US auto bankruptcies show rising credit pain in low-income households

Economic

Summary:

Bankruptcies at First Brands and Tricolor highlight strain in low-income auto credit, with rising delinquencies and high costs, though broader U.S. credit markets stay stable.

Two auto sector bankruptcies have rattled parts of the U.S. credit market, raising concerns about a deterioration in the financial health of low-income households and migrant communities.

Auto-parts maker First Brands became the latest company to unravel, filing for bankruptcy protection on Monday, following the recent bankruptcy of subprime auto lender Tricolor Holdings. While both companies had idiosyncratic reasons for their collapse, they have stoked fears of broader stress.

"As far as I can tell, the market appears concerned," said Campe Goodman, a fixed income portfolio manager at Wellington Management, who said spreads on asset-backed securities (ABS) for some consumer lenders had widened significantly.

ABS allow auto lenders to package loans into tradable bonds, providing them with cash and transferring credit risk to investors.

"There are some issues that are specific to each of these two companies…that said, a lot of times these things happen in an environment where things are changing," said Goodman.

He pointed to a weakening in consumer health and policy changes that impact low-income segments of the population, such as changing immigration rules.

First Brands struggled after a failed effort to refinance its debt earlier this year, which stalled when investors asked for a closer look at its books, according to two sources familiar with the matter.

One of the people familiar with the matter said First Brands' problems were exacerbated by the impact of tariffs on its business.

The collapse comes on the heels of subprime auto lender Tricolor Holdings’ bankruptcy.

Tricolor's court-appointed trustee did not immediately respond to a request for comment outside business hours.

Steve Edwards, senior investment strategist at Morgan Stanley Wealth Management, said while credit markets continued to look at these instances as company-specific issues, they may reveal underlying weakness in certain segments of the consumer market.

Lower-income consumers have been impacted by high interest rates, mounting labor market weakness and tariffs, he said.

"In this context, defaults on loans for lower-income consumers should not be very surprising," he said.

SIGNS OF STRESS

Signs of strain are emerging in U.S. credit markets tied to auto debt. Spreads on the ICE BofA AA-BBB US Fixed Rate Automobile ABS Index – a measure of the extra yield investors demand over Treasuries to hold those bonds – have widened by more than 20 basis points this month.

Still, the broader U.S. corporate credit market — both investment grade and high yield — remain stable, with dealmaking seeing a notable uptick following the Federal Reserve’s interest rate cut.

The ICE BofA U.S. Corporate Index, a benchmark for investment-grade bonds, shows spreads have narrowed by six basis points since early September. Even riskier high-yield debt has tightened, with spreads down about 10 basis points.

A sign of robust credit market is the latest leveraged buyout of videogame developer Electronic Arts (EA.O)

, opens new tab, which has agreed to sell itself to a group of private investors in a deal that values the maker of "Battlefield" and "Madden NFL" at $55 billion.

One Wall Street banker said there was a tale of two different economies where the richer are benefiting from home equity gains and stockmarket gains, while some of those on low incomes were under strain.

SUBPRIME STRESS

Auto loans are a segment of the consumer finance market that has been seeing recent stress. Rikard Bandebo, chief economist at VantageScore, which develops credit scoring models, said his firm has seen delinquency rates for auto loans continue to rise to historic highs.

"Lower-income households continue to have higher delinquency rates, but their delinquency rates have stabilized over the past year and a half, while delinquency rates at middle- and higher-income households are increasing," Bandebo said.

Analysts said that companies such as Tricolor, with operations in six states, were exposed to trends hitting lower income workers.

Tricolor sold cars and provided auto loans mostly to low-income Hispanic communities in the Southwestern United States, saying it saw an opportunity to serve "invisible" workers with no access to bank accounts or other forms of credit.

Analysts said the low-income auto market has been hurt by affordability, as second-hand car prices soared in the aftermath of the pandemic and so did borrowing costs.

"Subprime consumers disproportionally finance used vehicles, where values remain stubbornly high following pandemic related disruptions," said Satyan Merchant, senior vice president, automotive and mortgage business leader at consumer credit firm TransUnion.

"Beyond vehicle payments, insurance and maintenance costs have also surged faster than general inflation, placing additional strain on lower-income households with limited disposable income."

Source: reuters

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Warren Takunda

Economic

Absent a last-minute funding deal between the political parties in Congress, the United States heads toward a shutdown on Wednesday with incalculable consequences for the American economy.

