positive meetings with US President Trump throughout Asia last week, as well as an agreement signed with Chinese President Xi. While the details of the agreement are limited, markets remain reassured with positive dialogue between the sides.
Key factors & events to watch this week:
US Labor Market for Oct
With the shutdown still in place, we continue to rely on private sector labor market reports (and central bank surveys) to assess momentum in the US labor market.
- ADP is now releasing its 4-week average payroll growth statistic each week. Last week, for the four weeks ended 11 Oct, payroll growth was +14k.
- The full month ADP report for Oct is expected to show payroll growth of +25k, up from -32k in Sept.
- The Challenger Job Cut Announcement survey for Oct will also be released this week. Last month, job cut announcements fell to 54k.
- The various ISM and S&P PMIs will also provide some guidance on changes in employment conditions from the prior month across manufacturing and services firms.
US PMI Data – Oct
ISM & S&P PMI surveys for Oct will provide some further insight into changes in growth momentum.
- The ISM surveys are expected to show stagnant conditions in manufacturing and only modest growth in Services in Oct. The ISM Manufacturing PMI is expected to stay around 49, while the services PMI is expected to increase to 51. Across both reports, key indicators will be the momentum in orders, employment, and prices.
- The S&P prelim US PMIs for Oct showed somewhat stronger activity in Oct compared to Sept. The S&P manufacturing PMI is expected to confirm a modest expansion at 52.2, and a more widespread expansion in the services sector at 55.2.
US Fed speeches & Data
- There is a range of Fed speeches scheduled for this week. Of note is Governor Waller (central banking and the future of payments), Governor Cook (economic outlook and monetary policy), Vice Chair (Supervision) Bowman, and Fed Vice Chair Jefferson.
- The latest Senior Loan Officer Opinion Survey is expected to be released.
- The US Consumer Credit Change for Sept will be released at the end of the week. Growth in consumer credit in Aug was a mere +$0.36bn.
The RBA Meeting
Last week’s Q3 CPI came in higher than the already firmer expectations. Every category made a positive contribution to inflation in Q3. The trimmed mean and median measures of underlying inflation also increased notably compared to Q2, while not to the same degree as headline inflation, but still suggesting that it wasn’t just outliers driving the higher inflation in Q3. This will have implications for the RBA decision this week.
- RBA Decision: expected to stay on hold. The RBA also stayed on hold at the last meeting pending the Q3 inflation print, noting that the Sept quarter inflation could be higher than expected.
- Updated forecasts will also be released.
The BoE Meeting
- BoE Decision: expected to stay on hold, despite some recent continued cooling in the labor market. Markets are expecting a hold pending the UK government budget release later in Nov.
Canada Labour Market – Oct
- Conditions are expected to remain weaker, with employment expected to fall by -4k (versus +60k in Sept), and the unemployment rate is expected to increase to 7.2%.
The full suite of global S&P PMIs for Oct will be released this week.
This week, the US Treasury will auction and settle approx. $532bn in ST Bills, raising approx. $42bn in new money. QT this week: Approx $13bn in ST Bills will mature on the Fed balance sheet and will be reinvested.
The US Treasury will also update its quarterly financing requirements for Q4 2025 and provide estimates for Q1 2026.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Oct 27, 2025
The key events shaping the w/c 27 October 2025: Central bank meetings: FOMC, BoC, BoJ, and ECB, Aus Q3 CPI, US-China meeting at APEC
Recap from last week: CPI for September and Central Bank Previews
The US and global CPI reports for September provided an important update on the inflation backdrop, setting the stage for a week of key central bank meetings. We’ll review last week’s key inflation data from the US, Canada, Japan, and Europe as part of a broader preview to this week’s central bank meetings and policy decisions.
FOMC Preview
Markets are widely expecting the FOMC to cut rates by 25 basis points (bps) this week. The Fed is likely to maintain its risk management approach, prioritizing the rising downside risks to the labor market, despite the backdrop of elevated, but contained inflation in Sept. At the last meeting, the shift in the Fed’s assessment of rising downside risks to the labor market was the key driver of the decision to resume the rate-cutting cycle. Even without official government data, private sector reports suggest that this assessment is not likely to have changed.
