U.S. Shutdown Over but Economic Scars Remain, Fed December Cut Expectations Fade

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Summary:

Six-week U.S. government shutdown ends, with over $10 billion in permanent economic losses; UK government drops plan to increase income tax rates......

[Quick Facts]

1. Six-week U.S. government shutdown ends, with over $10 billion in permanent economic losses.

2. Interest rate derivatives show less than 50% chance of a Fed rate cut in December.

3. IEA raises global oil supply surplus forecast for the sixth consecutive month.

4. UK government drops plan to increase income tax rates.

5. The U.S. reaches Trade Deals with several countries, cutting tariffs on Latin American coffee and other products.

6. The Trump Administration plans to expand food tariff exemptions to ease inflation pressures.

7. Kashkari: December policy path still hinges on data.

8. Mussalem: Policy is nearing neutral, limited room for easing.

9. Hammack: Monetary policy must remain restrictive to curb inflation.

10. IEA raises global oil supply surplus forecast for the sixth consecutive month.

[News Details]

Six-week U.S. government shutdown ends, with over $10 billion in permanent economic losses

The six-week-long U.S. government shutdown officially ended late Wednesday local time. Although the political standoff has been temporarily resolved, its drag on the already challenged U.S. economy will persist, with full effects potentially taking months to materialize. According to estimates by the Congressional Budget Office (CBO), the shutdown is expected to reduce GDP growth in the fourth quarter of this year by approximately 1.5 percentage points—effectively halving the growth rate. While a rebound of around 2.2 percentage points may occur in the first quarter of next year after government operations resume, about $11 billion in economic activity is expected to be permanently lost. For comparison, the longest government shutdown in history, which lasted 35 days during 2018–2019 (affecting only some agencies), had a negligible impact of just 0.02% on GDP—far less severe than the current episode.

Interest rate derivatives show less than 50% chance of a Fed rate cut in December

Short-term U.S. interest rate derivative contracts indicate that markets now see less than a 50% chance of a 25-basis-point rate cut by the Federal Reserve in December. Contracts linked to the Fed's December 9–10 meeting, including federal funds futures and overnight indexed swaps (OIS), suggest the probability of a 25-basis-point reduction is slightly below 50%.

IEA raises global oil supply surplus forecast for the sixth consecutive month

As OPEC+ continues to restore supply and global demand growth remains weak, the International Energy Agency (IEA) has raised its forecast for the global oil supply surplus in 2026 for the sixth straight month. The report states that global oil supply will exceed demand by about 4 million barrels per day next year, a slight increase from last month's projection. The IEA noted that the global oil supply-demand status is becoming increasingly imbalanced, with the agency raising its surplus forecasts every month since June. Toril Bosoni, head of the IEA's Oil Industry and Markets Division, told Bloomberg TV, that the IEA sees global crude supply rising, while demand growth remains relatively modest.

UK government drops plan to increase income tax rates

According to the Financial Times, UK Prime Minister Keir Starmer and Chancellor of the Exchequer Rachel Reeves decided to abandon previously proposed plans to raise income tax rates in the budget. This marks a significant shift in the UK government's direction on tax policy.

The U.S. reaches Trade Deals with several countries, cutting tariffs on Latin American coffee and other products

Senior U.S. officials said on Thursday that trade agreements have been signed with several Latin American countries to reduce tariffs on certain imports, including coffee and fruits. In the current economic climate, coffee has become a symbol of affordability challenges for consumers evaluating the Trump administration's economic policies—much like eggs did during the Biden administration. Data shows that coffee prices saw the largest increase among all categories tracked by the Consumer Price Index (CPI) in September. Treasury Secretary Scott Bessent promised earlier this week that pressure on coffee prices would soon ease. The agreements cover countries such as Argentina, Ecuador, El Salvador, and Guatemala, with the U.S. offering tariff reductions on certain non-domestically produced goods, such as Ecuadorian coffee and bananas.

