Last Chance For The Hawks

ING

Forex

Political

Economic

Summary:

This week will offer the last real chance to put a December cut from the Federal Reserve into question.

USD: Still expensive and vulnerable

This week will offer the last real chance to put a December cut from the Federal Reserve into question. While our call is for a cut next week, we admit the 25bp priced into the OIS curve looks a bit too dovish relative to the mix of data and Fedspeak we have seen so far.

At the same time, this week's economic data releases often struggle to materially move pricing by themselves. The two major inputs for the Fed, payrolls and CPI, are only due after the 10 December meeting. So, despite the dovish asymmetry in pricing, strong hawkish signals are needed to lift the dollar and short-term rates.

In our view, those hawkish signals won't materialise this week. The ISM surveys should remain mixed at best, with manufacturing (released today) still in contraction. On Wednesday, we expect zero ADP payrolls growth (consensus 10k), with clear risks of a negative read, while Thursday's Challenger job cuts may send some dovish signals. Finally, Friday's core PCE deflator (for September) should stay close to 0.2% month-on-month, given muted CPI and PPI figures, a comfortable level to keep cutting rates.

Considering that the dollar still hasn't fully absorbed the negatives of the recent dovish repricing, we continue to see risks on the downside for the US dollar this week as markets may well cement their cut expectations. There is also some chance that President Donald Trump will announce the next Fed Chair in the next few days. Expectations are that it will be dove Kevin Hassett – confirmation of which could weigh on the greenback.

EUR: Eyes on Ukraine negotiations

Negotiations on a Ukraine peace deal have somewhat stalled in the past few days, but US special envoy Steve Witkoff's trip to Russia this week has some potential of leading to a breakthrough. Given how cautiously markets have been treading on the prospect of a truce, any meaningful progress should lift high-beta European currencies and weigh on oil and gas prices. Remember that, given the high sensitivity of the euro's medium-term fair value to energy prices, the implications for EUR/USD extend beyond the initial impact.

Eurozone data should continue to play a secondary role for FX. We are slightly below consensus with our CPI call for tomorrow: 2.0% vs consensus 2.1% for headline and 2.3% vs 2.4% for core. However, that will hardly be enough to drive markets towards more dovish European Central Bank pricing.

EUR/USD remains around 1.5% undervalued relative to our short-term fair value model, as rate differentials keep pointing up. Our baseline is a return to 1.170 this week.

JPY: Big hawkish surprise

In a rather surprising move, Bank of Japan Governor Kazuo Ueda sent clear hawkish signals in a speech this morning, causing a jump in market pricing for a December hike from 14bp to 21bp.

Aside from explicitly saying the BoJ is considering the pros and cons of a hike, he hinted that there is no clear opposition by new Prime Minister Sanae Takaichi to raising rates. This second factor had been crucial for markets, whose basic understanding was that Takaichi was a dovish-leaning influence.

USD/JPY is trading around 0.5% lower on the news. That is a rather small move relative to a very large overvaluation (both short and medium term) in the pair. A consolidation of rate hike expectations in Japan and rate cut expectations in the US does suggest that the tide may well be turning (at least this week) in USD/JPY, with a decisive break below 155.0 a clear risk.

CEE: Waiting for a peace deal

The CEE region is growing busier once again as the new month begins. GDP data in Turkey and Poland will be released today, and PMIs across the region should show a mixed picture of industry.

On Wednesday, inflation in Turkey is expected to show some decline from 32.9% to 31.6% year-on-year (1.3% MoM), and the National Bank of Poland is likely to cut rates again by 25bp to 4.00%. A press conference a day later should indicate how far the central bank wants to go in the cutting cycle, given last week's favourable inflation figures.

The Czech Republic will release November inflation and third-quarter wage data on Thursday. Inflation is expected to remain unchanged at 2.5%, slightly above the Czech National Bank's forecast.

On Friday, we will see some hard economic data from the Czech Republic, Hungary and Romania. Hungary is scheduled for another rating review on Friday, this time from Fitch. Moody's, as expected, kept its outlook negative on Friday but didn't downgrade Hungary. This time, we could see more action and a deterioration in the outlook to negative, given that Fitch was the most optimistic rating agency yet.