The press conference and decision will be important for highlighting any change in the Fed’s framing of inflation based on the Sept CPI report and other inter-meeting reports. The current framing includes that tariff impacts are likely to be temporary, upside risks to inflation have either diminished or not increased, and inflation expectations remain well anchored. The latest Fed minutes still highlighted participant concerns on inflation, given the lack of progress towards the 2% target. The outlook and guidance are likely to continue to navigate the balance between the risk of inflation that is still above target and downside risks to the labor market. The FOMC is still expected to chart a ‘cautious’ path. The Fed decision is also likely to address changes to Quantitative Tightening (QT) as signalled by Fed Chair Powell in his speech on 14 Oct.
The US CPI report for Sept was broadly supportive of further easing, in the context that inflation remained elevated, but did not worsen, especially as a result of tariffs. Headline CPI came in lower than expected, but still increased to +3% in Sept from +2.9% in Aug. Also, core CPI did not increase as much as expected and eased back to +3% over the year in Sept. Importantly, the underlying drivers of core inflation showed that while core goods inflation remained firmer than usual (a proxy for tariff-led impacts), it remained contained within the bigger picture. Core services inflation slowed over the year to +3.5%, reflecting a resumption of the disinflationary trend in shelter inflation. The trend in the median and trimmed mean measures of underlying inflation was more favourable. Both the median and trimmed mean rates slowed over the month and year, indicating less widespread inflation pressure.
The US S&P prelim PMI for Oct was mixed. The headline output PMI suggested a strong start to Q4 with an acceleration in output growth in Oct, to “the second fastest pace this year”. However, input buying fell due to a drop in backlogs and an “unprecedented build-up of unsold stock”, potentially affecting near-term output. Export demand fell across both manufacturing and services. Employment growth lifted overall. Prices added another layer to the inflation picture: input prices continued to “increase sharply” due to tariffs and “upward wage pressures”, but the prices charged by firms increased at the slowest pace since Apr – suggesting firms are absorbing tariffs via a margin squeeze. Business confidence fell to “one of its lowest levels in three years”.
The ongoing government shutdown may add a layer of uncertainty and likely compounds the Fed’s concern over economic weakness, especially given the length of the shutdown so far and no end in sight.
Bank of Canada (BoC) Preview
The BoC is expected to cut rates at this meeting by 25bps. The data backdrop shows inflation firming again alongside continued subdued economic activity and recently rising unemployment. At the last meeting, the BoC decided to cut rates again: “With a weaker economy and less upside risk to inflation, Governing Council judged that a reduction in the policy rate was appropriate to better balance the risks”. However, the CPI report for Sept showed inflation increasing across a range of measures. While the acceleration in headline CPI was partially the result of unfavourable base effects on gasoline prices, other measures of underlying inflation showed persistent and rising pressure. The BoC preferred measures of the median and trimmed mean inflation rates all increased more than expected, and reflected more widespread pressure this month.
The BoC business outlook survey for Q3 indicated that while perceived uncertainty had eased slightly, spending intentions remained subdued. Most businesses did not expect to increase current staffing levels in the near-term outlook. Soft demand and uncertainty related to trade tensions held back investment intentions. Weak demand limited firms’ ability to pass on cost increases, yet inflation is still rising. This, together with the recent softening in labour market conditions, increases the likelihood of another rate cut by the BoC at this meeting.
The Bank of Japan (BoJ) Preview
The BoJ is expected to keep rates unchanged at this meeting. Updated forecasts may set the stage for further rate hikes. The BoJ also faces a tug-of-war between persistent inflation and emerging signs of moderating economic growth momentum. After the last meeting, Governor Ueda noted that balance: “We have to look at how much tariff policy risks materialize in the Japanese economy and prices,” and the BoJ did highlight that growth conditions were expected to moderate due to trade. Governor Ueda also noted that: “On the other hand, we have to carefully look at whether inflation, food prices move in line with our forecasts”. There were two surprising dissenters at the last meeting, preferring a rate hike.
