IDF Vows To Destroy All Hamas 'Terror Tunnels' As Part Of Disarming Gaza

Source: reuters

The British economy faces a growing risk of a hard-landing, Bank of England policymaker Alan Taylor said on Tuesday, reaffirming his calls to speed the pace of interest rate cuts.

Taylor, an external member of the BOE’s Monetary Policy Committee, made the remarks as part of a broader speech about the impact of tariffs on the British economy. The economist and Columbia University professor said downside risks in the UK were fueling concerns that the British central bank “may have braked too hard” while raising interest rates to combat inflation in the wake of the pandemic and Russia’s invasion of Ukraine.

While Taylor said he believed that a “bumpy landing” had eclipsed a soft landing has the most likely outcome for the UK, he warned that the risk of a hard landing was growing. In that scenario, weak domestic demand can prompt a more forceful downturn, whereby recession dynamics kick in a way that’s difficult to contain or reverse, he said.

“This was a remote and low probability event a year ago, but the risk is rising,” Taylor said at King’s College, Cambridge. “The probability of this outcome is now not trivial.”

Data released earlier on Tuesday showed that UK unemployment unexpectedly rose and wage growth slowed more than forecast, prompting traders to add to bets on further interest-rate cuts from the BOE. The jobless rate climbed to 4.8% in the three months through August, the highest since May 2021 when Covid restrictions were in place, the Office for National Statistics said.

There was further bad news for Chancellor of the Exchequer Rachel Reeves ahead of what’s shaping up to be a challenging budget on Nov. 26. In its latest forecasts, the International Monetary Fund said Britain will suffer the highest inflation of any Group of Seven country next year and the weakest growth in living standards.

Taylor has emerged as one of the MPC’s most dovish members since joining the panel a year ago, having voted to cut rates at almost every meeting. He’s worried about a rapidly deteriorating economy, while colleagues such as Megan Greene have argued for keeping borrowing costs on hold until at least March due to worries about lingering price pressures.

Traders fully priced two quarter-point interest-rate cuts through next year earlier Tuesday, with the first point cut expected in by March.

“By maintaining what I think is a too restrictive path of interest rates, we may have braked too hard, such that inflation cannot smoothly return to target with the economy close to potential,” Taylor said.

Taylor said he saw more evidence that China was rerouting cheap goods destined for the US to the UK. He said that underestimating the impact of trade diversion may cause inflation to come in below the 2% target.

Taylor’s comments contrast with views held by fellow external rate-setter Catherine Mann, one of his most hawkish colleagues. In a recent interview with Bloomberg TV, Mann dismissed the effects of trade diversion on inflation, arguing that domestic factors will prevent firms from passing on lower prices to consumers.

An imported good “coming in on the dock there, still has to make it to the shelf in the UK, and that gets us back to the domestic foundations for the inflation pressures in the UK... whatever is happening with tariffs abroad,” Mann said. “The domestic component is the more important issue that I need to face.”

But Taylor argued that those domestic inflationary forces are receding. He said that wage settlements are set to end the year around 3.5% and are likely to decline to 3%, close to the BOE’s preferred rate, as soon as next year.

“As I see it, in an economy with rising unemployment and weak demand, wage settlements will be pushed down, and wage-led domestic inflation will not re-kindle an upward spiral,” Taylor said.

Source: Bloomberg Europe

Source: cnbc

US Moving Without Macroeconomic Data

USD/JPY Technical Analysis

Source: investing

The International Monetary Fund (IMF) has raised its global growth forecast for 2025 to 3.2%, up from its July prediction of 3.0%, while maintaining its 2026 outlook at 3.1%.

The upward revision, announced Tuesday in the IMF’s World Economic Outlook, comes as tariff impacts and financial conditions have proven less severe than initially feared. However, the organization warned that a potential escalation in the U.S.-China trade war threatened by President Donald Trump poses a "significant risk" to global economic growth.

IMF Chief Economist Pierre-Olivier Gourinchas noted that recent trade agreements between the U.S. and major economies have avoided the worst of Trump’s threatened tariffs with minimal retaliation. This marks the IMF’s second growth upgrade since April, when it had projected a more pessimistic 2.8% growth rate following Trump’s implementation of broad "reciprocal" tariffs.