But what exactly does that mean?

The current annual federal budget expires on September 30, 2025. The next budget for fiscal year 2026 must run from October 1, 2025, to September 30, 2026.

Certain public expenditures deemed essential such as social security, air traffic control and the military are considered mandatory and must continue to operate. They are therefore automatically authorised on a permanent basis.

However, other expenditures are considered discretionary and must be formally authorized each year by 12 appropriation bills voted on by Congress – this concerns practically everything else from national parks through farm loans to financial regulators.

If these appropriations bills are not passed, there will be a “shutdown,” which is the suspension of non-essential public services, unless Congress instead passes at least one stopgap measure called continuing resolution that temporarily authorises certain discretionary public expenditures for a specified period of time.

There have been 14 such shutdowns since 1980, according to the Bipartisan Policy Center.

Who is directly concerned?

In the event of a shutdown, civil servants assigned to the provision of these non-essential public services are placed on unpaid leave.

Their colleagues in essential services must work, but without pay. After the shutdown, the salaries of the civil servants concerned, whether furloughed or working, are paid retroactively.

Work resumes as soon as Congress passes the necessary appropriations bills.

In 2023, it took three successive continuing resolutions to avoid a shutdown and ensure the temporary functioning of federal public administrations, each time for a short period.

The problem recurred for fiscal year 2025, which began in October 2024 as it was impossible to vote on the appropriation bills in time.

On September 23, 2024, a continuing resolution was passed, authorising discretionary public spending until midnight on December 20, 2024. On December 21, 2024, a new continuing resolution was passed to allow the financing of discretionary public spending until March 14, 2025.

On March 11, 2025, a new continuity resolution was passed to allow for the financing of discretionary public spending until midnight on September 30, 2025. And this is where we are right now.

Very difficult negotiations in Congress

The problem is that a continuing resolution requires a majority of 60 votes out of 100 in the Senate. In the House of Representatives a simple majority is sufficient.

In the 435-member House, Republicans have an absolute majority of 219 compared to 212 for Democrats and 4 vacancies.

In the Senate, there are 53 Republicans, 45 Democrats, and 2 independents caucusing with the Democrats (Bernie Sanders from Vermont and Angus King from Maine).

Consequently, the approval of a new continuing resolution requires the support of 7 Democratic senators.

But the Democrats are making their support conditional on the maintenance of certain social spending which the Republicans reject.

Democrats have said they will only sign on to a deal that extends tax credits linked to the Affordable Care Act, or Obamacare, that are due to expire at the end of the year. Republicans have claimed that Democrats want to give undocumented migrants hundreds of billions of dollars in healthcare benefits.

What consequences for economic growth?

A suspension of discretionary spending, which accounts for 27% of total federal government spending, has significant consequences.

First, it corresponds to a temporary decrease in the production of public services, which is a component of gross domestic product.

Second, consumption by civil servants on unpaid leave falls sharply, which affects production in other sectors, which is also part of gross domestic product.

For each week of shutdown, economists estimate the decline in real quarterly GDP, relative to its normal level, as between 0.1% and 0.3%. A long month of shutdown would therefore reduce real quarterly GDP by 0.5% to 1.5%.

Since civil servants eventually recover their salaries, which have simply been postponed, there is a certain amount of catch-up in their consumer spending after the shutdown. Much of their paused consumer spending has simply been deferred.

After the shutdown, gross domestic product is therefore slightly higher than normal. However, it is unlikely that all lost consumption will be fully recovered, such as the cost of eating lunch out that furloughed civil servants would have incurred if they had been working, their transportation costs from home to the office, etc.

The shutdown would mean a suspension of payments by public administrations to their suppliers. Many companies would be in difficulty and, for some, jobs could be at risk. Some bankruptcies would even be possible if the shutdown lasted for a long time. All of this would exacerbate the decline in gross domestic product.

Looming trouble on financial markets

Interest rates on US government bonds would rise, as investors would consider them to be higher risk. A shutdown would therefore heighten fears of a US default on its sovereign bonds in 2025, because it would be very difficult to reach an agreement on raising the debt ceiling by December.

Failure to reach an agreement on the debt ceiling, which would prevent the government from taking on new net borrowing, would have economic consequences far greater than those of a shutdown.

