German Government Announces Relief For Industry

ING

Forex

Political

Economic

Summary:

It has taken a long time, but Berlin has finally recognised that the German economy is facing not just a cyclical downturn, but a structural period of weakness.

German Government Announces Relief For Industry_1

It has taken a long time, but Berlin has finally recognised that the German economy is facing not just a cyclical downturn, but a structural period of weakness.

The latest report from Germany's Council of Economic Advisors was one of many examples pointing to an economy that is likely facing the largest economic challenge of the last 80 years.

Fifteen years of underinvestment, a lack of structural reforms, and China's emergence as a fierce competitor have eroded Germany's economic model. The announced U-turn on fiscal stimulus half a year ago should have been the start of a longer and broader overhaul of the economy, but the new government seemed to believe that with this decision back in spring the job was already done.

Now that there is a high risk that any rebound of the German economy in 2026 will mainly stem from the three extra working days in the year vs 2025 (which will add some 0.3 percentage points to GDP growth) rather than a broad-based recovery, the urgency to act is high.

New policy announcements over the last 24 hours

Over the last 24 hours, the German government has agreed on several measures that at least show a willingness to act, even if a bigger masterplan is still lacking. Some of these measures are already actual policy decisions; others are only the result of last night's agreement between the main leaders of the coalition partners and not yet official government decisions. Here is what was decided:

· A fixed energy price of five cents per kilowatt-hour for the energy-intensive industry until 2028. Currently, the price is some 15 cents. The idea of a subsidy for industry energy prices was already mentioned in the official coalition agreement, but hadn't been specified or implemented yet.

· Production of new gas power plants with a capacity of 8 gigawatts.

· Reduction of air traffic control fees, with the aim of saving the aviation sector €350m.

· The start of a "Germany Fund". This idea was already mentioned in the coalition agreement, and back then was a fund of €10bn that should attract another €90bn from the private sector to support SMEs and scale-up companies.

· The return of semi-compulsory military service. As of next year, all 18-year-old men will have to pass the conscription assessment. If there are not enough volunteers for the actual draft, candidates for military service will be drawn by lottery. There is no official target number.

The economic policy announcements still need to get support from the entire government and parliament, and in the case of the energy price subsidy, also require approval from the European Commission. Therefore, the announcements still need to be taken with a pinch of salt.

However, the energy price subsidy, in particular, sends a strong signal and could provide industry not only short-term relief but also clarity and stability for years to come. That is still not an all-encompassing and coherent strategy for a broader overhaul of the economy, but that is a topic for another day.

Source: ING

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Gerik

Economic

Technical-level negotiations resume under high-level direction

Following the 8th ministerial-level dialogue on November 10, Vietnamese and U.S. delegations launched a fresh round of technical negotiations on November 12. These sessions are part of ongoing efforts to build a Reciprocal, Balanced, and Fair Trade Agreement. The meetings are being held under the supervision of Vietnamese Minister of Industry and Trade Nguyễn Hồng Diên and U.S. Trade Representative Jamieson Greer, with Vice Minister Nguyễn Sinh Nhật Tân and Deputy USTR Rick Switzer leading the technical teams.

Held at the Office of the U.S. Trade Representative (USTR) in Washington, D.C., the discussions took place in an open and constructive atmosphere. They focused on deepening the results achieved at the recent ministerial meeting and on aligning both parties on the next negotiation roadmap.

Focus on structure, reform, and fair trade mechanisms

The technical talks are seen as a critical follow-up phase to set direction and priorities for working groups. They reflect Vietnam’s and the U.S.’s mutual goal of building a stable, rules-based, and mutually beneficial trade partnership. Vice Minister Tân emphasized specific areas from the ministerial talks that needed further refinement and technical coordination to ensure that both sides move closer to a high-quality agreement.

Deputy USTR Switzer acknowledged Vietnam’s recent progress in institutional reforms and trade transparency, noting that the momentum from previous negotiation rounds could pave the way for a timely conclusion. Both sides reaffirmed their commitment to intensifying technical exchanges in accordance with high-level directives from national leadership.

