Fed's Hammack Leans Against More Rate Cuts Because Of High Inflation

Central Bank

Summary:

Cleveland Federal Reserve President Beth Hammack said on Thursday ongoing high levels of inflation argue against the U.S. central bank cutting interest rates again.

"I remain concerned about high inflation and believe policy should be leaning against ‌it," Hammack said in the text of a speech to be delivered to an Economic Club of New York event. "‌After last week's meeting, I see monetary policy as barely restrictive, if at all, and it's not obvious to me that monetary policy should do more at this time."

Hammack said the Fed continues to face inflation pressures that are above its target and that monetary policy is currently at a setting barely restrictive of economic momentum,⁠ which means it is not doing ‌a lot to help push down price pressures that exceed the central bank's 2% target.

She opposed the Fed's decision last week to cut its benchmark interest rate by ‍a quarter of a percentage point to the 3.75%-4.00% range. The central bank still views inflation as too high, but many of its policymakers have become increasingly concerned about nascent signs of weakness in the job market, and hope to buoy that part of the economy by making the cost of short-term credit cheaper.

Markets ‌have been mulling the prospect of another rate cut at the central bank's December 9-10 meeting, although Fed Chair Jerome Powell told reporters last week in a press conference that such a move was not guaranteed.

"Monetary policy should be mildly restrictive to return to our 2% inflation objective in a timely fashion while limiting the misses from maximum employment," Hammack said. She added that inflation should stand at 3% by ⁠the end of this year and then remain elevated through 2026 before slowly retreating back to desired levels.

Hammack acknowledged issues with the labor market while cautioning that the unemployment rate still remains low.

"Based on the slowing labor market, I expect the unemployment rate will tick up in coming months, ending this year ‍just above its longer-run ⁠value," she said. "I do not currently put high odds on a labor market downturn. But subdued job growth may indicate more fragility in the labor market."

Hammack also said financial ⁠markets are helping support the economy. "Financial conditions are quite accommodative, reflecting recent gains in equity prices and easy credit conditions,‌" she said, adding that those conditions should help lift growth next year.

Source: Yahoo Finance

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Adam

Stocks

Economic

Correction, consolidation, bear market, and crash. These could be the four most dangerous words in the financial world, but Sir John Templeton had already appropriated the expression for his famous aphorism: "The four most dangerous words in finance are: this time it's different."

Let's go crescendo:

Consolidation

Definition: this is the word used to describe a decline that no one cares about. Old hands or those who want to appear cool-headed consider consolidation to be "healthy" or even "beneficial."

In figures: a decline of 0 to 10% from the most recent peaks, but which starts to look like a real consolidation from 5% onwards.

The optimists' view: great, it's an excellent opportunity to buy stocks that were a little expensive.

The pessimists' view: all corrections have started with consolidations.

The graphic representation: a pothole in an uphill road, which becomes invisible over time.

Quote: "This consolidation is great, I was able to buy Palantir at 382 times earnings instead of 456 times."

Correction

Definition: it's when investors get really punched in the face and start to really get scared (definition not guaranteed, provided by an 87-year-old).

In figures: a 10%-20% drop from the most recent peaks. Statistically, there have been 27 corrections in the United States over the last 50 years (Source: Charles Schwab), the last one occurring in early 2025, between February and early April.

The optimists' opinion: great, it's an excellent opportunity to buy stocks "on sale", but we'll still wait a bit to see how things turn out.

The pessimists' view: all bear markets have started with corrections.

The graphic representation: a crevasse on the slope of a glacier, which may remain visible for a while.

The quote: "Please let it stop, please let it stop..."

The bear market

Definition: in French, we talk about a bear market. But we preferred to keep the American version, which is more animalistic. The bear symbolizes a decline on Wall Street, as opposed to the bull, which symbolizes an increase. The bear market is the beginning of hell for investors.

In figures: a sustained decline of more than 20%. There have been seven bear markets on Wall Street in 50 years. The last two date back to February/March 2020 (Covid) and January/October 2022. But the one in 2020 was so short (33 days) that it is difficult to really call it a bear market. Historically, the typical bear market lasts an average of 14 months and causes indices to lose 36%. But the latter two were shorter.

The optimists' view: a bear market lasts an average of 14 months, but a bull market lasts an average of five years.

The pessimists' view: I've been telling you for ages that the system is going to collapse, you bunch of idiots!

The graphic representation: a seismic fault line, which remains visible for a long time.

Quote: "I don't care, I've put everything into Swiss bonds, gold, and BX4."