Japanese National CPI for Sept came in as expected and accelerated over the year to +2.9% in Sept from +2.7% in Aug. Similarly, the BoJ’s preferred measure of underlying inflation excluding fresh food also increased in Sept to +2.9%. However, the trend of the monthly inflation measures has been easing over the YTD, and prices fell marginally this month across headline and core CPI. In contrast, while food price inflation eased slightly over the year to +6.7%, it remained at +0.7% over the month, led by fresh food prices. Over the year, food less fresh food inflation is running at a notable +7.6%, down slightly from +8% in Aug.
The Japanese S&P PMI prelim for Oct reflected some of the policy challenges: slowing growth momentum while input and output charges rose at “historically strong rates”. While service sector growth momentum slowed, it remained positive and helped to offset continued contraction in the manufacturing sector: “Overall output expanded at the softest rate since May, while firms recorded the first reduction in new business for 16 months.”
The appointment of new Japanese PM Takaichi adds another layer to the policy debate. She has historically tended towards ‘expansionary policies’, but her new government must now also address concerns over inflation and declining real wages for workers. The new PM will meet with US President Trump in Japan this week.
The European Central Bank (ECB) Preview
The ECB is expected to keep policy settings unchanged at its meeting this week. The ECB kept its policy settings unchanged at the last meeting, with the minutes noting that despite the new and highly uncertain trade environment, rates (policy settings) were currently “in a good place” and close to or at the end of the monetary policy cycle. The latest round of Euro area inflation for Sept showed headline inflation had increased from +2% to +2.2% in Sept, as well as core CPI up to +2.4% – all still below a year ago. Monthly inflation rates remained subdued at +0.1%.
The latest Eurozone prelim PMI for Oct showed positive signs for growth momentum going into Q4. At a composite level, output growth momentum improved, led by services, while manufacturing output growth stabilized. Underlying commentary around manufacturing in the Eurozone was mixed and tended towards a more negative outlook amid weak new orders, falling employment, and waning business confidence.
Outlook for the week ahead: Central bank meetings: FOMC, BoC, BoJ, and ECB, Aus Q3 CPI, US-China meeting at APEC
The focus this week shifts to key central bank decisions and the meeting between US President Trump and Chinese President Xi. The indication from lower-level meetings over the weekend is that there is likely to be an agreement signed by both Presidents later this week on the sidelines of the APEC Summit.
Key factors & events to watch this week:
US President Trump & Chinese President Xi meet at APEC
- The indication from lower-level meetings over the weekend is that there is likely to be a framework for an agreement to be finalised by both Presidents later this week on the sidelines of the APEC Summit. While the scope of the agreement will be important, markets also seem reassured by engagement and diplomatic progress on tariffs, possibly also further reducing some of that trade uncertainty, which, for now, is seen as more significant than the final fine print of the deal.
US FOMC meeting and US data.
- Policy Decision: Markets are expecting a 25bps cut this week.
- Guidance & QT: Fed Chair Powell’s press conference will provide an update on how the Committee is balancing its dual mandate risks, especially in light of the most recent inflation data, as well as outline any changes to its near-term guidance amid the lack of official data. The decision is also likely to address halting its balance sheet run-off, and the details will be important.
- Dissent: There is likely to be at least one dissenter at this meeting.
- Data/speakers: US data will again be limited to private sector reports. Of note will be the Conference Board Consumer Sentiment survey, which includes some labor market indicators. Pending home sales for Sep will also be released. So far, Vice Chair for Supervision, Bowman, is scheduled to speak on 30 Oct.
- The US government shutdown continues.
BoC meeting
The BoC is widely expected to deliver a consecutive 25bps rate cut at its meeting this week, prioritizing downside economic risks over the recent uptick in core inflation measures.
BoJ meeting and data
- Policy Decision: The BoJ is expected to keep rates unchanged at this meeting. Updated forecasts will be released after this meeting.
- Inflation data: The Tokyo CPI (ex-fresh food) is expected to increase to +2.6% in Oct from +2.5% in Sept.
- US President Trump will meet the new Japanese PM in Japan this week.
ECB meeting and data
- Policy Decision: The ECB is expected to keep policy settings unchanged, likely maintaining its wait-and-see approach.
- Inflation data: Euro area prelim CPI for Oct is expected to show headline CPI ease to +2.1% in Oct from +2.2% in Sept. Core CPI is expected to slow back to +2.3% in Oct from +2.4% in Sept.
