Xi Hosts Macron in Rare Chengdu Visit as China Signals Strategic Focus on France

Economic

Summary:

Chinese President Xi Jinping’s decision to personally accompany French President Emmanuel Macron to Chengdu highlights China's deepening diplomatic focus on France...

Strategic Hospitality in Chengdu Signals France’s Elevated Role

In a rare diplomatic gesture, President Xi Jinping joined French President Emmanuel Macron on a trip outside Beijing to Chengdu, capital of Sichuan province. This level of personal engagement, rarely extended to foreign leaders, underscores China’s strategic pivot toward France as its key interlocutor in Europe. France’s economic size and diplomatic autonomy, particularly its nuanced stance in transatlantic affairs, may be why Beijing is elevating Macron’s role in its European outreach.

The two leaders, accompanied by their spouses, visited the Dujiangyan irrigation system a UNESCO World Heritage Site with symbolic significance, representing China’s ancient ingenuity in water management. The inclusion of this site in the itinerary serves both cultural diplomacy and soft power objectives.

Macron Begins Day Jogging, Ends with Subtle Diplomacy

Macron’s visit began on an informal note, with footage of him jogging in Chengdu’s Jincheng Lake Park circulating widely on Chinese social media. This added a personable dimension to the visit, contrasting with the highly choreographed formal meetings that usually define state visits in China.

Later, in a formal meeting in Beijing, the two nations signed 12 cooperation agreements. These span areas like population aging, nuclear energy development, and panda conservation topics that reflect shared long-term interests but did not involve any major economic transactions or figures. Notably absent was a highly anticipated $50+ billion order for 500 Airbus jets, long discussed between China and France.

Airbus Order Withheld Amid U.S.–China Trade Dynamics

While Macron is accompanied by top executives from leading French corporations, including Airbus, China appears to be withholding a major aircraft order to retain leverage in parallel trade negotiations with the United States. Beijing is currently under pressure from Washington to purchase more Boeing aircraft as part of ongoing trade diplomacy.

Approving a large Airbus deal now would risk further straining U.S.–China economic relations. By delaying the decision, China retains bargaining power, using aircraft purchases as a strategic economic lever between the two Western powers.

Xi’s Chengdu meeting with Macron reflects a dual-track strategy: signaling openness and cultural warmth toward Europe while carefully calibrating economic moves to maintain leverage in broader geopolitical contests, particularly with the U.S. Macron’s visit his fourth to China reaffirms France’s role as a preferred dialogue partner, but also highlights the limited room for major deliverables when great power rivalry constrains global trade diplomacy.

Source: Reuters

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Economic

Commodity

Market Overview

Silver markets rebounded strongly on Friday, recovering from a previous session's 2% drop to trade near $57.68 an ounce. This resurgence is largely driven by significant inflows into silver-backed exchange-traded funds (ETFs), indicating sustained investor appetite despite technical signs that the metal may be nearing overbought levels. The 14-day Relative Strength Index (RSI) is nearing the 70 mark, typically viewed as a threshold for potential correction, but demand continues to defy such indicators.

Total inflows into silver ETFs over the past four days have already exceeded any full week's net additions since July 2025, highlighting strong investor conviction. This comes despite concerns that silver’s 100% price rally year-to-date may be overstretched. However, these ETF inflows show no signs of slowing, suggesting market participants are positioning for further gains, potentially fueled by monetary policy shifts.

Structural Supply Crunch and Industrial Demand

Beyond speculative flows, silver is increasingly supported by fundamental constraints. A historic short squeeze in the London bullion market earlier this quarter triggered an aggressive price spike, and though conditions have eased there, new bottlenecks are emerging. China, a major consumer of silver for both electronics and solar panels, is seeing inventories near decade lows, reinforcing concerns of structural scarcity.

According to Vantage Markets analyst Hebe Chen, the current rally “signals [silver is] no longer gold’s quiet sidecar.” Instead, silver is gaining prominence due to its dual role in industrial production and as a hedge against macroeconomic uncertainty.

Rate Cut Expectations Remain a Key Driver

Expectations that the Federal Reserve will lower interest rates next week continue to underpin silver’s strength. Lower borrowing costs tend to favor non-yielding assets like silver and gold. Despite Thursday’s strong US jobless claims data – the lowest in over three years – market pricing still reflects a near-certainty of a rate cut, suggesting that Fed policy is now focused on countering slowing inflation rather than overheating labor markets.