Higher interest rates on public debt could lead to a widespread increase in credit rates, particularly mortgage rates, exacerbating the real estate crisis and thus the contraction in gross domestic product.

Other consequences: The shutdown would prevent the National Flood Insurance Program, which is managed by the government and provides half of all flood insurance policies in the US, from operating.

Potential homebuyers looking for such insurance to obtain their loans would be stymied. This would further depress the real estate market and exacerbate the negative impact on economic growth.

In addition, the shutdown would compromise the availability of statistical indicators that are necessary to guide investors in the financial markets and the Federal Reserve's monetary policy.

A large part of the statistics are produced by public agencies whose activities would be suspended.

In sum, stock prices could fall due to higher interest rates, lower activity, and statistical opacity. Whether Washington's political brinkmanship would go that far we'll know on Wednesday.

Source: Euronews

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Adam

Economic

Chinese startup DeepSeek’s latest experimental model promises to increase efficiency and improve AI’s ability to handle a lot of information at a fraction of the cost, but questions remain over how effective and safe the architecture is.

DeepSeek sent Silicon Valley into a frenzy when it launched its first model R1 out of nowhere last year, showing that it’s possible to train large language models (LLMs) quickly, on less powerful chips, using fewer resources.

The company released DeepSeek-V3.2-Exp on Monday, an experimental version of its current model DeepSeek-V3.1-Terminus, which builds further on its mission to increase efficiency in AI systems, according to a post on the AI forum Hugging Face.

“DeepSeek V3.2 continues the focus on efficiency, cost reduction, and open-source sharing,” Adina Yakefu, Chinese community lead at Hugging Face, told CNBC. “The big improvement is a new feature called DSA (DeepSeek Sparse Attention), which makes the AI better at handling long documents and conversations. It also cuts the cost of running the AI in half compared to the previous version.”

“It’s significant because it should make the model faster and more cost-effective to use without a noticeable drop in performance,” said Nick Patience, vice president and practice lead for AI at The Futurum Group. “This makes powerful AI more accessible to developers, researchers, and smaller companies, potentially leading to a wave of new and innovative applications.”

The pros and cons of sparse attention

An AI model makes decisions based on its training data and new information, such as a prompt. Say an airline wants to find the best route from A to B, while there are many options, not all are feasible. By filtering out the less viable routes, you dramatically reduce the amount of time, fuel and, ultimately, money, needed to make the journey. That is exactly sparse attention does, it only factors in data that it thinks is important given the task at hand, as opposed to other models thus far which have crunched all data in the model.

“So basically, you cut out things that you think are not important,” said Ekaterina Almasque, the cofounder and managing partner of new venture capital fund BlankPage Capital.

Sparse attention is a boon for efficiency and the ability to scale AI given fewer resources are needed, but one concern is that it could lead to a drop in how reliable models are due to the lack of oversight in how and why it discounts information.

“The reality is, they [sparse attention models] have lost a lot of nuances,” said Almasque, who was an early supporter of Dataiku and Darktrace, and an investor in Graphcore. “And then the real question is, did they have the right mechanism to exclude not important data, or is there a mechanism excluding really important data, and then the outcome will be much less relevant?”

This could be particularly problematic for AI safety and inclusivity, the investor noted, adding that it may not be “the optimal one or the safest” AI model to use compared with competitors or traditional architectures.

DeepSeek, however, says the experimental model works on par with its V3.1-Terminus. Despite speculation of a bubble forming, AI remains at the centre of geopolitical competition with the U.S. and China vying for the winning spot. Yakefu noted that DeepSeek’s models work “right out of the box” with Chinese-made AI chips, such as Ascend and Cambricon, meaning they can run locally on domestic hardware without any extra setup.

DeepSeek also shared the actual programming code and tools needed to use the experimental model, she said. “This means other people can learn from it and build their own improvements.”

But for Almasque, the very nature of this means the tech may not be defensible. “The approach is not super new,” she said, noting the industry has been “talking about sparse models since 2015″ and that DeepSeek is not able to patent its technology due to being open source. DeepSeek’s competitive edge, therefore, must lie in how it decides what information to include, she added.

The company itself acknowledges V3.2-Exp is an “intermediate step toward our next-generation architecture,” per the Hugging Face post.

As Patience pointed out, “this is DeepSeek’s value prop all over: efficiency is becoming as important as raw power.”