The crash

Definition: a stockmarket crash is panic in fast-forward. A violent, brutal, sudden drop over just a few hours or a few trading sessions. It has nothing to do with an orderly or gradual decline: here, the markets collapse suddenly, in a climate of widespread panic. Contrary to popular belief, it is not so much the scale of the decline that defines a crash, but its speed, its violence, and its domino effect. The crash of October 1929 precipitated the Great Depression; the crash of March 2020, in the midst of the Covid crisis, wiped out several years of gains in a matter of days, before an equally spectacular recovery (well spotted, Kevin, March 2020 was both a crash AND a bear market express). In a crash, rationality gives way to herd instinct. Everyone sells, no one buys, and order books become black holes.

In figures: there is no official count of crashes. But we can count a number of single or consecutive trading sessions that meet the above definition. For the S&P 500, the sequence of -4.9% on March 11, 2020, -9.5% on March 12, 2020, and -12% on March 16, 2020 is considered a crash. The famous Black Monday of 1987 saw a 22.6% plunge in the Dow Jones. On Monday, October 6, 2008 (Lehman Brothers bankruptcy), the CAC 40 lost 9% in a single session. Over the week, it fell 22.7%.

Source:marketscreener

To stay updated on all economic events of today, please check out our Economic calendar

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Gerik

Economic

FDI Rebounds Sharply Amid Global Supply Chain Shifts

Vietnam has recorded a remarkable resurgence in foreign direct investment (FDI) inflows, with registered capital reaching $31.52 billion and disbursed capital hitting $21.3 billion by the end of October 2025. This marks a 15.6% year-on-year increase in registered FDI and an 8.8% rise in disbursed FDI the strongest performance for the January–October period in five years.

This uptrend reflects growing investor confidence in Vietnam’s economic resilience, favorable investment climate, and improving post-pandemic recovery. The shift also aligns with ongoing regional supply chain relocations driven by cost optimization, geopolitical tensions, and Vietnam’s continued openness to international capital.

Singapore and China Dominate New Investment Registrations

Among the 87 countries and territories with newly licensed investment projects in Vietnam this year, Singapore led the charge with $3.76 billion in newly registered capital, accounting for 26.7% of the total. China followed closely with $3.21 billion, or 22.8%, underscoring the strategic repositioning of Chinese investors amid trade disruptions and domestic capacity constraints.

Other notable contributors include Hong Kong ($1.38 billion, 9.8%) and Japan ($1.17 billion, 8.3%). The dominance of Asian capital sources highlights a strong intra-regional investment cycle, reflecting both market proximity and policy complementarities.

This concentration of funding from Asia also reveals a causal relationship between trade redirection (particularly away from China) and Vietnam’s increasing role as a manufacturing substitute or partner.

Manufacturing Sector Remains Core FDI Magnet

The manufacturing and processing sector retained its title as the top FDI magnet, accounting for $17.68 billion, or 83% of total realized FDI. In terms of registered and adjusted capital, the sector attracted $16.37 billion (62.5%).

Real estate followed with $5.32 billion (20.3%), while energy-related sectors such as electricity and gas production received $671.9 million (3.2%). These figures reaffirm Vietnam’s comparative advantage in labor-intensive manufacturing and its rising appeal in industrial real estate and clean energy.

Mergers, acquisitions, and equity participation also surged, with 2,918 transactions valued at $5.34 billion a 45.1% increase from 2024. Notably, $1.86 billion went into manufacturing, while professional services and tech absorbed $1.11 billion. The remaining $2.37 billion flowed into trade, finance, and service industries.

Geographic Highlights: Industrial Hubs Lead the Race

In terms of provinces, Bắc Ninh emerged as the top destination for newly registered FDI with over $1.7 billion, followed by Ho Chi Minh City ($1.6 billion) and Hải Phòng ($1.4 billion). These industrial hubs benefit from established infrastructure, logistics networks, and government incentives that enhance their competitiveness in electronics, logistics, and industrial real estate.

Their strategic locations also correlate with multinational firms’ site-selection strategies, where access to ports, labor, and high-tech ecosystems are key decision drivers.

Vietnamese Capital Goes Abroad: Outbound Investment Accelerates

Parallel to inward investment, Vietnamese firms have also ramped up overseas investments. In the first 10 months, outbound registered capital hit $1.1 billion more than double the same period last year.

This included 148 new projects worth $742.8 million and 28 capital expansion projects totaling $358.2 million. Primary destinations included Laos, which attracted $590.3 million (53.6% of total outflow), primarily into energy and manufacturing sectors.