While silver takes the spotlight, gold also edged higher by 0.2% to $4,215.91 per ounce, buoyed by the weaker dollar (Bloomberg Dollar Spot Index down 0.1%). Platinum and palladium followed suit with modest gains, as overall sentiment across the precious metals complex remains upbeat ahead of next week’s key Fed announcement.

Outlook and Strategy

Silver’s short-term trajectory appears bullish as strong ETF inflows and structural constraints continue to overshadow technical warnings. Investors should watch for signs of cooling momentum if RSI breaches 70. However, with Chinese inventories tightening and industrial demand rising, any pullback may be temporary. If the Fed confirms a dovish pivot, silver could push decisively above $58, with $60 as the next psychological resistance level.

Risk remains tied to unexpectedly hawkish Fed commentary or a rebound in dollar strength, but barring such surprises, silver’s upside potential remains supported by both macro trends and supply-side realities.

Source: Bloomberg

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Daniel Carter

Political

Indian Prime Minister Narendra Modi and Russian President Vladimir Putin held a bilateral meeting in New Delhi, as the two leaders look to deepen economic cooperation in the face of pressure from US President Donald Trump.

The meeting on Friday comes a day after Putin's arrival in India — his first to the country since Russia's full-scale invasion of Ukraine — and is expected to showcase the longstanding partnership between the two nations that dates back to the Cold War. Those ties have centered on defense, but Modi and Putin want to broaden cooperation to include deeper trade, migration and economic links.

During the two-day visit, India and Russia are expected to finalize a mobility agreement that would allow Indian professionals to relocate to Russia, a first for the two countries.

Also expected is an agreement on the shipment to Russia of Indian marine products and agricultural goods, exports of which have been hit following Trump's 50% tariffs on Indian goods, which took effect Aug. 1.

Putin is expected to showcase oil and defense ties as well, with officials working to finalize a deal for India to lease a $2 billion submarine from Russia, Bloomberg News reported.

India's share of Russian imports is now less than 2%. New Delhi and Moscow intend to increase trade to $100 billion by the end of the decade.

The US doubled tariffs on Indian goods to 50% to punish New Delhi for buying Russian oil and has pressed India to purchase more American weapons. Despite that pressure, Modi's government remains in trade talks with the Trump administration, with a negotiating team from Washington expected in India next week.

The broadening of ties comes despite heavy criticism from both the US and the European Union, with the meeting underscoring India's eagerness to keep links with traditional partners warm and look for alternate markets to offset US tariffs.

From direct purchases of military weapons, India and Russia are increasingly moving to joint development and production of weapons, collectively designing and manufacturing missiles and guns.

Source: Bloomberg Europe

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Economic

Stocks

Asian Equities Drift Amid Global Uncertainty and Data-Driven Caution

Asian markets ended the week on a mixed note, reflecting broader global investor caution ahead of key inflation data in the U.S. and high-level economic meetings in China. While U.S. equity indices hovered near all-time highs, risk appetite in Asia was restrained by soft economic prints from Japan and uncertainty over the Federal Reserve’s policy path.

Japan’s Nikkei 225 reversed previous gains, falling 1.2% to 50,408.70 after government data revealed a sharper-than-expected 3.0% year-on-year drop in household spending for October the steepest since January 2024. The contraction signals weakening consumer sentiment, which weighed heavily on technology shares. Advantest Corp. lost 2.3% while Tokyo Electron slipped 2.8%, reflecting broader pessimism in Japan’s tech sector.

The underlying cause appears linked to a combination of stagnant wage growth and elevated living costs, both of which have constrained domestic demand despite moderate GDP growth. Weak consumption remains a structural drag on Japan’s recovery, reinforcing the case for careful coordination between fiscal and monetary policy.

Diverging Market Performance Across the Region

In China, the Hang Seng Index dipped 0.1% to 25,921.69, while the Shanghai Composite rose modestly by 0.1% to 3,877.83. Traders remained subdued ahead of key macro data releases next week, including inflation, trade balances, and producer prices. Market participants are also awaiting policy cues from upcoming Communist Party economic meetings, as Beijing crafts its post-COVID growth strategy.