We will also be monitoring further developments in the peace agreement talks between Ukraine and Russia. Preliminary signs that the talks are moving forward supported CEE currencies last week. Betting websites show a rather pessimistic view, with a 28% chance of a ceasefire by the end of the first quarter. This, in our view, still presents a rather asymmetric risk for CEE FX in favour of further strengthening if we see some progress on this side. This should also deflect some pressure from a dovish NBP or negative rating reviews in Hungary.

EUR/CZK could see a minor move up to the 24.200-250 range after Friday's rate move lower. Otherwise, the Polish zloty and Hungarian forint will await more news on the Ukraine story, with fair pricing in our view at this point.

Source: ING

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Michelle

Forex

Economic

Jerome Powell's term as Federal Reserve Chairman doesn't expire until May 15, 2026, but his successor may be named before Christmas.

What that will mean is awkwardness and uncertainty for Powell and his successor. But speculation is already soaring on the next Fed chair , however, and that may affect how the economy and markets react.

Treasury Secretary Scott Bessent, charged with nominating Powell's successor, has said he will recommend his choice to the president before Christmas. The job is still subject to Senate confirmation.

Trump has repeatedly criticized Powell, angry that the Fed has not cut interest rates in a softening economy. But the Fed has basically been an independent agency since after World War II with its decisions not subject to Presidential or Congressional approval.

The president threatened to fire Powell this past winter, but such a move was stalled because the Chairman and Fed governors probably can't be fired except for cause. It's a dispute now in the courts.

Powell has said he won't leave before his term ends. Though he could serve as a Fed governor until 2028, he is likely to resign after his successor is confirmed.

Whoever takes the job will do so knowing Trump wants to be able to dictate Fed policy as the White House works to centralize government policy.

The nominees for the job are:

Kevin Hassett, chairman of the National Economic Council and a long-time advisor to President Donald Trump.
Christopher Waller, now a Fed governor.
Michelle Bowman, the Fed's vice chair and a firm advocate for reducing banking regulation.
Kevin Warsh, a former Fed governor and Wall Street banker.
Rick Rieder, global chief of fixed-income at money-management giant BlackRock.

Bloomberg and others have said Hassett is the front runner. He is an ebullient economic advisor who has long called for interest-rate and tax cuts. Hassett has been an advisor to Republican political candidates. He was worked on Sen. John McCain's 2008 campaign against Barack Obama.

Hassett may be best known as the co-author of Dow 36,000. The book, published in 1999, argued that stock prices were too low and could move much higher. The book came out just as the stock market peaked and broke during the Dot.com bubble.

The Dow Jones Industrial Average didn't top 36,000 until November 2021, during Joe Biden's term. The Dow closed at 47,716.42 on Friday.

Naming Hassett would probably boost stock and bond prices. It's also possible the financial markets are already pricing in a Hassett Fed nomination.

But stock index futures were lower Sunday evening after the big week enjoyed by stocks last week. The Standard & Poor's 500 Index was up 3.7% for the week, with the Dow up 3.2% and the Nasdaq Composite Index rising 4.9%.

The reports to watch for

Ordinarily, the Labor Department would release its November jobs report on Friday. The report would command the most attention during the week. But the release has been pushed back to Dec. 16 because of the government shutdown and problems getting the data collected.

But there are other reports to watch this week before the Fed's interest-rate decision on Dec. 10.

Purchasing managers reports — manufacturing

The state of U.S. manufacturing will be examined in Purchasing Manager Index reports from Standard & Poor's and the Institute for Supply Management. These measure manufacturing based on contracts signed. A weak report can set off a market sell-off.

S&P's last report put the index at 51.9. Above 50 means manufacturing was growing. The ISM's report showed manufacturing weakening slightly. That's what economists expect from the reports.

Purchasing managers reports — services

S&P and ISM will report on the services economy on Wednesday. Expect decent numbers because the service economy is in better shape — and bigger — than the manufacturing sector.

ADP employment report

This report, issued by payroll processing giant ADP, is the closest we will get to a November jobs report. Due Wednesday morning, the report will look only at private-sector employment, however.

For October, ADP reported a job gain of about 42,000, the first gain in three months. Pay growth was flat, suggesting "shifts in supply and demand are balanced."

Aside from the pandemic, U.S. private sector job growth has grown fairly steadily since September 2010. The growth rate has flattened in 2025.

Jobless claims

States report jobless claims data to the U.S. Labor Department, which puts out a weekly aggregate report every Thursday. Last week, the estimate was 216,000 new claims for unemployment insurance, down 6,000 in a week.