The Trump Administration plans to expand food tariff exemptions to ease inflation pressures

According to The New York Times, three insiders revealed that the Trump administration is planning to significantly broaden exemptions from food tariffs in an effort to address growing consumer anxiety over persistently high food prices. These exemptions would apply to certain imported goods subject to reciprocal tariffs imposed in April of this year, targeting products from countries without trade agreements with the U.S., with beef and citrus products likely to be included.

If approved, this move would mark the latest sign of a policy reversal on a key economic issue under Trump. The scope of exemptions may go beyond the limits set in the September executive order, which was restricted to non-U.S.-produced goods covered by trade agreements. It is reported that Commerce Secretary Howard Lutnick has been actively pushing for a series of food-related tariff exemptions due to high prices, whereas the September order mandated that he and U.S. Trade Representative Jamieson Lee Greer review tariff exemptions for over a thousand product categories, including agricultural goods.

Kashkari: December policy path still hinges on data

Minneapolis Fed President Neel Kashkari said in a speech on Thursday that, based on the fragmented evidence and data available, the underlying resilience of economic activity appears stronger than he had expected. Given the information at the time, the Fed should have opted to hold off on a rate cut in October, which was also the main reason for his dissent against the rate reduction last month.

Data since October suggests the overall economic situation has remained largely stable. As the December rate decision approaches, both arguments for a rate cut and for holding rates steady could be made, depending on how the data evolves.

Mussalem: Policy is nearing neutral, limited room for easing

St. Louis Fed President Alberto Mussalem said in a speech on Thursday that "Current policy is between neutral and restrictive" rather than moderately tight, and that there is limited room to ease policy further without risking excessive accommodation. Looking ahead, "additional rate cuts should be approached cautiously."

Inflation remains high at around 3%, significantly above the Fed's long-term target of 2%, so continued pressure on above-target inflation is necessary, while also supporting the labor market.

With the economy showing considerable resilience, policymakers must balance inflation control with employment stability. The labor market is expected to remain near full employment, possibly with slight moderation, while the fourth quarter may see some economic softness—but a rebound is anticipated in the first quarter of next year, reaching or exceeding potential output. With appropriate monetary policy, inflation is expected to begin declining in the second half of next year. He also noted that tariff-driven price pressures are expected to ease during the same period.

Hammack: Monetary policy must remain restrictive to curb inflation

Beth M. Hammack, President of the Cleveland Fed, said while there has been much discussion this year about the U.S. dollar and its weakening, much of this year's decline has simply brought the dollar closer to its theoretical fair value. This made it more aligned with other currencies.

Hammack proposed a restrictive policy path to maintain downward pressure on inflation. "This is a difficult time for monetary policy," given challenges to the Fed's inflation and job mandates, Hammack said in an appearance before the Pittsburgh Economic Club. "But when I look at both of those things, on balance, I think we need to remain somewhat restrictive to continue putting pressure to bring inflation down towards our target."

IEA raises global oil supply surplus forecast for the sixth consecutive month

[Today's Focus]

UTC+8 18:30 Speech by European Central Bank Executive Board Member Frank Elderson

UTC+8 22:20 Speech by Atlanta Fed President Raphael Bostic

UTC+8 23:00 Speech by ECB Chief Economist Philip Lane

UTC+8 23:05 Speech by Kansas City Fed President Jeffrey Schmid on economic outlook and monetary policy

TBD U.S. October Retail Sales MoM

TBD U.S. October PPI

Risk Warnings and Disclaimers

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Gerik

Economic

Premium spike exposes post-shutdown political risks

In the aftermath of a lengthy government shutdown, Republican lawmakers have succeeded in blocking the renewal of key tax credits under the Affordable Care Act (ACA), a decision expected to save billions in federal spending. However, this fiscal victory has triggered a sharp rise in health care premiums for ACA participants with 24 million Americans facing average increases of 114%, and some individuals seeing costs double or triple by early 2026.

This development has shifted the political narrative. Democrats, seizing the opportunity, are framing the GOP as responsible for rising living costs, undermining Donald Trump’s 2024 campaign promises to reduce everyday expenses for American households. Although Republicans have long criticized Obamacare as fiscally unsustainable, the immediate financial pain felt by millions could become a potent mobilizing force for Democratic voters.