- Growth data: Euro area GDP for Q3 is expected to be +0.1% over the quarter, unchanged from +0.1% in Q2, but is expected to slow to +1.2% over the year.
Australia CPI for Q3
- Inflation data: After the firmer monthly inflation result for Aug, expectations for Q3 inflation have increased and are above the most recent RBA forecasts. Headline CPI is expected to increase by +1.1% over the quarter in Q3 from +0.7% in Q2. Over the year, headline inflation is expected to jump from +2.1% in Q2 to +3% in Q3. The underlying trimmed-mean inflation rate is expected to increase by +0.8% over the quarter in Q3, up from +0.6% in Q2.
- This will be an important inflation print leading up to the RBA meeting next week. Markets had previously priced in at least another rate cut in 2025 before the firmer Aug monthly inflation report. A high Q3 print could force a reassessment of the RBA’s easing path.
This week, the US Treasury will auction and settle approx. $834bn in ST Bills, Notes, FRNs, TIPS, and Bonds, raising approx. $109bn in new money.
QT this week: Approx $32.5bn in ST Bills, Notes, and Bonds will mature on the Fed balance sheet and will be reinvested. Approx $4.3bn in Notes and Bonds will mature and be redeemed/roll off the Fed balance sheet.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Oct 20, 2025
The key events shaping the w/c 20 October 2025: US CPI for Sep, global inflation reports for Sep (NZ, the UK, Canada, and Japan), S&P prelim PMIs for Oct
Recap from last week: Fed Easing with Caution
Amid the ongoing US government shutdown and data vacuum, focus remained on key Fed speeches in the lead-up to next week’s FOMC meeting. The message from those speeches was clear: easing with caution. The latest Beige Book provided a broad update on the US backdrop, detailing slower growth, muted labor market conditions, and persistent input price inflation. The release of the US CPI report for Sep this week will provide the Fed with an important update on inflation. Globally, the market will receive Sep inflation updates from NZ, the UK, Japan, and Canada.
Speeches by Fed Chair Powell and Fed Governor Waller last week supported another rate cut at the FOMC meeting next week. The Fed Chair noted that, despite the lack of official data, and based on the data available, the outlook for employment and inflation hasn’t changed much since the last meeting. In other words, the balance of risks still reflects the rising downside risks to the labor market. He noted, though, that economic activity may be on a somewhat firmer trajectory than expected. The first half of Chair Powell’s speech focused on the Fed’s balance sheet. Chair Powell acknowledged that the end of Quantitative Tightening (QT)/balance sheet run-off may be approaching “in coming months”, given the level of total reserves in the system, and emerging signs that “liquidity conditions are gradually tightening”. It was a timely speech on liquidity conditions, given the recent, yet temporary pressures in short-term funding markets, and could signal an earlier end to QT.
In his speech, Governor Waller noted the backdrop of conflicting data: solid growth in activity while the labor market is softening. It’s a situation where “something’s got to give”. Until it’s clear which way the data will break (in favour of stronger growth or a weaker labor market), Governor Waller advocated for a cautious pace of cuts to avoid a policy mistake.
The Fed Beige Book for the six weeks to mid-Oct showed some easing in the pace of economic activity, continued subdued hiring, and stable employment, as prices continued to rise. While the report noted that economic activity had “changed little” from the previous report, fewer regions had reported either no change in activity or increasing activity, and more regions reported a “slight softening” in activity. Consumer spending “inched down,” manufacturing activity was “varied,” and activity in agriculture, energy, and transportation was “generally down”. The report showed differing effects among high and lower/medium income cohorts, with spending on “luxury travel and accommodation” reportedly strong, while other households “continued to seek discounts and promotions in the face of rising prices and elevated economic uncertainty”.
Employment levels were “largely stable”, while demand for labor remained muted. In some cases, hiring was replaced by “layoffs and attrition” due to weaker demand, elevated economic uncertainty, and investment in AI technologies.
Prices increased further due to higher import costs (tariffs) across many districts as well as higher costs of services. Tariffs seemed to have a dual impact of a growth drag on manufacturing and of driving higher input price inflation. There were mixed reports between firms absorbing the higher tariff costs via lower margins and firms passing on the higher costs.