Broader commercial and energy cooperation also on the agenda

Beyond negotiations, Minister Nguyễn Hồng Diên held discussions with multiple U.S. business leaders and trade experts. Notably, he met with Rock Bordelon, Chairman of Gulf of America Energy Sourcing (GAES), to explore U.S. investment in Vietnam’s liquefied natural gas (LNG) infrastructure and energy sector. Diên welcomed proposals that align with Vietnam’s energy development priorities and its goal to diversify sustainable energy sources.

Minister Diên also had a working session with Joseph (Joe) Damond, Global Chair for Trade Policy and Science at Crowell Global Advisors, who played a historic role in negotiating the original Vietnam-U.S. Bilateral Trade Agreement from 1995–2000. Their discussion covered long-term perspectives on Vietnam–U.S. economic cooperation and trade policy alignment in science-driven sectors.

Deepening strategic partnership through structured trade

The continuation of technical negotiations marks a pivotal stage in U.S.–Vietnam trade relations. The momentum from high-level meetings, combined with working-level consensus building, demonstrates both nations’ shared commitment to building a modern, reciprocal trade framework. This process not only reinforces the Comprehensive Strategic Partnership launched between the two countries but also positions them to navigate future global trade challenges together.

If successful, the agreement could serve as a new template for equitable trade cooperation between developing and developed economies — one based on reform, transparency, and mutual respect.

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Daniel Carter

Political

Russia-Ukraine Conflict

Ukrainian drones attacked oil infrastructure at Russia's giant Black Sea port of Novorossiysk overnight, as Moscow's forces launched a massive air strike on Kyiv that killed three and damaged several residential buildings.

Falling drone debris caused a fire at a Russian depot located at Transneft PJSC's Sheskharis oil terminal, the regional emergency service said on Telegram early on Friday. The blaze was put out after more than 50 units of firefighting equipment were deployed at the site, authorities said, but provided no details on the damage.

Drones also hit an unidentified civilian ship in the port of Novorossiysk, they said, without specifying the type of the vessel. The city mayor reported damage to at least three residential buildings in separate statements on Telegram. Another container terminal in Novorossiysk was damaged by fallen debris, but continued to operate normally, Delo Group, which runs that facility, said in a statement on Telegram.

In Ukraine's capital of Kyiv, three people were killed and at least 25 people injured during Russia's drone and missile strike, Mayor Vitali Klitschko said on Telegram Friday. Air defenses were working across the city, and multiple districts in the city reported falling debris and fires, he said. Several residential buildings were damaged, while a school and medical facilities also were hit. Strikes at a heat and utility network caused temporary outages, Klitschko added.

The attacks come as Russia has been ramping up strikes on power facilities across Ukraine as it tries to disrupt the country's energy system ahead of winter while also pushing to capture the eastern rail hub of Pokrovsk. The city's fall would represent the most significant prize for the Kremlin since its military took Avdiivka in February last year.

Meanwhile, Ukraine has intensified strikes on Russian oil infrastructure — from refineries to crude pipelines and sea terminals — in recent months in an effort to curtail the energy revenue that helps Moscow finance its invasion, now well into its fourth year. The attacks have reduced Russian crude-processing volumes, exacerbated fuel shortages in several regions of the nation and increased risks for Russia's seaborne oil-trade.

Ukraine last struck Russia's Black Sea oil-loading infrastructure in late September. That attack forced the Sheskharis terminal and the Caspian Pipeline Consortium loading facilities to halt operations briefly as a precautionary measure.

Transneft didn't immediately respond to a request for comment.

Western countries have been expanding sanctions against the Russian energy industry, also designed to cut Russia's energy revenue. Last month, the US sanctioned Rosneft PJSC and Lukoil PJSC, the two largest Russian oil producers, creating additional challenges for the nation's crude exports and its international trading network.

Source: Bloomberg Europe

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Gerik

Economic

Forex

The end of an era for America’s oldest coin

The humble 1-cent coin, or "penny," once a staple of American daily life, has now been officially discontinued. First minted in 1787 and bearing Abraham Lincoln’s image since 1909, the penny has long outlived its practical use in modern commerce. President Donald Trump ordered its termination in February 2025, citing that each penny cost nearly 4 cents to produce four times its face value.