“DeepSeek is playing the long game to keep the community invested in their progress,” Yakefu added. “People will always go for what is cheap, reliable, and effective.”

Source: cnbc

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Damon

Commodity

Economic

Source: TradingView.com

Gold (XAUUSD) remains in focus after setting a fresh record high Tuesday, as the precious metal is on track for its seventh consecutive week of gains.

Recent buying in the commodity has been fueled by a softer U.S. dollar ahead of an expected interest rate cut by the Federal Reserve next month and mounting concerns over a possible government shutdown. A weaker dollar lifts demand for dollar-priced bullion from foreign buyers, while safe-haven demand has increased amid the risk of a shutdown starting Wednesday and unresolved geopolitical tensions in the Middle East and Europe.

The price of gold has soared 45% since the start of the year and 10% over the past month, far outpacing the gains of major stock indexes. Spot gold was up slightly at around $3,850 an ounce in recent trading.

Below, we analyze the technicals on gold’s weekly chart and identify key price levels to watch out for amid the precious metal’s bull run.

Golden Run Continues

After breaking out from a four-month consolidation period in early September, the price of gold has continued to trend strongly higher in recent weeks.

While the relative strength index confirms the bullish momentum, the indicator also nears a stretched reading that has preceded several pauses in the precious mental’s uptrend over the past 18 months.

Let’s apply technical analysis to forecast where the commodity’s bullish price move may be headed next and also point out support levels worth watching during future pullbacks.

Bullish Price Target

To forecast where gold’s uptrend may be headed in coming weeks bulls remain in control of the price action, investors can use bars pattern analysis, a technique that studies prior trends to project future directional movements.

When applying the analysis, we take the precious metal’s strong trending move from early January to late April and overlay it from the start of the current uptrend. This forecasts a target of around $4,365, implying about 13% upside from Tuesday’s trading levels.

We selected the earlier move because it started with eight consecutive green weekly bars, closely mimicking gold’s latest advance, which is on track to record its seventh consecutive higher weekly close.

Key Support Levels Worth Watching

The first support level to watch sits around $3,450. Retracements to this area would likely attract buying interest near the upper range of the recent four-month consolidation period.

Bulls’ failure to defend this key level could see the commodity’s price retreat to $3,120. This location on the chart may provide support near the May low, which currently sits just above the upward sloping 50-week moving average.

Finally, a more-significant decline opens the door for a retest of lower support around $2,790. Investors could look for longer-term buy-and-hold opportunities in this area near last year’s notable October peak.

Source: Yahoo Finance

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FXOpen

Economic

Forex

Stocks

Cryptocurrency

A Doji candle is a technical analysis tool reflecting the uncertainties in the market. Although it provides strong signals, it should be used with other patterns or technical indicators. Why do traders look for Dojis when trading stocks, commodities, and currencies?

What Is a Doji Candle?

A Doji is a pattern that consists of a single candle. It looks very different from other candlesticks. Therefore, traders of any level of experience can determine it on a price chart. The Doji has a tiny body comprising equal or almost equal open and close prices and long shadows. What does a Doji candlestick mean? A short body informs traders about the indecision of buyers and sellers as none of them can drive the market. Long shadows reflect a market uncertainty. The longer the shadows, the more significant the market uncertainties.

How Can You Spot a Doji Candle?

The most common types of Doji candles are standard, long-legged, Dragonfly, Gravestone, and four-price.

● The Standard Doji is characterised by a small or non-existent body and wicks of various lengths. When found at the end of a prevailing trend, it can indicate a possible trend reversal, signalling a shift in market sentiment. However, in a consolidating or sideways market, the Standard Doji may suggest continued uncertainty, implying that the market could remain range-bound without a clear direction.

● The Long-Legged Doji comprises a short body and very long wicks, reflecting significant market doubts. At the end of a trend, a Long-Legged Doji candlestick may suggest a trend reversal. Appearing in a consolidating market, this setup may mean a flat market will prevail.

● The Dragonfly Doji has a short body and a long lower shadow, while an upper shadow is either small or absent. It tells traders that sellers failed to pull the price down. Therefore, its reversal signal is stronger at the end of a downtrend.

● The Gravestone Doji also has a small body, but its upper wick is long, while the lower wick is short or absent. Typically a reversal Doji candlestick informs traders that buyers couldn’t push the price up. Therefore, if the Gravestone Doji candle occurs at the end of an uptrend, the probability of a reversal is higher.