The Beige Book still confirms the challenging and delicate path for the Fed to navigate, the “no risk-free path”. However, the softening in growth and continued muted labor market conditions will still play into the rising downside risks, supporting an easing bias. With the inflation backdrop remaining persistent, this week’s US CPI report for Sep will offer an important view of the path of inflation.
The challenge of conflicting data was not limited to the US. The RBA Minutes showed that the Board had stayed on hold in Sep due to concerns that the decline in inflation had slowed, supported by signs of recovering private sector demand, stable unemployment, and “leading indicators (such as job advertisements and vacancies) that continued to point to healthy labour demand in the near term”.
However, last week’s Aus Sep labour market report showed a sharper increase in the unemployment rate to 4.5%, from 4.3% in Aug. Despite the rebound in employment growth, unemployment increased as participation also increased. This will be a concerning development for the RBA Board, and they will likely need to see whether this higher participation is absorbed/resolved next month. In the meantime, the important Q3 CPI data is due on 29 Oct, providing the RBA with a better understanding of shifts in underlying inflation. The next RBA meeting is on 3-4 Nov.
On the geopolitical front, markets continue to track the negotiations and posturing between the US and China on tariffs, leading up to the meeting between US President Trump and Chinese President Xi. The recent flare-up of tensions has been tempered with a more conciliatory tone for now.
Outlook for the week ahead: US CPI for Sep, global inflation reports for Sep (NZ, the UK, Canada, and Japan), S&P prelim PMIs for Oct
The focus this week shifts to data. Specifically, the updated inflation backdrop for Sept for the US, as well as global CPI reports. The BLS will be releasing the US CPI data at the end of the week, despite the shutdown, as it is an important input to calculate the cost-of-living adjustment for government transfer payments for 2026. The data will also be important for the FOMC meeting next week.
Also out this week will be the prelim S&P PMIs for key developed markets, offering the first view of growth and momentum leading into Q4.
Other important points for the week ahead: tensions on trade and tariff negotiations continuing to simmer between the US and China with ongoing headline risk, progress on resolving the US government shutdown, and this is the blackout period before the next FOMC meeting on the 28-29 Oct – although there are a few speeches scheduled (opening remarks).
Key factors & events to watch this week:
US inflation data – CPI for September.
The inflation data will be limited to the CPI release and is scheduled to be released at the end of the week on 24 Oct.
- Headline CPI is expected to increase by +0.4% over the month in Sep, after increasing by +0.4% in Aug. Over the year, headline CPI is expected to increase by +3.1% in Sep, up from +2.9% in Aug.
- Core CPI is expected to increase by +0.3% over the month in Sep, after increasing by +0.35% in Aug. Over the year, core CPI is expected to stay at +3.1% in Sep, versus +3.1% in Aug.
US private sector/Fed data and speeches.
- US existing home sales for Sep are expected to increase to 4.06m (annualized), up from 4.0m in Aug. Mortgage purchase applications had begun to rebound in Sep, along with falling mortgage rates.
- The Kansas City Fed Manufacturing Index for Oct will be released. The surveys released so far for Oct show mixed results for manufacturing orders and activity, while employment remains subdued but steady, and input price increases remain relatively widespread.
- Michigan Consumer Sentiment – final release for Oct. This is expected to remain around 55.
- There will be limited Fed speeches this week, given the blackout ahead of the FOMC meeting next week.
Global inflation reports for September.
- (Actual) NZ CPI for Q3 was expected to be +0.8%, but increased by +1% over the quarter, versus +0.5% in Q2. Over the year, headline CPI accelerated to +3% in Q3, up from +2.7% in Q2.
- Canada CPI for Sep is expected to fall over the month by -0.1% after a similar fall in Aug. Over the year, headline inflation is expected to remain little changed at around +1.9%. In Aug, CPI ex gasoline increased by +2.4% over the year. Median CPI for Sep is expected to slow slightly to +3% over the year in Sep, from +3.1% in Aug. The trimmed mean inflation rate is expected to remain unchanged at +3% over the year in Sep.
- UK CPI for Sep is expected to increase across both headline and core measures. Headline CPI is expected to increase to +4% over the year in Sep from +3.8% in Aug. Core CPI is also expected to increase to +3.7% in Sep from +3.6% in Aug.