On November 12, the U.S. Mint’s Philadelphia facility oversaw the minting of the final coins under the supervision of U.S. Treasurer Brandon Beach. While the penny will remain legal tender, no more will be produced, and the final batch is expected to be auctioned off.

Retailers caught off guard by rounding dilemmas

Although the penny’s retirement may seem like a technical change, it has caused operational headaches for retailers across the country. Many businesses have begun rounding cash transactions up or down to the nearest 5 cents. This rounding often results in customers paying 1–2 cents more per transaction. In some states, including Delaware, New York, and Oregon, such rounding is restricted or even prohibited under current trade laws.

Retail chain Kwik Trip, which serves over 20 million customers annually, has opted to round down for cash transactions out of fairness, even though it means losing millions of dollars each year. However, this inconsistency across regions is causing widespread confusion, as no federal guidelines were issued alongside the discontinuation announcement.

Legal and logistical concerns emerge

Federal assistance programs like SNAP (food stamps), which require precise accounting to the cent, complicate matters further. Retailers could face legal trouble if rounding practices appear to favor one group of customers over another.

Organizations such as the National Association of Convenience Stores (NACS) have called on Congress to enact legislation that would allow lawful rounding and prevent unintentional legal violations. Jeff Lenard, a spokesperson for NACS, stressed, “We need clear legal authority so retailers can give accurate change without breaking any rules.”

From childhood memories to monetary relic

Though less visible in daily life today, the penny carries immense historical significance. It was among the first U.S. coins and may have been designed by Benjamin Franklin. Over time, its purchasing power eroded, and now, despite over 300 billion pennies in circulation an average of less than $9 per American most are idle in jars, drawers, and coin trays.

For many, including 74-year-old historian Joe Ditler, the penny is tied to childhood nostalgia. “I still have a cigar box full of pennies my grandfather gave me. They bring back so many memories,” he said. “The penny had a beautiful life but maybe it’s time it moved on.”

Retiring the penny makes economic sense given the high production cost, but the lack of a national transition plan has exposed significant gaps in retail operations, legal compliance, and consumer equity. While other nations like Canada and Australia phased out low-denomination coins with structured plans, the U.S. chose to act swiftly announcing the change via a social media post by President Trump during the Super Bowl. The result is a fragmented and messy adjustment period that underscores the need for cohesive policymaking when symbolic changes meet real-world complexity.

Source: CNN

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Gerik

Economic

Uncertainty intensifies as Powell balances hawks and doves

The Federal Reserve is navigating one of its most delicate decision points of the year, with its December 9–10 meeting now shaping up to be a defining moment for global monetary policy. Fed Chair Jerome Powell and top officials are wrestling with deep internal disagreement, incomplete data, and fragile market expectations. A month ago, traders were pricing in a 95% chance of a December rate cut today, that figure has collapsed to just under 50%, according to CME’s FedWatch tool.

The sudden shift stems from Powell’s own cautionary signals in October, reinforced by recent comments from several regional Fed presidents expressing concern that inflation remains too high and economic data too thin to justify further easing. Boston Fed President Susan Collins emerged this week as a key hawkish voice, arguing that holding rates steady is the most prudent path given the current “uncertain environment” and calling for a “high bar” for any further loosening.

Data vacuum complicates decision-making

One of the primary catalysts behind the Fed’s uncertainty is the absence of critical economic data. Due to the recent government shutdown, October’s labor and inflation reports have been delayed and possibly scrapped altogether. This has left the Fed effectively flying blind, with policymakers forced to make decisions without their usual economic dashboards.

While labor market indicators point to a mild slowdown and core inflation remains above the 2% target, there isn’t enough visibility for the Fed to confidently judge whether the economy requires further stimulus or restraint. This information gap is at the heart of the current divide: Hawks like Collins and Kansas City Fed President Jeffrey Schmid are warning of inflation resurgence risks, while others such as Governors Stephen Miran and Christopher Waller argue that policy should stay responsive to disinflationary momentum.