● The Four-Price Doji isn’t a common formation. It consists of a horizontal line that indicates that open, close, high, and low prices are equal or almost equal. Usually, the pattern appears in illiquid markets.

How to Distinguish Between a Spinning Top and a Doji

Traders may confuse Dojis with Spinning Tops as they look very similar. The theory suggests that Doji’s open and close prices are equal or nearly equal. Therefore, a Doji has a tiny body, so the difference between open and close rates is barely noticeable. A Spinning Top has a small body but the difference between the open and close rates is visible.

Confirmation Tools

Traders may be caught in a trap if they rely solely on a Doji candle, meaning they need to combine Dojis with other technical tools to get reliable signals. These are some basic rules traders apply when reading a Doji candlestick pattern’s signals:

Trend strength. The first thing traders consider is the trend. Doji candles can appear before the continuation and reversal of a trend. If the market rises for an extended period, a newly formed Doji may be a sign of bull exhaustion. Conversely, appearing in a prolonged downtrend, it may signal an upcoming trend reversal. If the candle is visible in a newly formed trend, the trend will likely continue.

Additional indicators. If you find a Doji setup, it may be helpful to look for additional signals of other patterns or technical indicators. To confirm reversals, traders usually implement oscillators such as MACD, Stochastic, and RSI, which reflect overbought/oversold conditions, and indicators such as Average Directional Index that reflect the trend strength. Support and resistance levels can also be helpful when identifying trend reversals. The lack of a reversal confirmation may be a sign of a sideways movement or a trend continuation.

Most Reliable Timeframes for Doji Candlestick Patterns

Doji candles can be observed across various timeframes, but their reliability increases in higher timeframes, such as the 4-hour, daily, or weekly charts. In these periods, Doji patterns hold more significance due to the larger sample of market data they encompass, reducing the noise found in shorter timeframes like the 1-minute or 5-minute charts.

Traders tend to use Dojis on these higher timeframes to capture key market reversals or trend continuations with more confidence. In contrast, Dojis on lower timeframes can be less dependable because they often form due to temporary price fluctuations and minor market indecision.

Broad Market Context

Understanding the broader market context is key when interpreting Doji candles. A Doji by itself provides limited insight, but when viewed within the larger market environment, its signals can become more meaningful.

Market Sentiment

The broader market sentiment can impact how Doji candles are interpreted. In a strong bull market, a bearish Doji candle may signal a temporary pause rather than a full reversal, especially if there is no significant change in overall sentiment. Similarly, in a bearish environment, a bullish Doji may suggest indecision but not necessarily a complete trend shift. Observing market news, events, or fundamental data can provide additional clues about the market’s direction.

Economic Indicators

Major economic reports, interest rate decisions, and geopolitical developments can influence the formation of Doji candles. For instance, during the release of critical economic data, Doji patterns may appear as traders hesitate to commit to a direction until the news is fully digested. Traders often avoid making decisions based on Dojis during such high-volatility periods, preferring to wait for the market to settle before drawing conclusions.

Trend Phase

A Doji’s reliability also depends on the phase of the trend. In a well-established trend, Dojis can serve as a signal of market exhaustion, suggesting a possible reversal or slowdown. However, during periods of consolidation or ranging markets, Dojis might simply indicate ongoing indecision, reflecting sideways price action without any imminent breakout.

How Traders Use Doji Candles

Dojis can be found in different market conditions and their signals will vary significantly.

End of a Trend

A Doji can appear in up- and downtrends.

On the chart above, the EUR/USD pair formed a spinning top and two forex Doji candlesticks, a Gravestone and a Dragonfly at the end of a downtrend (1). At that time, the RSI indicator was in the oversold area, and the pair was near the lower band of the Bollinger Bands indicator. After, the market turned around.

However, if you have noticed, there was another Dragonfly Doji several candles ahead (2). Then, the RSI indicator was also in the oversold area, and the price was near the lower band of the Bollinger Bands indicator. You could wait for the RSI to leave the oversold zone to avoid a losing buy trade.

Sideways Market

The previous example can be used to explain another standard theory that a more significant number of Dojis results in a more reliable signal. However, while the last example confirms the theory, another refutes it.