Meanwhile, South Korea’s Kospi gained 1.1% to 4,074.00, led by sharp rebounds in blue chips like LG Electronics (+5.6%) and Hyundai Motors (+7.2%). The rally was largely sentiment-driven, with analysts pointing to improved forward earnings projections and easing export bottlenecks as possible catalysts. This localized rebound, however, remains decoupled from broader regional caution and illustrates the country’s tech-heavy resilience amid global supply chain normalization.

Australia’s S&P/ASX200 edged up less than 0.1% to 8,623.40, mirroring the general lack of directional conviction. Taiwan’s Taiex was also virtually unchanged, highlighting overall hesitation across developed Asia-Pacific markets.

India’s Rate Cut Adds to Mixed Signals in the Region

India’s Sensex added a modest 0.1% following the Reserve Bank of India’s (RBI) decision to cut its benchmark repo rate to 5.25%. The rate cut delivered despite stronger-than-expected GDP growth signaled a forward-looking stance to cushion potential future slowdowns, particularly in trade-sensitive sectors affected by U.S. tariffs.

While the move supports domestic credit conditions, it also reinforces market concerns about weakening demand fundamentals in Asia’s third-largest economy. The RBI's liquidity injection into the banking system suggests an effort to stimulate lending and offset the subdued export environment.

Wall Street Inches Up as Inflation Data Looms

In the U.S., the S&P 500 rose slightly by 0.1% to 6,857.12 just 0.5% below its all-time high while the Nasdaq gained 0.2% and the Dow Jones slipped by 0.1%. Market sentiment remains buoyed by expectations of another Fed rate cut next week, which would be the third in 2025.

However, better-than-expected labor market data such as a drop in jobless claims to a three-year low and a sharp decline in announced layoffs dented the certainty of rate cuts. While strong job numbers are positive for households, they signal to the Fed that the labor market may not need immediate support, potentially delaying the easing cycle.

This dynamic reflects a classic policy trade-off: easing rates would support equities and borrowing, but could also stoke inflation, which remains above the Fed’s 2% target.

Commodities and Currency Markets Show Limited Movement

In commodities, U.S. crude futures eased slightly by 17 cents to $59.50 per barrel, while Brent crude edged down 11 cents to $63.15. Oil prices remain subdued amid concerns over global oversupply and mixed geopolitical developments, including uncertainty over the Ukraine ceasefire and OPEC’s output policy.

On the currency front, the dollar weakened slightly against the Japanese yen, trading at 154.77, down from 155.12. The euro inched up to $1.1657. These movements were minor but reflect broader positioning ahead of major central bank decisions and inflation readings in both the U.S. and Europe.

Regional Markets Wait for Clear Signals

Asian financial markets are in a holding pattern, reflecting a blend of cautious optimism and policy uncertainty. While Wall Street’s resilience offers a supportive backdrop, investors across Asia are largely focused on domestic data, upcoming inflation prints, and central bank guidance.

Whether the Fed moves forward with another rate cut and how China signals its 2026 growth priorities will likely set the tone for the next wave of asset reallocation across global markets. Until then, Asian equities may remain directionless, with isolated sectoral gains unable to mask broader investor hesitation.

Source: AP

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Economic

Forex

Rupee Retreats Post-Rate Decision as Growth-Inflation Trade-Off Resurfaces

India’s central bank delivered a 25 basis-point policy rate cut on Friday, as expected by a majority of economists, but the rupee reacted negatively, retreating from 89.78 to 89.92 against the dollar shortly after the announcement. This move reflects both the market's sensitivity to monetary easing and lingering concerns over India’s external sector vulnerabilities.

Despite stronger-than-expected GDP growth of 8.2% in the July–September quarter, which had tempered expectations of immediate easing for some analysts, the Reserve Bank of India (RBI) proceeded with the cut. The move aims to reinforce momentum in what Governor Sanjay Malhotra described as a "goldilocks economy" characterized by robust growth and subdued inflation but currency markets interpreted it as a dovish signal amid fragile trade dynamics.