From legislative maneuver to electoral liability

While the GOP's refusal to include ACA subsidy extensions in the shutdown resolution may appeal to budget-conscious constituents, the broader political consequences are becoming apparent. History suggests that attacking health care protections can backfire. In 2017, a similar Republican-led attempt to weaken the ACA contributed to the party’s loss of the House in 2018. Now, with the “big beautiful bill” reducing Medicaid and the expiration of ACA tax credits, a similar pattern may emerge, particularly as the midterms loom.

Senator Thom Tillis, who benefited from early anti-ACA sentiment in his 2014 win, is now sounding the alarm from within the party. Warning that the House is “absolutely in play,” Tillis argues that Republicans must act to mitigate the political damage by extending subsidies or reconsidering cuts to Medicaid.

This suggests a potentially causal relationship between GOP health policy decisions and voter backlash, as prior midterm trends and current polling reinforce expectations of electoral volatility.

Health care becomes the core campaign issue

Rising costs are dominating the political discourse. House Democratic Leader Hakeem Jeffries linked surging premiums with broader inflation, highlighting a narrative that paints Republican governance as economically detrimental to everyday Americans. With food, housing, and energy costs already elevated, health care sticker shock is likely to intensify voter discontent.

For Democrats, this offers a strategic advantage. They are now positioning themselves as the defenders of affordability and health access, framing the GOP’s resistance as both ideologically rigid and practically harmful. The premium surge is a particularly damaging development for Republican incumbents in competitive states and districts, where many voters rely on ACA coverage.

Fragmentation within the Republican response

While Senate Majority Leader John Thune has signaled willingness to revisit the subsidy issue in December, House Speaker Mike Johnson remains opposed, reflecting a wider GOP divide. Some Republicans favor health savings accounts or a broader restructuring of the ACA, including narrowing mandated benefits and restricting abortion coverage. However, these alternatives lack consensus and fail to address the immediate affordability crisis.

The absence of a unified, feasible replacement plan is increasingly problematic. Fifteen years after Obamacare’s enactment, the GOP still struggles to coalesce around a substitute. This long-standing failure, repeatedly criticized by Democrats like Representative Adelita Grijalva, undermines Republican credibility on the issue.

Battleground states and moderate voices signal concern

In politically sensitive states like Maine, Ohio, Florida, and Alaska, several Republican senators and representatives are confronting the real-world consequences of their party’s health policy. Senator Susan Collins has proposed a phased subsidy extension for wealthier recipients while continuing support for low- and middle-income enrollees. Other incumbents, including Jon Husted and Ashley Moody, face reelection challenges in areas with high ACA enrollment, where premium hikes could cost them votes.

Notably, some premiums in Alaska are rising as much as $4,000 a month, particularly affecting older adults not yet eligible for Medicare. These disproportionate impacts underscore the direct voter harm and further reinforce the electoral risk to Republicans.

While Republicans may have succeeded in trimming ACA-related expenditures, the backlash from soaring premiums is reshaping the political landscape. Voter sentiment appears to be tilting against the GOP, echoing prior episodes where aggressive attempts to dismantle health coverage resulted in electoral defeat. Without a credible alternative or immediate relief for those facing financial strain, the GOP risks ceding ground to Democrats in both chambers come 2026. The situation illustrates a pattern where fiscal decisions, while ideologically driven, produce tangible consequences that ripple through electoral dynamics.

Source: Bloomberg

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Gerik

Economic

Commodity

Gold rallies on uncertainty and delayed data flows

As the United States emerged from its longest-ever six-week government shutdown, gold surged toward its best weekly performance in a month. Trading near $4,190 per ounce, the metal has regained almost all of its prior losses and is on pace for a 5% weekly increase. This rise reflects a growing sense of market uncertainty, as the backlog of unreleased economic data is expected to cloud visibility on the true state of the US economy.

While the possibility of another Federal Reserve rate cut initially lifted gold’s prospects given that gold does not yield interest and becomes relatively more attractive in lower-rate environments momentum for a cut cooled midweek. Fed officials signaled a lack of urgency in reducing borrowing costs, weakening some of the earlier enthusiasm. However, the underlying question remains whether the flood of upcoming data will reflect sufficient economic softness to reignite dovish monetary policy expectations.

