Federal Reserve Policy Outlook - The New York Fed President's comments significantly influenced market expectations, with Fed futures nearly doubling after his strong support for a 25 basis point cut in December [2][3] - There is speculation that dissenting votes may arise, with some presidents likely opposing any cuts, while others may support a pause in policy changes until more data is available [4][8] Labor Market Concerns - The labor market has shown signs of weakness, with the unemployment rate at 4.4% and payroll employment growth at 119,000, raising concerns about potential further deterioration [6][7] - Inflation remains a critical issue, currently at 3%, which affects affordability and complicates the Fed's decision-making process regarding interest rates [7][9] Economic Indicators and Risks - The Fed's current stance is influenced by a combination of weak labor data and elevated inflation, leading to discussions about the need for potential policy adjustments [8][14] - There are concerns about the impact of labor supply shocks and the slow growth of the labor force due to immigration policies, which could affect payroll employment growth [11][12]

19 November 2025 China Macro Tracker Economics Not yet at the finishing line Policy support: Slowing activity should prompt further policy support China's economic activity slowed in October, with investment, consumption, and industrial production softening due to subdued external demand and weaker domestic momentum (see China activity, 14 November). This should prompt a strong policy response on both the fiscal and monetary fronts to meet this year's growth targets and ensure a strong start for the 15th Fi ...

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Japanese economy** and its outlook from 2026 to 2028, highlighting the transition from "nominal stagnation" to "moderate but steady nominal growth" [2][10]. Core Economic Insights - **Economic Paths**: Japan faces two potential scenarios: a "virtuous cycle" of income and spending or a "stalling" scenario due to weak external demand and demographic challenges [2][10]. - **Inflation Trends**: Headline inflation is expected to slow to 2.1% in 2026 from 3.1% in 2025, while core-core CPI is projected to align with this trend [3][11]. - **Monetary Policy**: The Bank of Japan (BoJ) is expected to continue normalizing its policy, with rate hikes anticipated to reach 1.5% by mid-2027 [4][11]. Fiscal Policy and Government Actions - **Fiscal Expansion**: The Takaichi administration is expected to implement a responsible fiscal policy aimed at boosting household purchasing power and corporate investment, potentially increasing GDP by 0.2 percentage points in 2026 [5][38][40]. - **Budget Expectations**: The supplementary budget for FY2025 and the initial budget for FY2026 are anticipated to be larger than previous estimates, with demands for ¥25 trillion (approximately 4% of GDP) [12][39]. Risks and Challenges - **External Risks**: Potential risks include a sharp drop in external demand due to an AI bubble burst and geopolitical tensions, particularly between China and Japan [7][13]. - **Political Stability**: The minority status of the Takaichi administration raises concerns about policy execution and the potential for a "Japan sell-off" if fiscal expansion is perceived as excessive [7][39]. Economic Growth Projections - **GDP Growth**: Real GDP is projected to grow by 0.8% in 2026, with a gradual recovery expected as external demand picks up from mid-2026 [9][11]. - **Comparison with Global Growth**: Japan's per capita GDP growth is projected at 1.6%, comparable to the US at 1.5% and the Euro area at 1.2% [37][41]. Corporate Sector Dynamics - **Corporate Performance**: The corporate sector has shown resilience, with high operating profits and continued capital expenditure driven by labor-saving needs and decarbonization efforts [87][88]. - **Labor Share Concerns**: The downward trend in the labor share ratio raises concerns about the distribution of corporate earnings to workers, which is crucial for sustaining economic growth [89][90]. Consumer Behavior and Household Sector - **Consumption Growth**: Private consumption is expected to grow by 0.8% in 2026, supported by rising disposable income, although caution remains due to historical low consumer confidence [61][79]. - **Wage Growth**: Nominal wage growth is projected to remain high, with real wages expected to increase as inflation stabilizes [55][58]. Trade and Export Outlook - **Export Projections**: Japanese goods exports are expected to decline temporarily due to US tariffs but are projected to recover by mid-2026 as US domestic demand improves [42][46]. - **Trade Surplus**: Japan's trade surplus with the US was historically high in 2024 but is expected to decline gradually due to falling nominal export prices [44][46]. Conclusion - The Japanese economy is at a critical juncture, with the potential for sustained growth contingent on effective fiscal policies, external demand recovery, and addressing demographic challenges [14][39].

Market Overview - The market is rallying on three key pillars: an easing Fed cycle, earnings growth, and strong economic conditions [2][4] - The Fed's easing cycle is perceived as somewhat shaky due to concerns about inflation and unemployment [4][19] Economic Conditions - The current economic environment is characterized by a K-shaped recovery, where different sectors are recovering at different rates [4][15] - There are concerns regarding the credit market and potential fiscal implications due to increased activity in the repo market [7][8] Earnings Growth - Strong earnings growth is crucial for market performance, with companies showing broadening earnings potential [6][22] - The impact of artificial intelligence on productivity is noted, with companies able to do more with fewer employees, raising concerns about consumer demand [10][13][15] Federal Reserve Outlook - There is uncertainty regarding the Fed's path forward, particularly for a potential rate cut in December, as economic data remains unclear [19][20] - Corporate earnings are expected to provide insights into consumer behavior, especially concerning lower-income consumers [22][23]

So for more, let's bring in Barry Napp. He's director of research at Iron Science Macroeconomics. Uh Barry, love to get your read on the CPI number.Of course, one of the few data prints that we've been able to get, albeit, you know, delayed and guess sounds like the government had to pull some extra strings to get it to us, but uh 3% initially earlier on the show, we had Krishna Guha saying that's pretty benign, at least from a market perspective. the two um issues that I haven't heard discussed um over all ...