This diversification trend aligns with Vietnam’s ambition to build regional investment footprints while securing energy resources and market access.

Toward a New Growth Cycle in 2026–2030

Vietnam’s dual surge in both registered and realized FDI signals renewed investor confidence and lays the foundation for a new phase of industrial and export-led growth. If momentum continues through Q4, total FDI for 2025 could exceed $35 billion a new record.

Such inflows will be critical in boosting Vietnam’s manufacturing capabilities, labor market, and technology transfer as it positions itself as a Southeast Asian industrial powerhouse in the 2026–2030 period.

The dominance of Singapore and China also signals potential shifts in regional capital flow dynamics, as Vietnam becomes increasingly central to both supply chain diversification strategies and geopolitical recalibration across Asia.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Adam

Stocks

This week's wobble in shares connected to artificial intelligence is a stark reminder that the U.S. stock market is ever more reliant on the technology sector to drive it higher.

The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) on Tuesday suffered their biggest one-day drops in nearly a month, weighed down by a sharp tech decline. The indexes recovered somewhat on Wednesday, while the tech group extended losses slightly.

Fueled by a long period ‌of strong performance, tech is by far the biggest sector in the S&P 500, accounting for a roughly 36% weight in the benchmark index - a higher level than during the dot-com bubble era 25 years ‌ago, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Adding in megacap companies that are not classified as part of the technology sector - Google parent Alphabet (GOOG, GOOGL), Amazon (AMZN), Tesla (TSLA) and Facebook parent Meta Platforms (META)- the combined weight amounts to nearly half of the S&P 500 (^GSPC).

With so much riding on prospects for AI, the sector's heavy weighting in major indexes leaves broader markets vulnerable to negative developments, investors said.

"A significant percentage of the S&P is tied to one single sector and one single theme," said Walter Todd, chief ⁠investment officer at Greenwood Capital in South Carolina. "If there ‌is some hiccup around (AI) ... anything like that is a risk to the individual names, but also the market overall."

The sector has declined over 3% since last week, with weakness in names such as Palantir Technologies and Nvidia (NVDA) that have been signature stocks in ‍the AI trade.

Investors say tech shares might have been due for a breather after a strong run, and such a pullback can serve as a healthy reset that paves the way for further gains. At the same time, with much of Wall Street wary of signs of an "AI bubble" in the stock market, any weakness is being scrutinized as potentially the start of more severe declines.

The CEOs of Morgan Stanley and Goldman Sachs on Tuesday cautioned that equity markets could be heading toward a drawdown, underscoring concerns about elevated equity valuations. The S&P 500's forward price-to-earnings ratio ‌is around 23 times, above its 10-year average of 18.8, according to LSEG Datastream. The tech sector's forward P/E ratio of about 32 times is also well above its 10-year average of 22.2.

Stellar tech performance has been a hallmark of the current bull market, which recently surpassed three years. While the S&P 500 has gained 90% during its bull run, the tech sector has gained 186% over that period.

Its recent decline notwithstanding, tech has also been the best-performing of the 11 S&P 500 sectors year-to-date, rising about 27% against an over-15% gain for the broader S&P 500, which remains not far from record highs.

That outperformance means tech's weighting in the S⁠amp;P 500 has increased from just under 33% at the start of the year to its current level of about 36%. The next biggest sector, financials, has a weight of 13%.

"If the tech stocks go down in any kind of sustained meaningful way, the indexes will go down," said Matt Maley, chief market strategist at Miller Tabak.

Strong tech profits have been supporting the stocks' gains and their heavy index weightings. Tech is expected to account for about 25% of aggregate ‍SP 500 earnings in the third quarter,⁠ according to Tajinder Dhillon, head of earnings research at LSEG.

Indeed, investors are quick to say that the tech companies at the heart of the AI theme are financially much stronger in general than many of those during the dawn of the internet 25 years ago.

"The companies that are leading the charge and making money off AI, these are ⁠real companies with real cash flows," said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

Wren said large tech companies' ability to maintain strong capital spending related to AI has been one of the key drivers ‌of the stock market.

"If it's just even a whiff that that's not going to play out, markets are going to be immediately low on that,‌" Wren said.

Source: Reuters

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Justin

Central Bank

A deputy governor of the Bank of England (BOE) played down concerns the U.K. is slipping behind other jurisdictions in introducing regulatory regimes for stablecoins, saying the rules will be in effect "just as quickly as the U.S.," Bloomberg reported on Wednesday.

