The week ahead will not be as busy for the US given that it is Thanksgiving, which means data will be packed in the first three days of the week.
There are still some high impact data releases from Asia and of course the highly anticipated UK budget, where Chancellor Rachel Reeves faces an unenviable task.
Asia Pacific Markets
China is set to release its industrial profit figures on Thursday, which will complete the economic data for the month. Profits have been improving recently, showing a 3.2% increase for the year so far, driven largely by very strong growth of over 20% in both August and September. Part of this jump is because last year’s numbers were low, and while that statistical advantage will fade in the fourth quarter, profits for October are still expected to look healthy.
The strongest industries this year have been those that sell goods abroad, specifically trains, ships, aerospace equipment, and electronics and this positive trend is likely to continue.
In Japan, inflation in Tokyo is expected to rise to 2.7% in November, fueled by higher worker wages and a weaker Yen, which pushes prices up. Factory output remains steady following a trade agreement with the US.
Although the economy shrank in the third quarter, recent signs of recovery support the Bank of Japan’s plan to return to standard economic policies. While fewer investors now expect interest rates to rise in December, based on innuendo and comments, it appears at least three central bank members support the move. I still lean toward a rate hike next month, though there is a growing chance it could be delayed until January.
Thanksgiving Week in the US as the UK Budget Comes Into Focus
Because of Thanksgiving, economic reports are coming out early this week, but they may be unreliable due to the government shutdown. Key jobs and inflation data have been delayed until after the Federal Reserve’s December meeting.
Since officials were already planning to keep interest rates steady, the lack of new data means they likely won’t cut rates unless the economy faces a sudden crisis. However, we still predict interest rates will eventually drop by 0.75% by the middle of 2026.
The main event to watch in the week ahead is the “Beige Book,” a general survey of the economy.
On Wednesday, the UK Chancellor faces a £30 billion gap in the budget. Markets are watching to see if she raises taxes to fix this, as her decision will affect future interest rates and government borrowing. Regardless of what happens, the country’s deficit is expected to shrink next year.