Global Economic Snapshot

Australia

• Private inflation indicator rose to 3.1% y/y in October (prior 3.0%)

China

• Caixin Manufacturing PMI (Oct 2025): 50.6 (expected 50.7)
• USD-Denominated Trade Balance: $90.1B vs $96.9B

Germany

• Manufacturing PMI: 49.6 (unchanged)
• Industrial production: +1.3% m/m vs +3.0% expected
• Construction PMI: 42.8 vs 46.2 prior
• Trade balance: €15.3B vs €16.8B expected

United Kingdom

• Manufacturing PMI: 49.7 vs 49.6 expected
• Construction PMI: 44.1 vs 46.7 expected

Japan

• Manufacturing PMI (Oct): 48.2 (down from 48.5 in September)

United States

• ISM Manufacturing Index: 48.7 vs 49.5 expected
• ADP Employment: +42K vs +30K expected
• ISM Services PMI: 52.4 vs 50.8 expected

U.S. Blocks China from Nvidia’s Advanced Chips

President Donald Trump confirmed that the U.S. will prevent China from accessing Nvidia’s most advanced AI chips, citing national security and the need to maintain leadership in high-performance semiconductors. The move underscores Washington’s ongoing focus on controlling AI hardware exports amid rising U.S.- China tech tensions.

Meanwhile, China has banned foreign AI chips in state-funded data centers, requiring projects under 30% completion to drop or replace foreign hardware. The policy boosts domestic makers like Huawei and further reduces U.S. companies’ presence—Nvidia, once dominant in China’s AI chip market, now holds zero share. Analysts say this could reshape China’s $100 billion data center sector and widen the AI tech gap between the two nations.

Fed Officials Focus on Inflation as Job Market Remains Stable

Federal Reserve officials this week stressed that inflation is still the main concern, while the labor market continues to hold steady. Across both hawkish and dovish voices, there was agreement that policy will remain data-driven, with careful monitoring of underlying price pressures.

Miran noted that some financial conditions are loose but others, like housing, remain tight. He said policy has already tightened passively despite previous Fed cuts and suggested that a series of 50bps cuts could bring rates closer to neutral.

Goolsbee cautioned against frontloading rate cuts, emphasizing that inflation data is still worrisome, even as key job market metrics remain stable. He indicated that rate reductions should align with easing price pressures.

Cook pointed out that the labor market is solid, tariffs continue to drive prices, and the Fed remains committed to returning inflation to 2%.

Musalem highlighted the resilient U.S. economy, noting that inflation is elevated due to tariffs and fiscal deficits but is expected to ease gradually next year. Labor market conditions remain near full employment.

Overall, Fed officials made it clear that inflation is the main focus, the jobs market is holding steady, and even dovish members like Miran see 50bps as the likely floor for future rate cuts.

RBA & BOE Hold Rates

Both the RBA and BOE kept rates unchanged this week, signaling that inflation pressures are shaping their near-term policy stance.

RBA Governor Michele Bullock noted that financial conditions remain somewhat tight, helping temper the economy, but inflation is not yet at target. While further rate cuts are possible, the board is approaching neutral and will assess policy meeting by meeting. Forward guidance remains open, reflecting ongoing uncertainty around inflation.

BOE Governor Andrew Bailey emphasized that a more sustained downward trend in inflation is needed before cutting rates. Domestic price and wage pressures are easing, but the risk of persistent inflation remains, and the bank is watching incoming data closely before any policy moves.

In both cases, central banks signaled that inflation expectations will keep a pause on rate cuts, with decisions to remain data-driven and cautious.

US Shutdown Hits Record Territory

The US government shutdown has now entered its 36th day, breaking the previous record from 2018-19 and marking the longest in history. The stalemate is starting to show its effects on the economy and markets, as key economic releases remain missing just as the Fed prepares for December policy decisions.

The Congressional Budget Office estimates the shutdown could shave $14 billion off US economic activity if it lasts eight weeks, two-thirds of that period has already passed.

The shutdown is also disrupting daily life: from Friday, the US will cut around 10% of flights, impacting 3,500 - 4,000 departures daily at the busiest 30 airports, highlighting the broader ripple effects on businesses and consumers.

Equity markets showed early signs of stress this week:

• S&P 500 down roughly 3%, weighed by lingering inflation concerns and macro uncertainty.
• Nasdaq 100 fell around 4%, reflecting technology sector sensitivity to rising yields and central bank caution.
• DAX (Germany) slipped about 2.5%, impacted by weaker industrial data and persistent inflation worries.

Looking Ahead

This week, the major focus remained on inflation and how central banks are responding, with both the RBA and BOE keeping rates unchanged while signaling caution. The Fed’s commentary also reinforced that inflation remains the primary concern, even as the labor market shows stability. Are these signals pointing toward a similar pause from the Fed in December? Only time will tell, and markets will be watching closely.

Disclaimer

The information in this article is for general information only and does not represent financial or investment advice. Markets are unpredictable, and past performance does not guarantee future results. Before making any financial decisions, please do your own research or consult a licensed financial advisor. We are not responsible for any loss or damage caused by reliance on this content.