Goldman Sees US Investors Flocking To Japan As Nikkei Surges

Economic

Summary:

US investors are increasingly buying Japanese stocks focused on tech and artificial intelligence, lured by the country's outsized returns compared with US stocks, according to Goldman Sachs Group Inc.

"The increase in US flows is now moving at the fastest pace we've seen since Abenomics," said Bruce Kirk, the bank's chief Japan equity strategist. US investor active participation in Japanese equities is at the highest level since October 2022, Kirk said, adding that he gets frequent requests for meetings.

The inflow of US funds reflects the strong performance of Japanese equities in dollar terms this year. They have been helped by a 2.5% gain in the yen and renewed optimism driven by the pro-stimulus policies of prime minister Sanae Takaichi. The benchmark Nikkei 225 index has climbed about 30% in dollar terms this year, far outpacing the S&P 500 index's 14% gain.

Rising participation from US funds could mark a turning point for Japan's equity market, signaling a potential shift in drivers to growth-oriented shares from value stocks. Driven by pro-investor initiatives from the Tokyo Stock Exchange and the government, value stocks have outperformed growth stocks for four consecutive years since 2021.

"It's very significant that you've got more US participation coming and they tend to gravitate toward tech and AI-related themes," Kirk said in an interview on Nov. 6.

Kirk sees further upside in foreign fund inflows as global investors' net positions in Japanese equities remain light compared to the peak of Abenomics, leaving room for further buying. Global investors' continued diversification needs will likely sustain that trend, he said.

Foreign investors bought a net 384 billion yen ($2.5 billion) of Japanese equities in cash and futures in the last two weeks of October, according to data released by Japan Exchange Group.

Even so, given that the Nikkei entered overbought territory in late October, Kirk said he would not be surprised to see the market consolidate.

Source: Bloomberg

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Offshore Yuan Lending Grows Fourfold Amid Strategic Currency Push

Over the past five years, offshore yuan lending, deposits, and bond investments by Chinese banks have quadrupled to over 3.4 trillion yuan ($480 billion), marking a significant shift in China’s financial diplomacy. The State Administration of Foreign Exchange (SAFE) reports that yuan-based fixed income assets abroad have surged to $484 billion as of mid-2025 up from just $110 billion in 2020.

This expansion reflects a clear and deliberate policy goal: to strengthen the yuan’s role in global finance and reduce exposure to US dollar-centric systems. The People's Bank of China and policymakers in Beijing are pushing the yuan as a trade finance currency amid rising geopolitical frictions and sanctions, such as recent EU measures targeting Chinese banks allegedly aiding Russia’s military supply chain.

Yuan's Rise in Trade Finance: From Niche to Global Player

According to SWIFT, the yuan's share in global trade finance has soared fourfold in just three years, reaching 7.6% in September second only to the US dollar. This shift is largely driven by Beijing’s effort to provide alternatives to dollar-based transactions, especially for developing economies vulnerable to Western financial pressures.

BIS data also confirms this structural shift. Between 2021 and March 2025, RMB-denominated loans to developing countries grew by $373 billion, displacing dollar and euro-based credit. Countries like Kenya, Ethiopia, and Angola have begun refinancing older dollar debts in yuan, attracted by China's lower interest rates. Kazakhstan’s Development Bank, for instance, issued 2 billion yuan in bonds at a modest 3.3% yield, a move mirrored by Slovenia and Indonesia.

This trend demonstrates a causal shift in sovereign financing preferences: nations are responding to both lower funding costs and geopolitical alignment incentives, favoring yuan-linked instruments over traditional dollar channels.

CIPS and De-Dollarization: Building the Infrastructure for Financial Independence

Central to this currency strategy is CIPS the Cross-Border Interbank Payment System which serves as China’s alternative to SWIFT. While the yuan’s global payment share on SWIFT has dipped, CIPS volume has exploded, now handling over 40 trillion yuan per quarter. This divergence suggests a migration of payment flows from Western infrastructures to Beijing-controlled platforms.

Bert Hoffman from the National University of Singapore explains that Chinese officials view a dollar-centric payment system as inherently unstable, preferring a multi-currency settlement model anchored in Chinese infrastructure. This strategy is aimed at reducing systemic vulnerability and shielding China from future financial coercion.

The growth of CIPS, combined with an expanding network of currency swap lines and clearing banks, reflects Beijing’s determination to build a parallel financial ecosystem one that is more autonomous and politically insulated.

Constraints on Yuan’s Global Reserve Role Remain

Despite these advancements, the yuan’s status as a global reserve currency remains limited. IMF data shows the yuan accounts for only 2.1% of official global reserves as of early 2025. This stagnation is largely due to China’s persistent capital controls, which restrict free conversion and dampen investor confidence.