"Our aim is to make sure that our regime is up and running, just as quickly as the U.S.," Sarah Breeden, the deputy governor for financial stability, said at a conference on Wednesday, according to the report.

The U.K. central bank is set to reveal its proposed stablecoin regulations on Nov. 10, with expectations that it will impose limits on holdings of 20,000 pounds ($26,000) on individuals and 10 million pounds on businesses.

The BOE drew the ire of many in the crypto industry when it was reported the central bank planned to limit the amount of stablecoins that individuals and businesses could own. Breeden described these plans as "less of an issue in practice than people might think."

She pointed to differences in the U.K. mortgage market compared with the U.S., where the GENIUS Act was signed into law by President Trump in July, as a reason for a limit on stablecoin holdings being necessary.

"People in the U.S. get their mortgages from Fannie and Freddie, and they're funded in financial markets," Breeden said, referring to the Federal National Mortgage Association (known as Fannie Mae) and Federal Home Loan Mortgage Corp. (Freddie Mac). "People in the U.K. get their mortgages from commercial banks and so that need for limits as we transition to a world of stablecoins is one that is less pertinent to the U.S. regime."

The BOE did not respond to CoinDesk's request for further comment.

Source: CoinDesk

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Gerik

Economic

Forex

A Strategic Breakthrough: BHP Concedes to Yuan Settlements

BHP Billiton, the Australian mining titan and the world’s leading iron ore exporter, has agreed to settle nearly a third of its spot market iron ore sales to China in Chinese yuan (RMB) starting Q4 2025. This concession, covering an estimated 88.5 million tons of iron ore valued at around $10 billion annually, signals a milestone in China’s campaign to weaken the U.S. dollar’s dominance in global commodity markets.

While only 30% of trade volume, the symbolic value of this decision is enormous. It breaks with the traditional USD pricing system and opens the door for future expansions of yuan-denominated contracts, not only for BHP but potentially for other resource exporters.

The Pressure Campaign: From Suspension to Concession

The turning point came in late September when China Mineral Resources Group abruptly halted USD-based iron ore transactions with BHP. Although the official reasoning focused on pricing and quality disputes, analysts widely interpreted the move as a deliberate strategy to force a shift in transaction currency.

This calculated disruption reflected Beijing’s broader ambition: to localize commodity pricing power and test the global market’s willingness to accept yuan as a legitimate settlement currency. The strategy mirrors China’s earlier successes in securing RMB-based trade with Brazil and establishing yuan settlement hubs through Belt and Road partnerships.

Beijing’s growing leverage stems from its overwhelming influence in iron ore demand, as China imports over 70% of the world’s seaborne supply. With such weight, China can pressure major producers to adopt settlement terms aligned with its long-term monetary and geopolitical interests.

Australia’s Strategic Dilemma: Balancing Trade and Alliances

Australia now finds itself navigating between economic pragmatism and strategic alignment. Iron ore remains the bedrock of Australian exports and government revenue, yet yielding to yuan settlement introduces exchange rate risk and greater exposure to China’s monetary policy.

Prime Minister Anthony Albanese has voiced concern about trade disruptions, emphasizing the need for uninterrupted iron ore exports. Yet Canberra must now reckon with the precedent this sets for future trade negotiations and whether it signals a shift toward deeper economic entanglement with China at the expense of Western alliance priorities, particularly within frameworks like AUKUS and the Quad.

Though BHP reaffirmed that long-term contracts will remain USD-denominated through 2026, the company’s openness to expanding yuan settlement "depending on market adoption" of a China-led RMB iron ore benchmark leaves the door wide open for deeper RMB integration.

A Blow to the Dollar: Global De-Dollarization Accelerates

BHP’s partial shift aligns with a broader trajectory of de-dollarization led by China. Already, 28% of iron ore trades between China and Brazil are conducted in yuan. If China succeeds in establishing a credible RMB-based iron ore index that gains international recognition, it could disrupt the longstanding USD-centered pricing regime in commodities.

This movement reflects not just a financial adjustment but a geopolitical transformation. For decades, commodity markets have functioned under a petrodollar-like structure with USD as the universal trade medium. By undermining this norm, China seeks to erode U.S. financial influence and assert a parallel monetary order.

The effort is buttressed by complementary initiatives: the expansion of RMB clearing centers, the promotion of digital yuan as a cross-border payment tool, and bilateral currency deals that sideline SWIFT and U.S.-based banking infrastructure.

Mining Sector Reaction: Between Uncertainty and Submission

Australian iron ore exporters are rattled. BHP’s concession is perceived as the collapse of a once “untouchable” trade assumption that iron ore sales to China were immune from currency politicization.