Markets react to waning rate-cut bets

The policy uncertainty has already reverberated through global financial markets. On Thursday, November 13, U.S. equities experienced a sharp sell-off, while Treasury yields jumped, reflecting reduced expectations for rate cuts. The S&P 500, Dow, and Nasdaq all fell, reversing gains built on previous assumptions of looser policy.

Fed officials now face a dilemma: risk a split vote at a critical time or engineer a compromise. According to Krishna Guha of Evercore ISI, Powell and Vice Chair Philip Jefferson may be trying to engineer a “hawkish cut” a symbolic final cut accompanied by strong forward guidance signaling the end of the easing cycle.

A divided FOMC complicates consensus-building

What makes this moment especially fraught is the growing rift inside the Federal Open Market Committee (FOMC). The hawkish bloc including Collins, Schmid, Beth Hammack (Cleveland), and possibly Lorie Logan (Dallas) appears to favor a pause or even a longer hold, citing upside risks to inflation. In contrast, dovish voices want to continue easing, fearing a hard landing if rates remain restrictive for too long.

With Powell’s term ending in May 2026 and regional Fed rotations reshuffling voting rights in January, the balance of power within the FOMC is also in flux. Notably, both Collins and Schmid will rotate out of voting positions in 2026, while Logan and Hammack will step in. This transition complicates the Fed’s forward guidance strategy and could make December’s decision even more politically sensitive.

Strategic options: a pause, a cut, or a compromise

According to Thierry Wizman, global FX and interest rate strategist at Macquarie, Powell is now faced with a binary compromise: either hold rates in December or cut while sending an unequivocal message that no further reductions are expected. This would help prevent deep internal dissent and calm market volatility, especially as investors begin pricing in a higher chance of a January cut (currently around 70%).

Such a “hawkish cut” strategy would aim to balance market expectations, preserve the Fed’s credibility, and buy time until more complete data is available in early 2026.

As the Fed’s final decision of 2025 looms, the central bank finds itself in a uniquely precarious position. With fragmented internal consensus, absent data, and fragile investor confidence, Jerome Powell must craft a decision that not only reflects economic fundamentals but also unites a divided committee. Whether the Fed pauses or delivers one last symbolic cut, markets worldwide are bracing for the implications knowing that whatever path is chosen, it will set the tone for global monetary conditions in 2026.

Source: CNBC

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Justin

Forex

Economic

Bond

Pakistan's dollar bonds will likely extend their rally as credit-rating upgrades and the government's plans to re-enter global debt markets bolster sentiment, according to investors.

The nation plans to sell yuan-denominated bonds later this year and return to the Eurobond market in 2026 for the first time in nearly five years, marking a pivotal moment for a country that came close to a default two years ago. The move could fuel further gains in its debt, according to Goldman Sachs Asset Management and UBS Asset Management.

The issuance plans underscore Pakistan's push to broaden its funding sources and reduce dependence on the International Monetary Fund. Its dollar bonds have gained 24.5% this year, outperforming peers with similar credit ratings such as Egypt and Argentina.

Danske Bank Asset Management, which bought Pakistan's dollar bonds at the height of its financial crisis two years ago, has added to its holdings several times this year, said Søren Mørch, head of emerging markets debt. "We are optimistic that Pakistan will stay on the reform course, rebuilding buffers like higher dollar reserves and also getting market access and taking advantage of that," he said.

S&P Global Ratings and Fitch Ratings upgraded the nation's ratings this year, citing improved fiscal management and reform momentum under Prime Minister Shehbaz Sharif's IMF-backed programs. The government has secured billions in IMF funding by raising taxes and maintaining fiscal discipline.

"The outperformance will sustain as long as they're sticking to the IMF policies, which we believe they have a strong commitment to do so," said Shamaila Khan, head of fixed income emerging markets & Asia Pacific at UBS Asset Management.

Market access possibly opening for Pakistan is another positive, because "then you really are not concerned about refinancing over the next two to three years," she added.

