Ahead Today
G3: US FOMC Decision
Asia: China PPI, China CPI
Market Highlights
US yields increased and the Dollar strengthened modestly as US JOLTS jobs openings picked up and small business sentiment improved. Nonetheless details such as declining hiring rates and rising layoffs point to labour market softness. Meanwhile, Taiwan’s exports continued to defy gravity with strong electronics and AI demand. In particular, US jobs openings rose by 7658k in September, from 7227k the previous month, and with the jobs opening rates holding steady at 4.6%. We saw some modest deterioration in some of the other labour market indicators such as quit rates, which fell to 1.8% from 2.0% previously, and layoff rates, which rose to 1.2% from 1.1%. We find that quit rates have a very good leading relationship with wage growth, and if this historical correlation holds, could imply wage growth moderates further over the next 6-12 months. Meanwhile, the NFIB Small business index improved to 99.0 from 98.2 previously, with a pickup in hiring plans with a net 19% of owners planning to create new jobs in the next three months, while the proportion of owners raising average selling prices rising to 34%.
Net-net the macro picture has unlikely changed for the FOMC meeting to be held later today and we continue to see a hawkish 25bps cut and potential for somewhat divided decision given the lack of clarity on US macro numbers thus far. Markets will watch closely for Chair Powell’s comments together with the Summary of Economic Projections for hints on the Fed’s thinking on the path ahead, even as 2026 could also herald meaningful changes in personnel on the FOMC, chief of will include Chair Powell himself.
Meanwhile, the Asia export data for the month of November thus far has been quite good despite the imposition of tariffs, with continued strength seen in the likes of Vietnam and a pickup in South Korea’s exports. Taiwan just released its November exports and this rose a blistering 56%yoy from 50%yoy previously, and supported by very strong demand for electronics and AI chips in particular. Of course over here tariff exemptions on semiconductor by the US help, but more broadly there seems to be continued support on electronics underlying demand at least so far. Our best lead indicators of Asia’s exports including metal prices suggest that Asia’s exports should still be supported into 1H2026.