The report seems to confirm economist estimates that jobless rates may be rising. But they are still relatively low.

Layoff report

Outplacement firm Challenger Gray Christmas tracks layoff announcements monthly. Last month, the company said it saw layoffs affecting 153,074 workers in October, up 183% from September.

Directionally, the report is right. The numbers may not be perfect. The industries announcing the biggest layoffs were technology, retail, services and warehousing.

The November report is due at 7:30 a.m. Thursday.

Fed's favorite inflation report

Friday morning, the Commerce Department reports its Personal Income Spending Index in a gaggle of releases about incomes. The Index is the Federal's preferred inflation report because it tracks prices on stuff people actually buy.

The report will be for September because of the government shutdown.

Like the PMI reports, this report can move markets. It may influence the thinking of Fed officials because it comes out before the Dec. 9-10 Fed meeting.

How consumers are reacting to the economy and jobs

The University of Michigan's Consumer Sentiment Index offers a first look at how consumers are thinking in a report set to be released at 10 a.m. ET Friday morning. This is an attitudinal survey, and attitudes often don't match with spending decisions and other activities.

Nonetheless, people and investors pay attention to this report and the Conference Board's Consumer Confidence Index.

This story was originally published by TheStreet on Dec 1, 2025, where it first appeared in the Fed section. Add TheStreet as a Preferred Source by clicking here.

Source: Yahoo Finance

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Glendon

Commodity

Economic

Gold prices climbed on Monday to their highest level in six weeks, driven by investor expectations of a possible U.S. interest rate cut later this month and shifts in Federal Reserve leadership, while silver surged to a record high.

Spot goldwas up 0.3% at $4,241.21 per ounce as of 0855 GMT, after hitting its highest since October 21. U.S. gold futuresfor December delivery gained 0.5% to $4,275.40.

Silverwas up 1.3% to $57.12 per ounce after hitting an all-time high of $57.86 earlier.

"Market participants are now starting to price in again a rate cut for the Fed in December, as well the expectation is the new FOMC chairman will be a dove... that is supporting investment demand for gold," said UBS analyst Giovanni Staunovo.

"Silver benefits from the same factor as gold, plus the expectation of further improving industrial demand next year."

Traders have increased bets over the last few weeks for interest rate cuts in December following softer U.S. data, and dovish comments by several policymakers, including Federal Reserve Governor Christopher Waller and New York Fed President John Williams.

Markets are now pricing an 88% chance of a rate cut, according to the CME's FedWatch tool.

Lower borrowing costs tend to support non-yielding bullion.

White House economic adviser Kevin Hassett said on Sunday he would be happy to serve as the next chairman of the Fed if chosen. Like Trump, Hassett believes rates should be lower.

Trump is likely to announce a new chair before Christmas, said Treasury Secretary Scott Bessent.

Markets now await the November ADP employment report on Wednesday and core U.S. Personal Consumption Expenditures September figures on Friday for further cues on the Fed's policy path.

Meanwhile, the U.S. dollar fell to a two-week low, making greenback-priced bullion cheaper for holders of other currencies.

"We expect gold to rise to $4,500/oz next year (and) silver to rise to $60/oz next year," said Staunovo.

Among other precious metals, platinumrose 0.5% to $1,680.75, while palladiumgained 0.2% to $1,452.97.

Source: TradingView

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Glendon

Forex

Economic

The eurozone manufacturing sector weakened in November as new orders fell, according to the latest HCOB Eurozone Manufacturing PMI data released Monday.

The headline PMI dropped to 49.6 in November from 50.0 in October, falling below the crucial 50.0 threshold that separates growth from contraction. This marked a five-month low and signaled a renewed deterioration in factory conditions across the eurozone, though the decline was only marginal.

The Manufacturing PMI Output Index also decreased to 50.4 from 51.0 in October, hitting a nine-month low while still indicating slight growth.

A stark contrast emerged between the eurozone's two largest economies and the rest of the bloc. Germany and France both saw their PMI readings fall to nine-month lows at 48.2 and 47.8 respectively, while Ireland led growth with a reading of 52.8, followed by Greece at 52.7.

New orders, the most heavily weighted component of the PMI, decreased after stabilizing in October. Export orders fell for the fifth consecutive month, highlighting continued challenges in overseas markets.