This reflects a correlation rather than a firm causation at this stage: the market is reacting not necessarily to confirmed economic weakness, but to uncertainty and the potential implications of unreleased figures. In other words, investor anxiety is amplifying gold’s safe-haven appeal, even before hard evidence emerges.

Central banks and fiscal risks drive long-term demand

Another significant support for bullion prices comes from central banks and long-term investors. Gold is up nearly 60% this year, on track for its strongest annual performance since 1979. Much of this surge is attributed to increased central bank buying, driven by a need for portfolio diversification and a reliable store of value amidst widespread fiscal stress. These purchases indicate a deeper, more structural confidence in gold beyond short-term market swings, suggesting a causative relationship between sovereign asset allocation trends and sustained price elevation.

Liquidity policies from the Federal Reserve are also supporting gold’s ascent. Roberto Perli, who oversees the System Open Market Account at the New York Fed, emphasized the importance of ensuring liquidity through asset purchases. Starting December 1, the Fed will halt the shrinking of its balance sheet—a move that injects liquidity into the system. While this is not an explicit stimulus, it signals accommodation, reinforcing gold’s bullish trajectory.

As of 9:03 a.m. Singapore time, gold rose 0.4% to $4,187 per ounce. The Bloomberg Dollar Spot Index held steady, and other precious metals such as silver, platinum, and palladium also posted gains. With investor sentiment teetering between data-driven caution and monetary policy speculation, gold remains at the center of the market's flight-to-safety strategies.

Whether upcoming economic reports will justify or dispel the current rally remains to be seen, but for now, gold is benefitting from a perfect storm of fiscal concerns, policy uncertainty, and strategic demand from central banks.

Source: Bloomberg

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ING

Forex

Commodity

Economic

Energy- IEA continues to see very well-supplied oil market

Oil prices moved higher yesterday, settling just shy of 0.5% higher, despite a bearish weekly Energy Information Administration (EIA) inventory report. Also, a monthly International Energy Agency (IEA) release again highlighted expectations for a sizable oil surplus in 2026.

The EIA's report showed that US crude oil inventories increased by 6.4m barrels over the last week, larger than expected and more than the 1.3m barrel increase the API reported the previous day. This leaves crude stocks at their highest level since June. Seasonally, they are at their lowest level since 2014. The increase was largely driven by weaker exports, which declined by 1.55m b/d week on week. For refined products, gasoline and distillate stocks fell by 945k barrels and 637k barrels, respectively. These inventory declines come despite refiners increasing utilisation rates by 3.4 percentage points, week on week, to 89.4%. Run rates are expected to increase as refinery maintenance concludes, while healthy refinery margins are likely to also support higher refinery run rates.

The IEA's monthly report continues to indicate a well-supplied market. The agency estimates that global oil supply will grow by 3.1m b/d and 2.5m b/d in 2025 and 2026, respectively. Meanwhile, demand growth is forecast to be more modest, with the IEA expecting it to increase by just 790k per day (b/d) in 2025 and a further 770k b/d in 2026. In terms of oil inventories, the IEA estimates that global observed stocks surged by 77.7m barrels in September, with a large increase in floating storage. Meanwhile, preliminary data shows that global stocks increased further in October, driven once again by floating storage.

While the ICE gasoil crack has fallen from its recent highs over the past couple of days, it remains at elevated levels, above $30/bbl. As we head deeper into the Northern hemisphere winter, refinery maintenance season, a number of unplanned refinery outages, Russian sanction uncertainty and low stocks have kept the middle distillate market well-supported. The latest inventory data from Enterprise Singapore shows that onshore middle distillate stocks in the nation fell by 119k barrels over the last week. In the Amsterdam-Rotterdam-Antwerp (ARA) region, gasoil stocks increased by 87kt WoW to 2.29mt, according to Insights Global.