Currency Market Overview - The dollar index rose by +0.34% to a four-session high, supported by weakness in the yen and easing US-China trade tensions [1] - The yen fell to a one-week low against the dollar due to expectations of expansionary fiscal policy under new Japanese Prime Minister Takaichi [1][5] - The euro declined by -0.31% as a result of dollar strength and negative sentiment from a credit rating downgrade of France [3] Economic Indicators - The October Philadelphia Fed non-manufacturing business activity survey dropped -9.9 to a four-month low of -22.2, indicating a slowdown in business activity [2] - Markets are anticipating a 97% chance of a -25 basis point rate cut at the upcoming FOMC meeting on October 28-29 [2] Central Bank Policies - The Federal Reserve is expected to continue cutting interest rates, while the European Central Bank (ECB) is nearing the end of its rate-cutting cycle, leading to central bank divergence [3][4] - Swaps indicate a 2% chance of a -25 basis point rate cut by the ECB at the October 30 policy meeting [4] Japan's Economic Data - Japan's September machine tool orders were revised upward to +11.0% year-on-year, marking the largest increase in six months [6]

Financial Data and Key Metrics Changes - AGNC reported comprehensive income of $0.78 per common share for Q3 2025, with an economic return on tangible common equity of 10.6%, consisting of $0.36 in dividends and a $0.47 increase in tangible net book value per share [13] - The company ended the quarter with leverage of 7.6 times tangible equity, unchanged from the prior quarter, and maintained a strong liquidity position with $7.2 billion in cash and unencumbered agency MBS, representing 66% of tangible equity [14] Business Line Data and Key Metrics Changes - Net spread and dollar roll income declined to $0.35 per common share, driven by lower swap income due to the maturity of $4 billion of legacy swaps and a timing mismatch in capital deployment [14] - The average projected life CPR of the portfolio increased to 8.6% from 7.8% in the prior quarter, while actual CPRs averaged 8.3% compared to 8.7% previously [15] Market Data and Key Metrics Changes - The demand for agency mortgage-backed securities (MBS) increased significantly, with bond fund inflows reaching $180 billion in Q3, slightly ahead of last year's pace [9] - The supply of agency MBS is expected to be about $200 billion this year, at the lower end of initial expectations, while demand outlook has improved, particularly from the money manager community [8] Company Strategy and Development Direction - AGNC is positioned to generate attractive risk-adjusted returns as the largest pure play levered agency investment vehicle, focusing on optimizing asset composition and maintaining a favorable hedge ratio [12] - The company is actively rotating into pools with favorable prepayment characteristics and has added $7 billion of receiver swaptions for down rate protection [19] Management's Comments on Operating Environment and Future Outlook - Management expressed a constructive outlook for agency MBS, citing improved spread environments, balanced supply and demand dynamics, and favorable financing markets [6][10] - The company anticipates that lower funding costs from recent rate cuts and a shift in hedge mix will provide a moderate tailwind to net spread and dollar roll income [15] Other Important Information - The Treasury Department is focusing on mortgage spreads to improve housing affordability, which is seen as beneficial for agency MBS and AGNC's business [7] - The company issued $345 million of fixed-rate preferred equity, the largest mortgage REIT preferred stock offering since 2021, and $39 million of common equity at a significant premium to tangible net book value [15] Q&A Session Summary Question: Discussion on expected ROEs and dividend sustainability - Management indicated that current coupon mortgages are expected to yield ROEs between 16-18%, aligning with total cost of capital, and that dividend sustainability remains strong despite recent spread tightening [21][23] Question: Insights on hedge ratio changes - The hedge ratio decreased due to a higher proportion of short-term debt, but management expects benefits from anticipated Fed rate cuts, which will lower funding costs over time [26][29] Question: Demand for MBS from money managers - Management noted robust bond fund inflows and anticipated continued strong demand for agency MBS, particularly as banks may increase their mortgage holdings following regulatory reforms [38][39] Question: Impact of Fed easing on net spread - Management expects a near-term tailwind to net spread income due to the deployment of capital and the anticipated easing of short-term rates [42][45] Question: Risks to the constructive view on spreads - The primary risks identified include macroeconomic factors that could lead to inflationary pressures, which may affect the Fed's monetary policy and, consequently, the agency MBS market [85][86]