Despite these headwinds, manufacturing output growth continued for the ninth straight month, though at the weakest pace during the current upturn. Companies pursued more aggressive retrenchment strategies, with employment, purchasing, and inventories all falling at steeper rates than in October. Job losses were the sharpest since April.

Supply chain pressures intensified, with suppliers' delivery times lengthening to the greatest extent since October 2022. This contributed to a marked increase in input costs, the sharpest since March, following relatively stable prices throughout 2025.

"The current picture of the eurozone is sobering, as the manufacturing sector is unable to break out of stagnation and is even tending towards contraction," said Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.

However, business confidence improved, with sentiment rising above its historical average to the highest level since June. Dr. de la Rubia noted that "most companies in the eurozone are confident that they will be able to expand their production in the next twelve months," with improved mood in Germany and a shift from pessimism to optimism in France.

Source: Investing

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Gerik

Economic

Cryptocurrency

Major Cryptocurrencies Slide as December Begins

The cryptocurrency market resumed its downward trajectory on December 1, 2025, with Bitcoin falling to $86,273.68 down 5.5% and Ethereum plunging over 6.5% to $2,831.95 in early London trading. The losses marked a sharp reversal from recent attempts at recovery and underscored renewed investor anxiety across digital assets. Other major tokens also slumped, including Solana (down 7.7%) and Dogecoin (off 8.4%), signaling widespread risk aversion among crypto holders.

These declines highlight an intensifying correlation between cryptocurrency performance and broader market sentiment. As macroeconomic uncertainty grows, digital assets often positioned as speculative risk-on instruments are among the first to feel the impact when sentiment sours.

Broader Market Risk-Off Sentiment Spills into Crypto

The latest downturn coincides with a resurgence in global risk-off behavior. Concerns about overheated valuations in artificial intelligence stocks, ambiguous signals from the U.S. Federal Reserve ahead of its December 9–10 meeting, and deteriorating factory activity in China have dampened investor appetite across asset classes.

Cryptocurrencies, due to their volatility and speculative nature, have become increasingly sensitive to such shifts. The current climate mirrors periods earlier in the year when macroeconomic uncertainty triggered synchronized pullbacks across tech and crypto. The recent drop suggests that expectations of a potential Fed rate cut may not be strong enough to offset deeper structural fears especially if economic data remains mixed or geopolitical risks escalate.

Chinese Regulatory Crackdown Adds Additional Pressure

Sentiment in Asia was further dented by regulatory developments. The People’s Bank of China (PBoC) issued a public warning over the weekend, reaffirming its stance against illegal activities involving digital currencies. While details were limited, the statement contributed to a decline in Hong Kong-listed digital asset-related equities during Monday’s session.

This warning reflects a continued tightening of China’s approach to crypto markets, particularly after brief periods of speculative optimism earlier this year. By reinforcing regulatory restrictions, Chinese authorities have effectively removed one of the largest potential sources of institutional demand in the Asia-Pacific region. As a result, investor confidence weakened, and crypto-linked equities followed crypto tokens into negative territory.

Volatility Returns as Crypto Enters Uncertain December

The renewed sell-off in Bitcoin, Ethereum, and other digital assets marks a turbulent start to December, a month that has historically brought strength to risk markets. However, the convergence of regulatory pressure, macroeconomic uncertainty, and shifting market psychology has once again destabilized the crypto landscape.

Unless clarity emerges from upcoming Fed policy announcements or risk appetite revives across equity and tech sectors, cryptocurrencies may continue to face downward pressure in the short term. Traders and investors should be prepared for heightened volatility as 2025 closes out on a note of caution.

Source: CNBC

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Gerik

Economic

Mixed Market Mood Greets December's Arrival

As 2025 enters its final month, global investors are bracing for a complex finish to a year defined by rapid technological growth, geopolitical tension, and shifting macroeconomic conditions. The long-anticipated “Santa Claus rally” could yet materialize, particularly if the U.S. Federal Reserve delivers a quarter-point interest rate cut during its final meeting of the year scheduled for December 9–10. According to CME FedWatch Tool projections, there is now an 87.4% probability of such a move.

This expectation has buoyed hopes across equity markets, following a winning week for U.S. stocks, where all three major indexes gained in a shortened Thanksgiving session. The Nasdaq Composite closed higher for a fifth consecutive day, reflecting momentum in tech-heavy sectors.

Yet, optimism remains tempered by unresolved structural and political risks that could derail sentiment. As Lim Hui Jie of CNBC’s Daily Open aptly notes, “December is its landing strip,” signaling that markets are approaching a critical inflection point.