There is a clear tension between China’s desire for greater international use of the yuan and its reluctance to liberalize financial flows. As long as the People’s Bank of China maintains tight control over capital movement, the yuan will struggle to rival the dollar or euro as a store of value even if its use in trade and credit expands.

Yuan Internationalization Gains Momentum But Faces Structural Limits

China’s global yuan push marks a bold evolution in its financial policy, reflecting both ambition and strategic necessity. Offshore lending, rising trade settlement in yuan, and the growth of CIPS illustrate meaningful progress in reshaping the international currency landscape. Yet structural obstacles especially capital controls and limited transparency continue to constrain the yuan’s rise as a true reserve currency.

The surge in yuan-based finance reveals a long-term trajectory toward de-dollarization and financial bifurcation. As geopolitical fragmentation deepens, the yuan is positioned to play a larger role in emerging markets, but whether it can achieve parity with the dollar remains uncertain. Much will depend on China’s willingness to align financial openness with its global ambitions.

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Unexpected Decline Signals Mounting External Pressures

China’s export sector, long regarded as a cornerstone of its economic resilience, showed signs of stress in October 2025. According to customs data released on November 7, exports contracted by 1.1% year-over-year, missing economists’ forecasts of a 3% gain. This marks the first year-on-year decline since March 2024 and comes as a surprise given earlier expectations of a rebound.

The downturn in exports is primarily attributed to a sharp 25.17% drop in shipments to the United States, a consequence of heightened tariff threats from President Donald Trump in response to Beijing’s restrictions on rare earth exports. Although exports to the EU and ASEAN countries grew slightly (0.9% and 8.9% respectively), these gains were insufficient to offset the drag from US-bound shipments.

The data suggest a causal link between protectionist measures and weakened export momentum, with analysts estimating that tariffs have reduced China’s annual export growth by approximately 2 percentage points translating into a 0.3% GDP impact.

Trade Truce Eases Immediate Risk But Uncertainty Persists

Tensions reached a boiling point in early October when Trump threatened to impose a 100% tariff on Chinese imports. However, markets breathed a sigh of relief after a one-year trade truce was negotiated during a bilateral summit in South Korea between Trump and Chinese President Xi Jinping. The agreement included mutual tariff reductions, eased export controls on strategic minerals and technologies, and China’s renewed pledge to purchase more US soybeans and help combat fentanyl trafficking.

As a result, the average US tariff on Chinese exports has dropped to 31%, according to estimates from Macquarie Group. Economists like Woei Chen Ho of UOB note that the short-term export outlook for China has stabilized due to the truce, although long-term supply chain decoupling remains inevitable.

The pattern here is clear: while temporary political accords can provide short-term relief, structural shifts in global trade flows continue to undermine China’s traditional export dominance.

Industrial Weakness and Domestic Headwinds Weigh on Imports

Although China posted a 1% increase in imports, the figure fell short of the 3.2% consensus estimate. Persistently weak domestic consumption dragged down by a stagnant property sector and lackluster job growth has constrained demand for foreign goods.

Additionally, manufacturing activity has now declined for seven consecutive months. This ongoing contraction reflects not just cyclical weakness but a broader struggle with overcapacity, falling prices, and intensifying global competition. In response, Beijing has moved to tighten control over industrial output in a bid to mitigate inefficiencies.

Shifting Focus Toward Domestic Demand and Emerging Markets

Despite near-term setbacks, longer-term forecasts suggest some optimism. Oxford Economics has upgraded its 2026 and 2027 GDP growth projections for China to 4.5% and 4.4%, respectively. This revision is supported by China’s increased focus on industrial upgrading under its five-year development plan and a concerted push to diversify export markets toward emerging economies and regional partners.

However, economists caution that if exports fail to recover meaningfully, policymakers may be forced to lean more heavily on domestic consumption. Larry Hu of Macquarie argues that China will eventually need to shift its growth model inward between 2026 and 2030, placing households at the center of its economic engine.

This reflects a potential causal pivot in economic strategy: from export-led growth toward consumption-driven expansion, should external demand continue to falter.

China’s Trade Model Faces Renewed Strains

October’s export decline represents more than just a statistical anomaly it signals a possible turning point for China’s externally driven growth model. While a temporary truce with the US has eased pressure, structural challenges such as shifting global supply chains, decoupling trends, and weak domestic demand remain significant.

Moving forward, China must navigate an increasingly complex economic environment where resilience will depend on balancing industrial efficiency, export market diversification, and robust domestic consumption. Whether policymakers can manage this transition smoothly may define the trajectory of the Chinese economy through the rest of the decade.

