- US/India: Recent dovish remarks from senior Fed officials and weaker US economic data have renewed market expectations for a rate cut at the December FOMC meeting; meanwhile, India’s domestic reform broadens to labour market
- Japan: The Takaichi government unveiled its first stimulus package worth of JPY21.3tn; attention now turns to parliamentary approval of the supplementary budget and the upcoming 2026 general budget; the latest CPI and export figures continue to support the case for a BOJ rate hike within the next three months
- Singapore: Chances of MAS easing its SGD NEER policy band in Jan 2026 diminished after October inflation exceeded MAS target range; we maintain our Singapore real GDP growth forecasts at 4.0% for 2025 and 1.8% for 2026, following a sharp upward revision in 3Q25 GDP data and latest MTI forecast
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US/India: Dovish signals from Fed officials and soft data fuel December rate cut bets. Following dovish signals from senior Fed officials and weaker US data, markets are reinstating bets for a rate cut at the December FOMC meeting. Fed Governor Christopher Waller downplayed tariff-related inflation as a one-off, while San Francisco Fed President Mary Daly highlighted the sudden deterioration in the US labour market as a priority for policy action. Although Daly is not a 2025 voting member, her views matter. She is the Fed’s leading labour-market specialist and a close ally of Fed Chair Jerome Powell. Alongside New York Fed President John Williams, Daly’s willingness to contradict Powell’s earlier guidance – that a December cut was not a forgone conclusion – was notable.
Moreover, the US Conference Board reported a 6.8-point tumble in November’s consumer confidence index to a seven-month low of 88.7. Anxiety rose over prices and inflation, tariffs and trade, and politics surrounding the recent government shutdown. Over the next six months, households grew more pessimistic about future business conditions, income prospects, and job availability. The labour market differential – the share of consumers saying jobs are “plentiful” minus the share saying “hard to get” – fell to 9.7% in November after a slight increase in October, signalling a rise in the US unemployment rate. Concurrently, ADP reported that private companies shed an average of 13.5K jobs per week over the past four weeks, up significantly from 2.5K in the previous update. Regarding US retail sales, September growth printed weaker than expected at 0.2% m/m (vs c.0.4%). Consequently, the probability of a cut has risen above 80%, up from a low of 29.3% on 19 Nov.
Turning to India, the government consolidated 29 labour laws into four comprehensive labour codes. These changes are intended to formalise the labour market – improving compliance, simplifying the framework, and safeguarding workers’ rights and welfare. One notable change is the increase in the threshold for government approval for closures or retrenchment to 300 workers (vs 100 workers previously), which effectively incentivises companies to scale up and gain greater autonomy in labour-related decisions. A uniform statutory minimum wage will also be introduced in the coming months, alongside better protection for gig workers. These domestic reforms have accelerated in the face of heightened global uncertainty and limited relief on the US tariff front, complementing other efforts such as rationalising of the indirect tax mechanism, enforcing quality norms for the manufacturing sector, and providing incentives to boost presence in mid tech and high-tech sectors.
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