Source: ING

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Samantha Luan

Forex

Economic

Key points:

· Thai prices hit lowest since October 2007

· Farmers to grow less rice due to persisting low prices- Thai trader

· New season crop starting to push local prices down- Indian dealer

· Bangladesh to import 50,000 tons parboiled rice through tender

The Asian rice export markets were subdued this week, with rates in Thailand at their lowest level in 18 years due to subdued demand and ample supply from the new season's crop, with fears emerging that the persistent low prices might lead farmers to grow less rice.

Thailand's 5% broken rice (RI-THBKN5-P1) was quoted at $335 per tonnes on Thursday, slightly down from $338 quoted last week, to its lowest since October 2007.

"Buyers have been purchasing only little amount due to news that India will be releasing more rice that is cheaper than Thai variety," a Bangkok-based trader said, adding that farmers are now going to grow less rice due to the persisting low prices.

The supply situation also offers little relief in Thailand with more rice entering the market as the rainy season winds down.

India's 5% broken parboiled variety (RI-INBKN5-P1) was quoted this week at $344-$350 per ton, unchanged from the last week, while its 5% broken white rice was priced at $350 to $360 per ton.

"Supplies from the new season's crop are starting to push local prices down, though the government's been buying up stocks pretty aggressively," said a New Delhi-based dealer with a trade house.

Vietnam's 5% broken rice (RI-VNBKN5-P1) was offered at $415-$430 per ton, unchanged from a week ago, according to the Vietnam Food Association.

Sales are very slow due to weak demand, despite offering lower prices, said a trader based in Ho Chi Minh City.

Vietnam's rice exports are forecast to be 8.8 million tons this year, state media on Thursday cited the association chairman Do Ha Nam as saying.

Meanwhile, Bangladesh has approved a proposal to import 50,000 metric tons of parboiled rice at $355.59 per tonne through a tender. The move aims to strengthen food security and ensure sufficient stock as the government struggles to control rising prices of rice.

Source: TradingView

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MarketPulse by OANDA Group

Cryptocurrency

Forex

Risk assets have been yo-yoing since mid-October, with fundamentals turning increasingly obscure amid the absence of US data, leaving investors hesitant to take on new risk.

Cryptocurrencies have also been flashing mixed signals following the early-October rallies in Bitcoin, Solana, and Ethereum.

Despite ongoing market cap outflows, the crypto space has made solid progress this year.Screenshot 2025-11-13 at 11.15.59 AM

Ethereum Drops Another 3% Below $3,500 – Time For Panic Or Opportunity?_1

Crypto Total Market Cap Weekly Chart, November 13, 2025 – Source: TradingView

Still, with prices now down roughly 32% from the $4,950 August peak, the hype in ETH has cooled substantially.

Yet, it's often when fewer people are watching that true opportunities emerge—though the question remains: is this a dip to buy or a reason to panic?

Overstretched tech valuations continue to weigh on markets, as reflected in today's weakness across stock indices, and crypto is facing similar pressure.

From an investment standpoint, the long term will reveal its truth—but for those without a crystal ball, a prudent approach is Dollar-Cost Averaging (DCA), which involves gradually building positions over time.

For traders, the focus should stay on support and resistance levels—spotting trends between them and reacting when those levels break.

Let's now look these levels through a multi-timeframe Ethereum analysis.

Ethereum Drops Another 3% Below $3,500 – Time For Panic Or Opportunity?_2

Daily overview of the Crypto Market, November 13, 2025 – Source: Finviz

Ethereum (ETH) Multi-timeframe technical analysis

Ethereum Drops Another 3% Below $3,500 – Time For Panic Or Opportunity?_3

Ethereum (ETH) Daily Chart, November 13, 2025 – Source: TradingView

Having broken its April 2025 explosive upward channel, the picture for ETH is tilting more bearish, as strong flows have brought the second-Crypto below its $3,500 momentum pivot.

Multiple attempts to break resistances have been met with consequent selloffs, leading to the formation of lower-highs.

A balancing rebound last Tuesday (Nov 4) marked a temporary bottom at $3,053 – the rest will be to see if the bottom holds in an eventual double bottom or if its breaks, but for now these prices are still 8% from here (But never underestimate Crypto volatility!).

