Weekly Recap

Cooling Jobs Data Reopens Fed Easing Debate

CIBC argues the latest US labor data reinforces the view that conditions are steadily softening. While November payrolls rose by 64K, this follows a sharp 105K drop in October, effectively wiping out September’s gains. The three-month average has slowed to just 22K and the unemployment rate edged up to 4.6%. The mix of slower hiring and steady demand may prompt Fed officials who dissented at the last meeting to reassess their position. CIBC believes this increases the chance of rate cuts arriving earlier in 2026.

Goldman Sachs: CPI Unlikely to Change Fed Policy

Goldman Sachs downplayed the market impact of the November CPI report, saying it is unlikely to materially alter the Fed’s near-term policy path. Officials are expected to focus more closely on December inflation data ahead of the January FOMC meeting. Goldman estimates core PCE inflation eased to around 2.66% y/y in November.

The bank notes that recent downside surprises in core CPI were largely driven by technical factors rather than broad-based disinflation. Shelter costs were distorted by missing data earlier in the quarter, while core goods prices were affected by timing issues in price collection. As a result, Goldman sees little reason for the Fed to adjust its stance based on this CPI report alone.

ECB Signals Stability, Not Urgency

ECB President Lagarde’s press conference highlighted domestic demand as the main growth engine going forward, with falling savings rates and higher defense spending expected to support investment. However, the global backdrop remains a drag, and trade tensions continue to inject volatility.

Policymaker Olli Rehn reinforced that message, pushing back against market assumptions of an imminent hike. He stressed that the next move is not automatic, decisions will remain meeting-by-meeting, and inflation risks are now slightly tilted to the downside. Still, Rehn cautioned against pre-emptive cuts, noting that geopolitics and trade conflicts are now directly influencing inflation, growth, and markets.

BOJ Hikes, Keeps Future Moves Data-Dependent

The Bank of Japan delivered a 25-bp hike, lifting rates to 0.75%, the highest level since 1995. Governor Kazuo Ueda said reduced risks to inflation and growth justified the move, with underlying inflation now clearly above zero.

Ueda avoided committing to further tightening, emphasizing a data-dependent approach. While the door remains open to additional hikes, communication suggests no urgency to move again as early as March unless conditions clearly warrant it.

Toyota Looks to Ease US–Japan Trade Frictions

Toyota plans to begin selling US-built vehicles in Japan from 2026, exporting models such as the Camry, Highlander, and Tundra from plants in Kentucky, Indiana, and Texas. The move is aimed at easing trade tensions with Washington and strengthening ties with the Trump administration amid ongoing tariff negotiations.

The strategy underscores Toyota’s effort to position itself as a contributor to US jobs and investment while encouraging a rollback of tariffs on Japanese auto exports. Symbolically, exporting American-made cars back to Japan marks a notable shift in traditional trade flows.