However, tensions escalated Friday when Trump threatened 100% duties on Chinese goods, on top of existing tariffs averaging 55%, in response to Beijing’s expanded export controls on rare earths. Treasury Secretary Scott Bessent indicated Monday that negotiations were underway to prevent a major trade war escalation.

The IMF’s downside risk scenario shows that if tariffs increase by 30 percentage points on Chinese goods and 10 percentage points on goods from Japan, the euro area, and Asian emerging markets, global growth could be reduced by 0.3 percentage points in 2026, with negative impacts increasing to more than 0.6 percentage points through 2028.

U.S. growth remains resilient in the IMF’s baseline forecast, with a slight upgrade to 2.0% for 2025 from the previous 1.9%, and 2.1% for 2026. These figures remain below the 2024 growth rate of 2.8%.

The euro zone growth forecast improved to 1.2% from 1.0%, driven by fiscal expansion in Germany and strong momentum in Spain. Japan saw a significant increase to 1.1% from 0.7%, benefiting from front-loaded trade and stronger wage growth.

The IMF maintained its China growth forecasts at 4.8% for 2025 and 4.2% for 2026, while warning that "the outlook remains worrisome" with elevated financial stability risks as the property sector continues to struggle.

Global headline inflation forecasts remained largely unchanged at 4.2% for 2025 and 3.7% for 2026, though the IMF noted divergence among countries, with inflation forecasts rising in the U.S. as firms begin passing tariff costs to consumers.

Source: Yahoo Finance

Most of China’s biggest defaulted developers are reaching a restructuring milestone, as creditors increasingly accept that better terms are unlikely during a real estate crisis that has triggered $130 billion of defaults.Eight of China’s 10 most indebted developers have largely if not entirely put the offshore restructuring process behind them. One of those, Sunac China Holdings Ltd., which has already gained majority support for its restructuring from creditors, is scheduled to hold a vote on Tuesday, among the last procedural hurdles it has to clear.

While policymakers have rolled out a slew of measures aimed at propping up the housing market, sales are still sluggish and Chinese developers continue to face challenges. So far, eight of the country’s 30 major builders that have defaulted on dollar debt have received liquidation orders, including China Evergrande Group and China South City Holdings Ltd., according to Bloomberg-compiled data. Many defaulted companies are still working on onshore debt plans also.

Bondholders who once banged tables and peppered executives with questions during debt negotiations are now more muted, people familiar with several Chinese real estate restructuring deals said.“Creditors have come to realize that things won’t get better anytime soon, so they’re willing to take larger haircuts,” said Ron Thompson, managing director and head of the Asia restructuring practice at Alvarez & Marsal.When Sunac’s restructuring process began in 2022, creditors balked at a proposal to swap some debt for equity at a conversion price of HK$20 ($2.57) a share, Bloomberg reported earlier. In February 2023, they held contentious all-day meetings with the Chief Financial Officer Gao Xi seeking better terms. Months later, more than 75% of offshore creditors had signed on to the deal with a much lower conversion price.

Less than two years after completing its initial restructuring, Sunac ran into repayment problems and pursued another one. This time, the deal took about two months to officially wrap up, compared with a little over a year for its first restructuring.

Such condensed debt talks are becoming more common across the property sector. In general, some bondholders don’t even bother to dial in to calls about small things once the basic restructuring framework is done, according to two restructuring advisers.Yuzhou Group Holdings Co., for example, spent more than two years negotiating its restructuring, which it sought court approval for last year. When it later revised some terms, it faced little opposition from bondholders, according to people familiar with the matter, and the deal was concluded within months.

While some creditors are willing to accept more onerous terms, others are choosing to abandon debt talks and seek immediate liquidation.That was the case with state-backed builder China South City. The company missed a couple of deadlines set by a key bondholder group and eventually proposed restructuring terms that were far from the recovery of around 70-80 cents on the dollar that bondholders had sought, people familiar with the matter said.

At its last winding up hearing in August, Hong Kong High Court Judge Linda Chan asked creditors if one more adjournment would be acceptable to them. But the bondholders’ lawyer insisted on immediate liquidation instead.Sunac declined to comment. Yuzhou and China South City didn’t respond to requests for comment.The China real estate era has changed and the last thing international creditors are looking for is dragged out talks, said Jason He, debt capital markets advisory leader at Deloitte China.“Either take the terms or press the liquidation button — both work,” he added.

Source: Bloomberg Europe