4H Chart and levels

Ethereum Drops Another 3% Below $3,500 – Time For Panic Or Opportunity?_4

Ethereum (ETH) 4H Chart, November 13, 2025 – Source: TradingView

Levels of interest for ETH trading:

Support Levels:

· $2,100 June War support

· $2,500 to 2,700 June Consolidation

· Recent lows $3,053

· $3,500 (+/- $50) Main Current Pivot

Resistance Levels:

· $3,500 (+/- $50) Main Current Pivot

· $3,650 Descending channel highs

· $3,800 September lows

· $4,000 to Dec 2024 top Higher timeframe pivot zone

· $4,950 Current new All-time highs

1H Chart

Ethereum Drops Another 3% Below $3,500 – Time For Panic Or Opportunity?_5

Ethereum (ETH) 1H Chart, November 13, 2025 – Source: TradingView

ETH is oscillating in a shorter timeframe descending channel which serves as immediate momentum indicator:

Breaking below its support line ($3,300 to $3,330) points at more aggressive selling

Bouncing at the lows of the channel points to a short-term revisit of the $3,500 Pivot Zone.

Further upwards, a break above $3,700 (with preferably a session/weekly close), points to a more stable rebound that may serve for future rallies.

Source: MarketPulse by OANDA Group

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Justin

Forex

Political

Economic

In Australia, the week's dataflow kicked off with a bang as Westpac-MI Consumer Sentiment surged 12.8% in November to 103.8, the first reading above the optimist / pessimist divide since the economy reopened after the 'delta' outbreak. A calmer geopolitical backdrop following the de-escalation of US-China trade tensions and a more assured domestic recovery look to be behind the result.

While respondents showed some renewed concerns over inflation and the interest rate outlook, these negatives were offset. It is interesting to note that responses received after the RBA's November decision were positive, suggesting the Board's decision and communications were construed as measured rather than outright hawkish.

On balance, these factors led to a significant improvement in views on the economic outlook for one year (+16.6%) and five years (+15.3%). The 'time to buy a major household item' sub-index also jumped (+14.9%); together with less-restrained intentions for Christmas spending, this outcome suggests the foundation for the consumer recovery is firming. Positive wealth effects associated with the housing upswing are arguably also at play, as evinced by strong investor-led growth in home lending and Westpac-MI house price expectations moving to a new cycle high.

While consumers have grown more anxious on the jobs outlook, this week's labour force data confirmed that the labour market is only softening at a very gradual pace. Employment was firmer-than-expected in the month, rising +42.2k, keeping annual growth steady at 1.5% on a three-month average basis. The unemployment rate also fell from a 'thin' 4.5% in September to a 'fat' 4.3% in October (–0.1ppt from 4.45% to 4.34%). Looking through the noise, the steady-but-modest uptrend in the unemployment rate in place throughout 2025 remains intact. At its current level, the unemployment rate is broadly consistent with full employment – indicative of a labour market in good health but which poses little-to-no risk to inflation via wages.

The rebalancing of employment growth from the 'jobs-rich', public-funded care economy to the less 'jobs-intensive' market sector is a key driver of the softening employment trend. The latest NAB business survey suggests this transition remains in good stead, the business conditions index rising to its highest level since March 2024. Confidence is re-emerging but remains fragile. Given the weak starting point for investment, businesses might hold off on capacity expansion.

The main development offshore this week was US Congressional approval to end the government shutdown in place since the beginning of October. While a welcome development, another partial shutdown from the end of January is a distinct possibility, with only the Departments of Agriculture and Veteran's Affairs, the Food and Drug Administration, military construction projects and Congress funded through to end-September. There is no guarantee a vote on extending the Obamacare subsidies will pass over year end, and so debate is likely to remain highly politicised over funding the remainder of the Government from February.

In coming weeks, US statistical agencies will attempt to bring the dataflow back up to date, though the market has already been told some upcoming releases will be incomplete. FOMC members, by and large, continue to focus attention on inflation risks, viewing these as more significant and immediate than the labour market's ongoing deceleration. Arguably then, it will take a material deterioration in conditions for the Committee to ease again at the December meeting.