Summary of CEE Economics Conference Call Industry Overview - The report focuses on the macroeconomic trends and outlook for Central and Eastern Europe (CEE), specifically highlighting the economic conditions in Poland, Hungary, and the Czech Republic [1][2][3]. Key Points Poland - **Economic Activity**: There is a low probability of recession in Poland, with nowcasting models indicating an acceleration in GDP growth for Q3 [21][24]. - **Labour Market**: Despite economic recovery, employment is declining, particularly affecting young workers, although the overall jobless rate remains stable [25][28]. - **Monetary Policy**: Inflation has decreased below 3% due to a slowdown in utility prices and moderation in core inflation, with markets anticipating further rate cuts [32][34]. - **Fiscal Policy**: The Ministry of Finance expects a significant increase in public debt, with a slower narrowing of the fiscal deficit than previously anticipated. Heavy issuance of POLGBs is expected in Q4 [36][40]. Hungary - **Economic Activity**: No significant rebound in industrial output is observed, with recession risk indicators remaining high, although some improvement was noted in September [48][50]. - **Labour Market**: Average wages have slowed to 9% YoY, with public sector wages rising faster at 10%. The share of sectors with double-digit growth has decreased [54][56]. - **Inflation Outlook**: Headline inflation remained unchanged at 4.3% in September, with core inflation gaining momentum and nearly 60% of the core inflation basket growing at a double-digit annualized pace [60][64][66]. - **Monetary Policy**: The National Bank of Hungary (NBH) is expected to maintain cautious rates in Q4, with a narrow window for potential cuts in early 2026 [70][73]. Czech Republic - **Economic Activity**: Low and falling recession risks are indicated, with stable production of capital goods despite weak growth in Germany. Retail growth is solid, supported by positive real wage growth [81][85]. - **Inflation and Monetary Policy**: Headline inflation has slowed, but core inflation remains elevated, prompting the Czech National Bank (CNB) to signal a prolonged period of rate stability [87][88]. - **Fiscal Policy**: An expected issuance of around CZK 210 billion in Czech T-Bonds for 2025, with strategies to manage bond maturities in 2026 [90][93]. Additional Insights - The report emphasizes the interconnectedness of macroeconomic indicators across the CEE region, highlighting the importance of monitoring inflation, employment trends, and fiscal policies as they can significantly impact investment opportunities and risks in the region [1][2][36][70].

says that's because investors are paying attention to different things in DC. Fiscal and monetary policy, which I think Dan Clifton, uh, head of policy research at Strategus, uh, research, which is a bar company. Both of those are are going to be positive, I think, at least, um, for GDP, aren't they, Dan.There's there's some serious uh, scratch coming our way in the economy from these things. Absolutely, Joe. Great to see you.I mean, there's a lot of noise here from Washington, and there are some real risks ...

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses global economic conditions, focusing on the implications of political events and economic indicators across various regions including the US, Europe, and Asia. Key Economic Insights 1. **US Government Shutdown**: - The US government shutdown has extended into its second week, delaying federal economic data releases, which is expected to reduce Q4 annualized GDP growth by 0.11 percentage points per week of shutdown [3][4][5] - Alternative labor market data indicates a rebound in job growth to 80,000 per month in September from around 0 in May [5] 2. **Global PMIs**: - The global composite PMI fell by 0.5 points in September to 52.9, with declines in both manufacturing and services sectors [3] - US manufacturing suppliers' delivery times increased as the rush to frontload ahead of tariff implementation subsided [3] 3. **Political Uncertainty in Europe**: - Renewed political uncertainty in France following the resignation of Prime Minister Sebastien Lecornu, with expectations of growth running below trend and an increase in the government deficit forecast to 5.3% of GDP for 2026 [5][6] - The upcoming Canada and UK Budgets are anticipated to focus on fiscal consolidation and investment [3] 4. **Inflation Outlook**: - Inflation in the Euro area is expected to normalize, with core inflation projected to remain around 2% in the coming years [6] - Headline inflation is forecasted to reach 2.0% by the end of 2025, with a slight increase in food inflation [6] 5. **Japan's Political Landscape**: - Sanae Takaichi was elected as the leader of Japan's Liberal Democratic Party, but significant fiscal policy changes are not anticipated in the near term [6] - The next Bank of Japan rate hike is expected in January 2026 [6] 6. **Central Bank Actions in Asia**: - The Reserve Bank of New Zealand lowered its policy rate by 50 basis points to 2.5%, with further cuts expected [6] - The Philippines central bank also surprised with a dovish rate cut, while the Bank of Thailand held its rate steady [6] Economic Growth Forecasts - **Real GDP Growth Projections**: - US: 2.8% in 2024, 1.9% in 2025, 1.8% in 2026 [7] - Euro Area: 0.8% in 2024, 1.3% in 2025, 1.2% in 2026 [7] - China: 5.0% in 2024, 4.8% in 2025, 4.2% in 2026 [7] - India: 6.7% in 2024, 7.1% in 2025, 6.4% in 2026 [7] Additional Insights - The military pay date on October 15 could be a critical event for resolving the US government shutdown [5] - Concerns regarding the implementation of Germany's fiscal package, particularly in infrastructure spending, are noted, but optimism remains regarding defense spending's growth impact [5][6] This summary encapsulates the essential points discussed in the conference call, highlighting the economic conditions, forecasts, and political factors influencing the global economy.