External Pressures Weigh on Currency Performance

The rupee has depreciated roughly 5% year-to-date, making it the weakest-performing currency in Asia in 2025. This decline is causally linked to a combination of deteriorating trade balances, sluggish capital inflows, and mounting tariff barriers, particularly from the U.S.

The impact of these tariffs most notably the 50% duties imposed by the Trump administration on Indian exports has deepened India's current account concerns. With outbound shipments to the U.S. declining for consecutive months and overall export values falling, the trade deficit has widened, exacerbating pressure on the rupee.

The RBI's rate cut, while supportive of domestic credit and liquidity, risks further dampening foreign investor appetite for rupee-denominated assets, especially amid global yield competition and a still-strong U.S. dollar.

Liquidity Measures May Offer Domestic Support, Not FX Relief

In addition to the rate cut, the central bank also announced steps to improve banking sector liquidity. These include easing reserve norms and increasing liquidity windows to ensure adequate credit flow. While these measures may support economic activity and help banks expand lending, they are unlikely to stem the rupee’s decline unless accompanied by stronger capital inflows or export recovery.

The immediate market response wherein the rupee weakened despite an expected policy decision reflects concerns that macro-level interventions are not sufficiently addressing structural external imbalances. Investors remain cautious as the currency continues to test psychological resistance levels near the 90-per-dollar mark.

Policy Tailwinds for Growth, But Currency Risks Persist

India’s monetary easing reinforces its growth-supportive stance, especially amid favorable inflation data and solid GDP expansion. However, the rupee’s continued depreciation highlights unresolved external sector fragilities particularly the impact of U.S. trade policy and muted global demand.

As long as trade imbalances and capital flow challenges persist, the rupee will remain vulnerable, even in the context of a growing domestic economy. The RBI faces a delicate balancing act: supporting growth without undermining currency stability a challenge made more acute by global monetary tightening and trade protectionism.

Source: Reuters

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Economic

Finance-Governor Coordination Suggests Policy Alignment

Japanese Finance Minister Satsuki Katayama emphasized a constructive working relationship with BOJ Governor Kazuo Ueda, noting “very good” communication since assuming office in October. Speaking at a routine press conference on Friday, Katayama reiterated that the specifics of monetary operations remain under the purview of the central bank, but her tone suggested strong institutional alignment.

This message comes at a critical time: markets expect the BOJ to raise interest rates soon, and Katayama’s remarks signal that such a move would not face resistance from the fiscal authorities. The comment reflects more than diplomatic cordiality, it suggests a deliberate effort to reduce friction between monetary tightening and fiscal strategy, especially as Japan exits years of ultra-loose monetary policy.

Bond Yields Climb Amid Fiscal Stimulus and Rate Expectations

The 10-year Japanese government bond (JGB) yield climbed to 1.94% on Friday, the highest level since July 2007. This surge reflects investor concern over the dual pressures of rising interest rates and expansive fiscal policy under Prime Minister Sanae Takaichi’s stimulus agenda. The stimulus, which is expected to be financed primarily through new borrowing, has reignited fears over Japan’s already-heavy debt load.

The market’s response is not coincidental, it is causally linked to the perceived lack of synchronization between increased spending and looming monetary tightening. However, Katayama attempted to counter this narrative by underscoring the government’s commitment to fiscal responsibility. She affirmed that the recently announced supplementary budget was formulated “with sustainability in mind,” and that similar discipline will guide the FY2026 budget process.

Balancing Fiscal Ambition with Market Confidence

Katayama also acknowledged recent volatility in the bond market, stating that the government would closely monitor developments and maintain dialogue with market participants to safeguard confidence. Her comments reflect growing awareness that policy credibility is now under scrutiny, not just from domestic investors but also from global markets that track Japan’s fiscal-monetary dynamics closely.

The challenge lies in maintaining a delicate balance: the government must stimulate growth while avoiding destabilization of its bond market, especially as the BOJ signals an end to its yield curve control (YCC) framework and moves toward normalization.

Subtle Shift Toward Policy Coordination in Post-Yield Curve Control Era

As Japan approaches a likely interest rate hike, Katayama’s comments serve to pre-empt market volatility and reinforce a narrative of institutional coordination. The message is clear: while the BOJ remains independent, the Ministry of Finance is prepared to cooperate in navigating Japan’s transition out of ultra-loose policy.