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Russia-Ukraine Conflict

A Fiscal Crossroads for Europe

The European Union is at a pivotal juncture in deciding how to sustain its long-term financial support for Ukraine. In a confidential document reviewed by Financial Times, the European Commission has warned that without the use of Russia’s frozen central bank assets estimated at around $300 billion globally, with about $200 billion held at Euroclear in Belgium the EU may be forced to rely on direct grants or collective borrowing to bridge Ukraine’s 2026 budget shortfall. This, the Commission stresses, would substantially strain national budgets and increase public debt burdens across the bloc.

The underlying causal link is clear: absent the use of these frozen Russian reserves, the financial responsibility to maintain Ukraine’s fiscal stability will fall squarely on EU taxpayers either through collective loans or direct national contributions.

Economic Consequences of Inaction

The proposed “compensation loan” plan, valued at €140 billion ($160 billion), has yet to gain consensus among EU capitals. Without progress, the EU risks bearing substantial annual interest payments, estimated at €5.6 billion. More critically, large-scale joint borrowing could drive up the EU’s collective borrowing costs and potentially erode the strength of existing financial mechanisms such as the Recovery and Resilience Facility.

The stakes are not limited to the EU’s fiscal framework. Ukraine’s 2026 budget projects $114 billion in expenditures against just $68 billion in revenue meaning nearly all civilian expenditures, including salaries, pensions, healthcare, and education, would rely on foreign aid. Failure to close this gap could compromise Ukraine’s government functions and social stability.

Belgium’s Resistance and Legal Complexity

Belgium continues to oppose the use of frozen Russian assets as collateral, citing both reputational and legal risks. As the custodian of the majority of the funds held at Euroclear Belgium argues that these assets are technically not confiscated and could be reclaimed by Russia if sanctions are lifted or expire.

To circumvent these limitations, the EU has expanded its legal framework, declaring the interest earned on frozen Russian assets as “windfall profits” not legally belonging to Russia. These funds have already been earmarked for military aid to Ukraine. However, using the principal for collateralized loans introduces significantly higher risks and would set a legal precedent with far-reaching implications.

The assumption underpinning the current proposal is that Russia would eventually repay the EU for these funds as part of a postwar settlement an outcome Belgian Prime Minister Bart De Wever has labeled “highly unlikely.” The EU’s inability to persuade Belgium, even during meetings on November 6, reflects the depth of intra-bloc disagreement on the matter.

Russian Retaliation Threatens Escalation

Russia has declared that any attempt to use its frozen assets particularly the principal amount would be considered theft. In response, Moscow has signaled its willingness to seize up to €200 billion worth of Western assets currently held within Russia, including state and corporate property. This threat introduces a tit-for-tat risk that could destabilize corporate holdings and financial relations between Europe and Russia, further complicating the West’s economic engagement strategy.

This raises not only a financial correlation but a direct geopolitical risk: any EU move to unlock Russian assets could provoke retaliatory actions that reverberate through global financial systems, especially those involving foreign direct investment and bilateral trade.

A Strategic, Legal, and Fiscal Dilemma

The EU’s debate over the use of Russian frozen assets encapsulates a broader conflict between immediate fiscal necessity and long-term legal precedent. On one side lies a pragmatic path to funding Ukraine without increasing national debts; on the other, a legal and reputational minefield that could escalate tensions with Moscow and create vulnerabilities within the EU’s own financial architecture.

While the Commission’s proposal underscores a shift in urgency, the lack of consensus, particularly from Belgium, means that time is running out for a unified European response. Without decisive action, the burden of Ukraine’s reconstruction may either fall back on European taxpayers or risk collapsing under geopolitical and legal gridlock.

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Initial Euphoria Followed by USD Weakness

Donald Trump’s return to the White House triggered a sharp reaction in global markets. In the immediate aftermath of the November 5, 2024 election, the US dollar surged as investors anticipated a pro-growth agenda backed by aggressive fiscal spending. However, this optimism faded, and the dollar has since declined by 4%, reflecting growing unease over unpredictable trade policies, increased deficit projections, and the global search for alternative stores of value.

The currency’s performance underscores a causal relationship between political leadership, macroeconomic expectations, and investor confidence. Trump’s tariff-heavy rhetoric and fiscal expansionism initially boosted sentiment, but longer-term sustainability concerns have eroded the greenback’s appeal.

Bitcoin Surges on Crypto-Friendly Policy

One clear beneficiary of the new administration has been Bitcoin. With Trump embracing pro-crypto stances and regulatory easing, the digital currency reached a record high of $125,835 in October 2025. This dramatic rally is both a function of policy support and broader investor flight from traditional assets amid volatility.

