The Fed is set to reduce the policy rate by 25 bps in next week’s FOMC meeting. Throughout the year, the Fed has been in ‘wait-and-see’ mode, awaiting hard data on the impact of tariffs, to see which side of the mandate requires more urgent attention. In recent months the Fed has felt increasing pressure from the Trump administration and markets (who may be pricing in that political pressure) to support the labour market and start easing. The labour market seemed to be gradually cooling, but the two non-farm payroll releases since the last FOMC meeting changed the story. Weak monthly job gains, and a substantial negative revision to the months before now show a picture of an almost stalling labour market. This makes a 25 bps cut next week essentially inevitable. While we do not think a ‘recalibration’ of 25 bps towards neutral will materially affect the outlook, we do think a forward-looking Fed should rather keep rates on hold.

China Macro: Fixed investment growth weakest since 2020. Other macro data also point to a slowdown in growth momentum. All this adds to policymakers’ sense of urgency to add stimulus to safeguard growth.

These are the Key Macro Events for the upcoming week.