Companies fear future pricing power erosion and increased susceptibility to policy-linked leverage. Memories of China’s unofficial bans on Australian wine, barley, and coal during the 2020–2021 trade tensions remain fresh. This time, iron ore the backbone of Australia’s economy is in play.

The yuan settlement shift may bring cost advantages to Chinese buyers while pushing foreign miners into complex hedging strategies to manage forex volatility. Over time, this could shift the center of gravity for global resource trade not just toward Asia, but toward Chinese monetary influence.

A Paradigm Shift with Global Implications

The yuan’s entrance into iron ore pricing represents more than just a transactional evolution. It is a test of China’s long-game strategy to recalibrate global finance around its currency and influence. BHP’s acceptance even partial sets a powerful precedent and may encourage other producers to follow suit under similar pressure.

Should the RMB-based benchmark gain international traction, the U.S. dollar could face its most serious challenge yet in the commodities sector. This event underscores how financial sovereignty, geopolitical rivalry, and trade interdependence are converging and reshaping the rules of global commerce in real time.

To stay updated on all economic events of today, please check out our Economic calendar

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Gerik

Economic

Divergence Between CPI and Core Inflation Explained

Vietnam’s consumer price index (CPI) in October 2025 rose by 0.20% compared to the previous month, with cumulative growth reaching 3.27% year-on-year for the first ten months. In contrast, core inflation which excludes volatile items increased by only 3.20% during the same period. This discrepancy is subtle but significant in understanding the underlying inflation dynamics.

According to the General Statistics Office’s (GSO) monthly report released on November 6, the headline CPI increase was driven by a confluence of short-term cost surges: food prices rose in flood-affected areas, dining out became more expensive due to rising input costs, and tuition fees at non-public schools continued to climb. However, these price shifts belong to categories excluded from the core inflation calculation.

This statistical distinction creates a structural reason for the gap: although CPI includes food, energy, education, and healthcare, core inflation filters these out to better reflect long-term, policy-relevant inflation trends. As a result, temporary or seasonal shocks in these categories can inflate headline CPI while leaving core inflation relatively unaffected.

October Price Trends: Food, Education, and Jewelry Lead the Rise

Among the ten commodity groups that contributed to the 0.20% CPI increase in October, the food and catering group had the most significant impact, rising by 0.59%. Notably, food alone surged by 0.69%, contributing 0.15 percentage points to the monthly CPI. Eating out increased by 0.57%, while staple food rose only marginally by 0.02%.

The education group added further pressure, increasing by 0.51% in October. Although public institutions benefited from tuition subsidies under Decree No. 238/2025/ND-CP, private schools adjusted their fees upward. This was complemented by moderate increases in school supplies and stationery.

The miscellaneous goods and services group also recorded notable inflation at 0.43%, largely due to a 9.82% spike in jewelry prices aligned with global gold trends. Other contributors included personal care items, non-electric personal tools, and services such as hairdressing and environmental hygiene.

These increases although significant are treated as external shocks within the CPI framework and are omitted from core inflation measurements, explaining the slower growth in the latter.

Currency and Gold: External Influences Add Volatility

The domestic gold price index surged by 12.53% month-over-month in October, marking a dramatic 63.64% increase since December 2024 and a staggering 65.03% rise year-on-year. The average ten-month increase stood at 44.02%, driven by global investor demand in response to falling interest rates, a weakening USD, and escalating geopolitical risks.

In contrast, the USD price index in Vietnam fell by 0.34% in October, despite rising 3.98% on average over the first ten months. This decoupling from the global USD trend which rose by 1.02% in October reflects localized FX interventions and shifting capital flows.

These external price movements impact headline CPI through cost-push mechanisms, particularly for gold-related goods and imports, but do not affect core inflation unless they alter underlying demand or wage conditions.

Implications for Policy and Market Outlook

The gap between core inflation and headline CPI in Vietnam underscores a key point for monetary policy: while surface-level prices are influenced by short-term shocks, the underlying inflationary trend remains moderate. The difference is a consequence of methodology not necessarily a sign of policy failure and provides SBV (State Bank of Vietnam) and fiscal authorities with a clearer view of persistent demand-side pressures.

Looking ahead, if headline inflation continues to be driven by volatile categories, policymakers may prefer to respond with targeted fiscal tools rather than broad monetary tightening. The CPI-core inflation gap thus serves as a valuable diagnostic tool in balancing inflation control with economic recovery objectives.

To stay updated on all economic events of today, please check out our Economic calendar

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