China's Manufacturing Retreats Despite Export Support

A significant drag on global sentiment comes from China’s manufacturing slowdown. November’s private PMI data confirmed an unexpected contraction in industrial activity, marking the first sub-50 reading in four months. Despite a rebound in new export orders fueled in part by a temporary trade truce with the United States the uptick failed to compensate for deeply rooted domestic weakness. Consumer demand remains sluggish, and confidence among Chinese manufacturers continues to erode.

The data suggest that while foreign trade provides short-term relief, the underlying drivers of China’s economy namely investment, property, and consumption are not yet aligned for sustained recovery. This imbalance poses risks for global supply chains, particularly in sectors reliant on Chinese manufacturing.

India's Growth Accelerates, Offering a Regional Contrast

In sharp contrast to China’s industrial retrenchment, India’s economy posted an 8.2% year-on-year GDP growth rate for Q3 2025, outperforming expectations. The expansion was supported by resurgent manufacturing, a buoyant construction sector, and strong domestic consumption. This reinforces India’s growing role as a counterbalance to China in Asia’s economic narrative and may further influence multinational investment strategies.

While this performance offers a positive signal for emerging market investors, it also introduces a divergence in regional policy expectations. With India’s economic engine revving up, monetary easing is less likely there, reinforcing the importance of localized policy responses across Asia.

Wingtech-Nexperia Dispute Highlights Supply Chain Vulnerabilities

A separate flashpoint emerged as tensions escalated between Dutch chipmaker Nexperia and its China-based unit Wingtech. In an open letter, Nexperia warned of “imminent production outages” across industries unless supply chain operations are stabilized. This public confrontation underscores the lingering fragility in semiconductor networks and adds to the overall narrative of technological decoupling and industrial fragmentation.

Such disputes pose practical risks to global production timelines and elevate the political risk premium for firms operating across U.S.-China-Europe supply corridors. The timing of this conflict during a seasonally critical quarter for electronics could amplify operational bottlenecks into early 2026.

Silver’s Silent Surge Amid Gold Buzz

One of the more surprising developments in commodity markets has been the under-the-radar rise of silver. While gold has dominated headlines, silver recently hit a new record high, and analysts are forecasting its value could double over the next few years. This bullish outlook is supported by both investment demand and industrial use, particularly in renewable energy and electronics. It also reflects growing hedging behavior among investors wary of equity volatility and monetary policy shifts.

In the travel sector, an unprecedented recall of 6,000 Airbus A320-series aircraft due to software issues linked to solar flares has caused widespread disruption. The European Union Aviation Safety Agency issued the directive after a JetBlue flight experienced an unexpected pitch-down event. The recall affected over half of the world’s narrow-body jets and came during one of the busiest global travel periods, straining airline operations from the U.S. to Australia.

This aviation disruption introduces additional short-term economic costs and may influence airline stocks and travel-related industries, particularly if delays extend through the December holiday window.

Holiday Cheer Competes with Caution

The final weeks of 2025 are poised at a fragile intersection of policy, geopolitics, and investor psychology. While Wall Street anticipates a supportive signal from the Federal Reserve, uncertainties surrounding China’s slowdown, tech supply chains, and military risks in regions like Venezuela could dampen momentum.

Markets may yet find joy in December if macroeconomic and geopolitical turbulence remains contained. But as the Airbus recall and semiconductor disputes show, shocks can emerge quickly in a globalized system already stretched thin. The next two weeks will be pivotal in determining whether 2025 ends on a hopeful or hesitant note.

Source: CNBC

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Daniel Carter

Political

Russian President Vladimir Putin signed an order to allow visa-free entry into the country for Chinese citizens as ties between the two nations continue to deepen.

Chinese citizens will be able to enter the country for 30 days for business and tourism starting from Monday, according to the order, which was published on a government website. The measure runs until Sept. 14 next year. A few categories of travelers, including journalists and students, will still require visas under the order.

Putin in September said that Russia planned to take the step after Beijing allowed visa-free entry into China for Russian citizens with ordinary passports as part of a trial.

China previously announced plans to expand its unilateral visa-free entry scheme as it tries to rev up tourism. Meanwhile, the Kremlin's February 2022 full-scale invasion of Ukraine has pushed Russia closer to China, which has remained an economic and diplomatic lifeline for Moscow.