With bond yields climbing and debt-funded stimulus in motion, the path ahead will test both monetary flexibility and fiscal restraint. The early signals from Katayama’s tenure suggest that policymakers are aware of these pressures and are actively working to present a unified front crucial for sustaining confidence in Japan’s policy credibility during a period of historic transition.

Source: Reuters

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Economic

Home Prices Slide as Structural Pressures Persist

China’s real estate sector remains mired in prolonged weakness, with average home prices expected to fall by 3.7% in 2025, according to a Reuters survey conducted between November 17 and December 3. This extends the market’s decline from previous years, reflecting enduring structural challenges. Forecasts for 2026 have been revised downward as well, with prices now expected to contract another 2.8% a sharper drop than the 0.5% previously projected. The market is now anticipated to stabilize only in 2027, and even then, prices are forecast to stay flat, rather than recover.

This continuous decline reflects a causal dynamic driven by deep-seated issues: overbuilt housing stock, weak consumer confidence, unfavorable demographics, and tight labor market conditions. The property market’s trajectory is no longer shaped by cyclical fluctuations alone but by structural dislocations that have yet to be meaningfully addressed by Beijing’s policy apparatus.

Policy Responses Remain Inadequate Amid Mounting Risks

Despite a series of modest policy efforts including mortgage rate cuts and regulatory easing Chinese authorities have so far refrained from launching large-scale stimulus to absorb excess housing inventory or rescue heavily indebted developers. Analysts, including Zichun Huang from Capital Economics, argue that while a significant government intervention could engineer a temporary rebound, there is little evidence to suggest policymakers are prepared to take such steps.

Instead, housing support continues to underwhelm, especially in the face of a deepening supply glut. Fitch Ratings’ Lulu Shi highlights that structural headwinds such as falling birth rates, job insecurity, and affordability constraints continue to weigh down demand, amplifying the downward pressure on prices. These factors collectively create a feedback loop, where price declines dampen sentiment, reducing buying activity and extending the cycle of market stagnation.

This reveals a causal pattern: without substantial fiscal support or demand-side recovery, housing prices are unlikely to find a floor. Supply-side excess alone is now sufficient to depress valuations, even as other economic indicators attempt to stabilize.

Investment and Sales Slump Reflects Broader Sectoral Weakness

Beyond price pressures, the Reuters poll also revealed that property investment is expected to decline by 15% in 2025, while sales may drop by 8% steeper than prior forecasts. These figures indicate that developers are not only facing financing constraints but also a loss of operational viability as unsold inventory mounts and buyer interest fades.

The downturn in investment is both a symptom and a cause of weaker market confidence. Developers scaling back projects to preserve cash flow are reinforcing the perception that the market lacks direction. Simultaneously, sales declines reflect both a drop in effective demand and a growing perception among consumers that waiting may yield better value, which perpetuates the slump.

This cycle of falling prices, reduced investment, and waning sales underscores the sector’s ongoing contraction. Without stronger macroeconomic stimulus or confidence-building reforms, these trends are likely to persist well into 2026.

Downside Risks: Mortgage Stress and Negative Equity

Looking ahead, the outlook could worsen if macroeconomic support fails to materialize. Fitch’s Shi warns that falling prices may push more homeowners into negative equity, potentially triggering a rise in mortgage delinquencies and wider financial instability. This scenario would pose risks not just to the real estate sector but to the banking system and broader consumer spending.

Such risks underscore the urgency of a coordinated policy approach that goes beyond piecemeal real estate measures. Structural reforms to labor markets, income distribution, and social safety nets may be necessary to rebuild the foundation for long-term housing demand.

Stabilization Unlikely Before 2027 Without Bolder Action

China’s housing market remains on a multi-year downward path, with no recovery in sight before 2027. The causes are deeply structural, and current policy responses have not proven sufficient to restore confidence or absorb oversupply. The decline in prices, investment, and sales reflects more than just post-COVID turbulence it signals a sector grappling with a long-term reset.

Unless Beijing shifts toward a more aggressive, coordinated stimulus strategy, the risk of continued price deflation, investment stagnation, and financial stress will remain elevated. For now, the sector’s trajectory continues to point downward, with stabilization still two years away and a full recovery dependent on broader economic transformation.