Cryptocurrencies have thus emerged as both hedge and speculative instruments, drawing in capital amid concerns over inflation, debt, and geopolitical disruption. The Trump administration’s open alignment with crypto markets created a direct and favorable policy-to-price feedback loop.

Gold Hits Historic Highs on Inflation and Uncertainty

Gold prices have rallied to unprecedented levels, driven by expectations of Fed rate cuts, intensifying geopolitical tensions, and central bank accumulation. The metal soared past multiple milestones in 2025, culminating in a peak of $4,381/oz on October 20.

This price action reflects a correlation between perceived macroeconomic fragility and demand for safe-haven assets. While US policy contributed to rising volatility, global trade and security risks further fueled demand for tangible stores of wealth. Investment flows into gold ETFs and sovereign holdings have confirmed this trend.

Equities Rally on AI and Rate Cut Expectations

Despite volatility in currency and bond markets, equities have rallied strongly, led by technology and defense sectors. The S&P 500 is up 17% since Trump’s election, while the Nasdaq has soared over 50% since April 2025 when Trump announced sweeping new tariffs.

This bullish trend is partially attributed to AI-driven optimism and easing rate expectations, but also to Trump’s defense spending push, which lifted European military stocks. In Asia, major indices in Japan, Korea, and China also recorded substantial gains, suggesting that global equities are pricing in adaptation to a Trump-led policy regime rather than rejecting it outright.

Nonetheless, the market remains sensitive to policy headlines. The MSCI World Index fell 10% after the April 2 tariff announcement but later recovered to a new high, showing that while tariffs may trigger short-term corrections, investor focus remains fixated on broader growth and rate narratives.

Bond Yields Rise Amid Fiscal Concerns

Global bond markets have responded to Trump’s expansive fiscal policies with higher yields. In the US, 30-year Treasury yields rose modestly up 14 basis points to 4.66% as the Federal Reserve cut rates and inflation appeared contained. However, fiscal pressures remain intense. The “One Big Beautiful” tax package passed in July is projected to add $3.8 trillion to the deficit over a decade.

In other major economies, the response has been more pronounced. Japan’s 30-year government bond yield surged by 85 basis points, while French and German long bonds climbed 62 and 59 basis points, respectively. These increases reflect growing investor skepticism about the long-term sustainability of debt-fueled stimulus worldwide.

Tesla’s Wild Ride Amid Trump-Musk Dynamics

Tesla’s stock performance offers a vivid case study in how politics can intersect with corporate fortunes. Initially, the company benefited enormously from Elon Musk’s close ties with Trump. Musk not only endorsed Trump but actively joined his campaign and was rewarded with significant visibility and influence, including a public event at the White House.

Tesla’s stock nearly doubled within two months of the election, reaching $488.5. However, Musk’s political activism especially the creation of the so-called Department of Government Efficiency (DOGE) sparked backlash, eroding brand loyalty and hurting sales. The stock hit a bottom in April 2025 amid tensions with Trump but rebounded after reports that Musk would exit the DOGE role.

Tesla’s recovery stock now trades at $430 shows how corporate valuation is sensitive not just to market conditions or earnings, but also to public perception and political entanglement. The correlation between political controversy and brand damage became a tangible drag on Tesla’s short-term fundamentals.

Policy Volatility Defines Trump’s Second Term

Since Trump’s reelection, global markets have seen sharp fluctuations driven by a combination of aggressive fiscal expansion, unpredictable trade policies, and regulatory shocks. While equities, gold, and crypto have surged on speculative and structural themes, currency and bond markets have displayed signs of strain.

These movements reflect a broader truth: Trump 2.0’s impact on global markets is not linear but layered producing gains in some areas while introducing fragility elsewhere. Investors now face a world where politics shapes fundamentals more than ever, and where the search for resilience may prove more important than the chase for returns.

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From Strategic Ambiguity to Timed Commitment

For years, the European Union has used the promise of enlargement as a diplomatic instrument maintaining influence over neighboring countries and preventing them from aligning too closely with rival powers. However, this approach was marked by strategic vagueness, offering “perspective” without a clear timeline. The last accession occurred in 2013 with Croatia. Since then, the EU’s stance remained noncommittal despite crises such as Brexit and the Russo-Ukrainian conflict.

The European Commission’s latest enlargement progress report marks a turning point. It not only emphasizes the urgency of expansion but also defines a concrete timeframe: the next wave of enlargement is set to occur by 2030. The two leading candidates are Montenegro and Albania, while Turkey and Serbia are viewed with greater skepticism due to limited reform progress.