- Japanese core CPI – ex fresh food (the BoJ preferred measure) is expected to increase to +2.9% over the year in Sep, from +2.7% in Aug.
China data for Sep and Q3 growth
The full range of China’s Q3 growth and Sep activity data was released earlier in the week, and ahead of the Fourth Plenum meeting this week. Details of the meeting and review of plans and initiatives will be in focus post the meeting.
S&P Prelim PMIs Oct.
S&P Prelim PMIs for Oct will be released this week, providing an update on private sector activity at the start of Q4.
This week, the US Treasury will auction and settle approx. $532bn in ST Bills, raising approx. $52bn in new money. The US Treasury will also auction to 20-year Bond and 5-year TIPS this week – both will settle on 31 Oct.
QT this week: Approx $10bn in ST Bills will mature on the Fed balance sheet and will be reinvested.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Oct 13, 2025
The key events shaping the w/c 13 October 2025: US-China trade posturing, US government shutdown continues, Fed speeches: Fed Chair Powell, Fed Beige Book
Recap from last week: Balancing the Fed Policy Mandate
With the ongoing US government shutdown creating a data vacuum, our focus shifted to central bank communications this week. An overarching theme across these communications was the challenge of balancing policy mandates amid conflicting views on data and elevated risk. The Fed minutes revealed the FOMC undertaking a balancing act with its 25bps cut as rising downside risks to employment shifted the Fed’s balance of risks. The minutes and speeches this week reinforced the complex, two-sided risk environment, as well as a lack of consensus on the progress of inflation and on the cause of the current labor market weakening. This balancing theme was reflected elsewhere; the ECB minutes suggested rates were in a “good place” for balancing current risks, while the RBNZ opted for an aggressive 50bp cut to pre-emptively mitigate downside risk from cautious spending. However, the fragile tariff truce between the US and China, while they negotiate around lowering the US ‘Liberation Day’ tariffs, was upended on Friday, shifting risk sentiment.
The FOMC minutes reflected broad, if not unanimous, agreement to cut the FFR at the last meeting in response to the ‘shift in the balance of risks’. One committee member dissented in favour of a larger cut. Overall, the minutes suggest that the Committee was taking a risk management approach to mitigate the rising downside risks to employment and to avoid a rise in unemployment, before those risks become a reality.
“Most” participants observed that it was appropriate to move the target range for the federal funds rate toward a more neutral setting because they judged that downside risks to employment had increased over the intermeeting period and that upside risks to inflation had either diminished or not increased. Source: FOMC Minutes 16-17 Sep 2025
Beyond the immediate decision, the minutes reflect the Fed navigating a more complex, two-sided risk to its dual mandate. Committee members held differing views across both sides of the dual mandate: on the progress of inflation and on the reason for labor market weakness. This division was evident in the nuanced language used throughout the minutes. Even the unanimous decision to cut rates was caveated: “a few participants” saw “merit” in keeping the rate unchanged, and could have supported such a decision. On inflation, some members felt that inflation, excluding tariffs, was close to target. Others emphasized that progress on inflation had stalled, even excluding those tariffs. Finally, there was a range of views on the current drivers of the weakening labor market conditions – whether the weakness in payroll growth was driven by a mix of faltering labor demand and/or emerging structural supply factors.
The minutes surrounding forward guidance were also nuanced. The tension remained between being “data dependent” and “not on a preset path,” while acknowledging that “more easing is likely to be appropriate.” While most judged that it would likely be appropriate to ease policy further over the remainder of this year, Participants stressed the importance of a “balanced approach” given the two-sided risks: easing too much risked unanchored inflation expectations, while keeping rates too high risked unnecessary increases in unemployment. Despite the absence of official government data due to the shutdown, markets are still pricing in two further 25bps cuts this year.