On the chart above, there are three Dojis — long-legged and two Gravestones (1), formed after a downtrend. However, their appearance didn’t lead to a trend reversal — it was a medium-term consolidation ending with a continuation of a downtrend. The consolidation was confirmed by the lack of signals from common trend reversal indicators — the MACD and the RSI.

Common Mistakes

While Doji candle patterns can be useful in trading, there are several common mistakes traders make when interpreting them. Here are some pitfalls to avoid:

● Over-reliance on Doji candles alone: There isn’t enough information to gather from a single Doji candle, meaning it’s difficult to make accurate trading decisions using them in isolation. Traders who rely solely on Dojis without considering other technical indicators or market conditions may enter trades prematurely or miss important signals.

● Ignoring the broader trend: Dojis appearing in the middle of a strong trend don’t always signal reversals. Traders often mistake the formation as a sign of change, when it could simply be a temporary pause before the trend resumes.

● Misinterpreting timeframes: Lower timeframes, such as 1-minute or 5-minute charts, can produce Dojis frequently, which can be misleading. They’re often a result of minor market noise, rather than significant indecision or trend shifts.

● Failing to wait for a confirmation: Entering a trade right after a Doji forms can lead to losses, especially if there is no confirmation from other indicators, such as volume, RSI, or moving averages. Waiting for confirmation may potentially prevent false signals.

● Overtrading Doji patterns: Traders may try to act on every pattern they see, leading to overtrading. Not every Doji is worth acting on, especially in consolidating markets.

Final Thoughts

A Doji isn't a common instrument to determine market direction. Still, it may be used as a barometer of the market sentiment that may lead to particular price movements. The theory suggests that traders do comprehensive analysis and combine Dojis with other technical tools before they enter or exit the market.

FAQ

What Does a Doji Candle Indicate?

A Doji candle signals market indecision, as the opening and closing prices are nearly identical. It often represents a balance between buyers and sellers, leading to a potential reversal or continuation depending on the broader market context and trend.

Is a Doji Candle Bullish or Bearish?

A Doji candle is neither inherently bullish nor bearish. Its interpretation depends on its position within a trend. In an uptrend, it may suggest a bearish reversal, while in a downtrend, it could signal a bullish reversal. In either scenario, it may also signal a period of market indecision.

What Does a Doji Mean in a Downtrend?

In a downtrend, a Doji often signals that the sellers are losing strength, hinting at a potential bullish reversal. However, confirmation through other technical indicators is often sought before acting on this signal.

Source: FXOpen

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Adam

Central Bank

Economic

Policymakers signalled a need for continued caution, pointing to lingering inflation pressures and a labour market that remains tight. The Australian dollar reacted positively, with AUD/USD climbing 0.35% on the day. Since the start of the week, the pair has gained just over 0.80%.

Daily AUD/USD Chart

The RBA Notes that the Slowdown in Inflation Is Losing Momentum

Australia’s inflation story is becoming more complicated, with the Reserve Bank of Australia (RBA) cautioning that the pace of disinflation is beginning to stall. After two years of steady progress in bringing price growth down from its 2022 peak, recent data suggest that the road back to price stability may be bumpier than expected.

Headline inflation and the trimmed mean measure both sat within the RBA’s 2–3% target range during the June quarter. On paper, that marks a significant achievement: consumer price inflation rose just 2.1% over the year to June 2025. Key categories such as Housing (+1.2%), Food and non-alcoholic beverages (+1.0%), and Health (+1.5%) were the main drivers of quarterly increases.

However, the RBA has flagged concerns that the downward momentum is weakening. The monthly CPI indicator climbed 3.0% in the 12 months to August, up from earlier readings, with Housing (+4.5%), Food (+3.0%), and Alcohol and tobacco (+6.0%) leading the gains. Rising electricity costs in particular are putting renewed pressure on households and risk pushing inflation back to the top of the band.

Core inflation, which strips out volatile items, remains broadly consistent with the RBA’s objectives. Yet policymakers warn that partial and volatile data for the September quarter point to inflation running hotter than what was forecast in the August Statement on Monetary Policy. That raises the possibility that the central bank’s victory against price pressures is not yet secured.

The stakes are high: the release of third-quarter CPI data on October 29 will be pivotal. If the data confirm that inflation has re-accelerated, the RBA may be forced to hold off on another interest rate cut at its November meeting—or even reconsider the extent of its easing path. For now, uncertainty dominates the outlook, with the central bank caught between evidence of cooling price growth and fresh signs that inflation’s slowdown is losing steam.