Still, tensions with neighbors India and Afghanistan pose risks to its already sluggish economic growth, while a rise in energy prices could strain finances given that oil accounts for about 30% of total imports.

For now, investors remain upbeat. "In the next six to 12 months, we see rating upgrades as the first catalyst and market access as the next catalyst" for capital appreciation in markets like Pakistan, said Salman Niaz, head of global fixed income for APAC ex-Japan at Goldman Sachs Asset Management.

Source: Bloomberg Europe

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Gerik

Economic

Fixed-asset investment plunges as housing collapse accelerates

One of the most striking data points from October was the deepening contraction in fixed-asset investment, which declined 1.7% in the first ten months of 2025, worsening from a 0.5% drop during the January–September period. This is not merely a cyclical fluctuation but represents a structural weakening, particularly in real estate. On a monthly basis, investment fell a staggering 11.4% compared to the same period last year the sharpest decline since the early COVID-19 lockdowns in 2020.

Property investment, a crucial component of China’s long-standing growth model, contracted 14.7% through October, worsening from a 13.9% decline seen previously. This persistent slump suggests a clear causal link between the housing downturn and the broader investment collapse, especially as infrastructure spending and private development stall simultaneously.

Although utilities investment surged 12.5% and manufacturing investment rose 2.7%, these gains were insufficient to offset the drag from real estate. Analysts attribute the collapse partly to Beijing's continued tightening around overcapacity in heavy industries and its limited direct support for the housing market. These policy decisions, though intentional, now appear to be exacting a heavier toll on aggregate demand than expected.

Industrial output slows, undercut by holiday and soft demand

Industrial production expanded 4.9% year-on-year in October, down from 6.5% in September and missing expectations of a 5.5% increase. The deceleration is attributed both to a long national holiday from October 1–8 and ongoing weakness in export demand, particularly toward the U.S.

China’s manufacturing sector also reported its lowest activity in six months, indicating the slowdown is not merely calendar-driven. The weakening performance in industrial output, combined with subdued investment, paints a concerning picture for future production capacity utilization and supply-side momentum.

Retail sales growth stalls despite beating expectations

Retail sales grew by 2.9% in October, slightly surpassing market expectations of 2.8%, but still marking the fifth consecutive monthly slowdown and the lowest figure year-to-date. This softening in consumer spending reflects waning household confidence, likely tied to the deflationary property market and stagnating wage growth.

Although the urban unemployment rate improved slightly from 5.2% in September to 5.1%, it may not yet be enough to revive broader consumption sentiment. The economy is still struggling to shift toward a consumer-driven growth model as intended.

Price data signal tentative demand stabilization

Inflation turned positive in October, with consumer prices rising 0.2% year-on-year the first increase since June and the strongest reading since January. Core inflation, which excludes food and energy, climbed 1.2%, its highest level since early 2024. While this suggests some underlying demand resilience, the pace remains modest and unlikely to significantly change the current disinflationary narrative.

China’s exports unexpectedly contracted in October for the first time in nearly two years, primarily due to a sharp drop in shipments to the U.S. amid escalating trade tensions. Although Presidents Trump and Xi reached a temporary détente by agreeing to suspend new tariffs for a year, the export weakness has already materialized, amplifying the external headwinds facing China’s economy.

The decline in exports, coupled with sluggish domestic drivers, reinforces the idea that without substantial fiscal or monetary support, the current pace of growth will remain vulnerable to both internal fragilities and external shocks.

Risks mount as recovery momentum stalls

China’s economy is showing signs of exhaustion, with the October data highlighting serious structural cracks, particularly in the real estate sector. Fixed-asset investment is falling at a pandemic-era pace, consumer demand is weakening despite positive inflation, and industrial output is losing steam. While the government still appears on track to meet its modest 5% growth target for the year, this stability is fragile.

Economists do not expect a major stimulus rollout in the remaining months of 2025. However, the depth of the contraction in investment and the fading impact of post-COVID recovery policies suggest that a more proactive fiscal approach will be needed early next year to prevent a prolonged stagnation. The longer Beijing waits to revive investor and consumer confidence, the harder it may be to reignite sustainable growth momentum.