A range of views was also borne out across Fed speeches last week. Of note was Governor Barr’s speech, where he focused on the complexity of balancing the dual mandate, saying that “the most difficult circumstances for making monetary policy decisions are when both mandate variables are at risk”. He acknowledged the rising risk to jobs at the last meeting. However, this speech emphasised inflation risks – noting that the Fed’s price stability goal “faces significant risks”. The speech by New York Fed President Williams, on the other hand, erred more on the side of a weakening labor market in supporting further cuts this year. In an interview later in the week, Fed Governor Waller advocated for a more cautious approach, highlighting the disconnect between slowing payrolls and recent strengthening in growth, noting that “something’s got to give”. But he also said that “the labor market is weak – and that’s the punchline for policy”. He emphasized that while he favoured cutting rates, “you’re not going to do it aggressively and fast, in case you make a big mistake on which way that things go”. He sees the pace of quarter-point cuts at the next few meetings as sufficient.
Other global central banks also emphasised this balancing approach. The ECB minutes for the latest meeting (hold) showed a consensus that rates were currently in a “good place”, and “close to or at the end of the monetary policy cycle”. Minutes showed the inflation outlook as stable, but vulnerable, and domestic growth resilient but also vulnerable in the near-term. While a further rate cut “would better protect the inflation target… under a range of adverse scenarios” (downside growth risk), the materialization of upside inflation risks “would instead warrant maintaining the current level.”
However, the RBNZ cut rates by more than expected by 50bps, and guidance indicated that the Committee was “open to further reductions”. The decision for a 50bp cut was seen as mitigating the risks of persistent, overly cautious household and business spending, while there is still spare capacity in the economy, and despite inflation remaining at the upper end of the 1-3% target band.
Outlook for the week ahead: US-China trade posturing, US government shutdown continues, Fed speeches: Fed Chair Powell, Fed Beige Book
The trade negotiations between the US and China were again a source of headline risk late last week. At the time of writing, there has been some effort to de-escalate; however, there is disagreement on the terms of the tariff truce while negotiations are ongoing. Both US President Trump and President Xi plan to meet in a few weeks at the APEC summit in South Korea. Importantly, the immediate market reaction on Friday serves as a sharp reminder: a swift de-escalation of the renewed trade tensions is important to prevent this spike in risk from hardening back into more sustained and elevated uncertainty around tariffs for business and households.
The coming week has many angles. Headline risk around US-China trade posturing ahead of planned talks, progress on the US government shutdown, Fed speeches prior to the blackout period before the next FOMC meeting on the 28-29 Oct, and limited data. The BLS also announced that the CPI report for Sep will be released next week on 24 Oct.
Key factors & events to watch this week
US Fed speeches & the Beige Book
This is the final week of speeches ahead of the blackout period next week, before the FOMC meeting on 28-29 Oct. The Fed Beige Book will be released this week ahead of the FOMC meeting – and is likely to gain more scrutiny amid the data vacuum.
- There will be several key Fed speeches this week. Fed Chair Powell will speak on the Economic Outlook and Monetary Policy at the NABE conference (14 Oct). This will be a key speech ahead of the FOMC meeting.
- Fed Governor Waller will speak on the Economic Outlook (16 Oct) – also a key speech ahead of the FOMC meeting.
- There will be a range of other speeches through the week – see the official Fed calendar.
- The Fed Beige Book, covering anecdotes from regional Fed business contacts for the last six weeks. This will be an important input into the next Fed meeting (as usual).
US Fed surveys and private sector data
Given the ongoing US government shutdown, US data will be limited to US regional Fed manufacturing surveys and private sector reports.
- The NY Empire State and Philadelphia Fed Manufacturing surveys for Oct will be released – our first data point for Q4.
- The NAHB Housing Market (home builder sentiment) index for Oct.
- The NFIB business optimism index (Sep)
Global data reports
- UK labor market for the 3 months to Sep. The unemployment rate is expected to stay unchanged at 4.7%.
- The Australian labour market report for Sep. Employment growth is expected to rebound to +20k from -5k in Aug; however, the unemployment rate is expected to increase to 4.3% from 4.2% in Aug.
- The RBA minutes will be released this week.
- Euro area CPI – final for Sep is expected to confirm headline inflation of +2.2% and core inflation of +2.3%.
This week, the US Treasury will auction and settle approx. $651bn in ST Bills, Notes, and Bonds, raising approx. $91bn in new money.
QT this week: Approx $11.3bn in ST Bills and TIPS will mature on the Fed balance sheet and will be reinvested. Approx $0.7bn in TIPS will mature and roll off the Fed balance sheet.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