What Are Big Banks Expecting from the RBA Now?

The Reserve Bank of Australia’s decision to hold the cash rate at 3.6% has intensified debate about whether the central bank’s easing cycle is nearing its conclusion. While markets had been pricing in additional cuts this year, the latest signals from policymakers—and from major banks—suggest that the scope for further reductions may be limited.

NAB has struck one of the more cautious tones, arguing that the next phase of monetary policy will depend heavily on incoming data. “Looking ahead, spending and labour market data—alongside the full quarterly CPI release—will be highly consequential for the policy outlook,” NAB economists said. For now, the bank expects the RBA to remain on hold until May 2026, when it projects a final 25 basis point cut. This implies a prolonged pause, hinting that the current cash rate may already be close to its floor.

ANZ takes a slightly more dovish view, still leaving room for a November cut. However, the bank has reiterated that its April forecast of a 3.35% terminal cash rate remains intact. “Our confidence that this represents the end point for this cycle remains higher than our conviction on the exact timing,” ANZ analysts noted. Importantly, they highlighted that absent an economic “shock,” the RBA’s post-meeting statement suggests the central bank is indeed close to wrapping up its easing campaign.

HSBC, meanwhile, has emphasised the balance the economy currently enjoys. For the first time in a decade, inflation is sitting comfortably within the RBA’s 2–3% target band, unemployment is steady at levels consistent with full employment, and growth is on an upswing. From HSBC’s perspective, this “sweet spot” provides little urgency for further cuts, reinforcing the idea that policy is already sufficiently accommodative.

Retailers have a different view on a rate cut, seeing it as a lifeline for the holiday season. Both the Australian Retailers Association (ARA) and the National Retail Association (NRA) argue that another rate cut before Christmas would stimulate the discretionary spending that many businesses desperately need to make up for a slow year. For many, the holiday period is when they earn as much as two-thirds of their annual profits.

They warn that the decision to keep rates steady could dampen demand at a time when businesses are already under pressure from rising rents, wage growth, surging energy and insurance costs, persistent supply chain challenges, and even a spike in retail crime.

Taken together, the views of Australia’s biggest banks and industry groups point to a common conclusion: while a near-term cut cannot be ruled out, the easing cycle is clearly approaching its limits. The RBA may prefer to wait for further clarity on inflation and the labour market before acting again, signalling that the end of rate reductions—at least for now—may be in sight.

Source: fxempire

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Warren Takunda

Economic

U.S. jobs openings were essentially unchanged million last month amid economic uncertainty arising from President Donald Trump’s trade policies and an impending government shutdown.

The Labor Department reported Tuesday that job openings blipped up to 7.23 million from 7.21 million in July. Economists had forecast a drop to 7.1 million.

The Job Openings and Labor Turnover Survey (JOLTS) showed that layoffs fell month. But so did the number of people quitting their jobs — which is a sign of confidence in their prospects.

Job openings remain at healthy levels but have fallen steadily since peaking at a record 12.1 million in March 2022 as the U.S. economy roared back from COVID-19 lockdowns.

The U.S. job market has lost momentum this year, partly because of the lingering effects of 11 interest rate hikes by the inflation fighters at the Federal Reserve in 2022 and 2023 and partly because Trump’s trade wars have created uncertainty that is paralyzing managers trying to make hiring decisions.

Labor Department revisions earlier this month showed that the economy created 911,000 fewer jobs than originally reported in the year that ended in March. That meant that employers added an average of fewer than 71,000 new jobs a month over that period, not the 147,000 first reported. Since March, job creation has slowed even more — to an average 53,000 a month.

On Friday, the Labor Department is expected release numbers on September hiring and unemployment — though the report could be postponed if a budget impasse in Congress leads to a government shutdown Wednesday.

If the report comes out, it is expected to show that employers added 50,000 jobs in September, unimpressive but up from a meager 22,000 in August, according to a survey of economists by the data firm FactSet. The unemployment rate is expected to stay at a low 4.3%.

At their last meeting two weeks ago, Fed policymakers cut their benchmark interest rates for the first time this year to support the sputtering job market.They also signaled that expect two more rate cuts this year.

Source: AP

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