This move signifies a critical adjustment in EU strategic thinking from passive conditionality to active integration. The underlying causal logic is clear: enlargement is now seen as essential for securing the Union’s future geopolitical and socio-economic stability.

Enlargement as a Defensive and Offensive Strategy

The renewed urgency stems not just from external pressures but from the EU’s reassessment of internal vulnerabilities. The war in Ukraine, increasing geopolitical polarization, and global power shifts have forced the EU to acknowledge that a fractured continent only benefits external actors namely Russia, China, and to a lesser extent, the United States.

By integrating more nations, the EU aims to prevent fragmentation and reinforce its collective capacity to respond to security threats, economic stagnation, and political extremism. Enlargement is now a dual-purpose strategy: it is both a mechanism of cohesion and a platform for projecting European influence globally.

Rather than viewing accession as a privilege granted to outsiders, the EU now perceives it as a mutual necessity. This shift reflects a causal reversal enlargement is not merely a reward for reform but a strategic imperative to ensure continental resilience.

Reinforcing Stability Through Continental Integration

The EU’s renewed commitment also highlights a deeper realization: full European integration is necessary to address chronic instability within member states and in candidate countries. By encouraging reforms in governance, rule of law, and public administration, the EU believes that it can help stabilize the broader region, reduce susceptibility to authoritarian influence, and create a more durable framework for development.

This proactive orientation marks a departure from reactive enlargement practices of the past. The EU now views integration not just as a diplomatic tool, but as a structural solution to a fragmented continent. The belief is that “more members means more strength” not dilution.

Post-Ukraine War Vision and the Battle for Relevance

At a time when the war in Ukraine persists with no clear resolution, the EU’s enlargement strategy is also a bid to shape the post-war European order. The EU seeks to reaffirm its central role in deciding Europe’s future not as a peripheral player, but as the primary architect of peace, recovery, and political alignment.

Setting a 2030 enlargement goal positions the EU as forward-looking, acknowledging the need to adapt to shifting global dynamics. Enlargement is thus framed as a necessary evolution rather than a concession part of the bloc’s adaptation to a rapidly changing international landscape.

Challenges Ahead: Unity Versus Complexity

While the new approach signals bold ambition, it is not without risk. Enlargement will inevitably bring new complexities: institutional strain, political disagreements, and uneven economic development across an expanded union. Admitting countries still undergoing systemic reform will test the EU’s capacity to enforce cohesion and uphold core democratic principles.

Nonetheless, the EU appears willing to accept these trade-offs. It recognizes that delaying further could weaken its influence and embolden rival powers. As such, enlargement is both a bet on the future and a test of the EU’s own flexibility and unity.

Enlargement as Evolution and Necessity

The European Union’s new commitment to enlargement by 2030 reflects a fundamental change in mindset. No longer a distant prospect, integration is now framed as a strategic necessity in an unstable world. It is a recognition that in order to protect its values, security, and influence, the EU must expand not reluctantly, but decisively.

If managed effectively, this shift could rejuvenate the European project and fortify its global standing. However, as history has shown, enlargement is not a panacea. The challenge lies in transforming ambition into action without undermining the very cohesion it seeks to secure.

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Consumer Sentiment Hits a New Low

The preliminary November survey by the University of Michigan revealed a stark drop in US consumer confidence, down 3.3 points to 50.3 just marginally above the record low of June 2022. This decline spans all age, income, and political groups, marking a broad deterioration in public sentiment. The leading causes include persistently high living costs and the prolonged government shutdown, which has disrupted the release of key economic data and raised concerns about national governance.

Joanne Hsu, the survey director, emphasized that consumers feel “pressured from all sides,” pointing to both everyday expenses and a softening labor market outlook. The erosion of household confidence is more than a psychological reaction; it reflects real anxieties about future financial stability, suggesting a causal relationship between political dysfunction and economic pessimism.

Labor Market Signals Raise Alarm

Even though medium- to long-term inflation expectations have eased slightly, short-term inflation and rising unemployment fears are weighing on consumers. Over 71% of survey respondents expect the jobless rate to rise in the coming year twice the rate seen a year ago.

Federal Reserve Bank of New York data supports this shift in sentiment: the probability of job loss within 12 months has surged to 43%, the highest since April 2025. Simultaneously, the perceived ability to find new employment has declined. This is compounded by ADP Research Institute’s report that only 42,000 private-sector jobs were added in October marking the slowest gain in four months.

This constellation of data illustrates a significant correlation between labor market uncertainty and the decline in consumer sentiment. Although hiring hasn’t collapsed, the “low churn” job market characterized by minimal hiring and firing has created an environment of stagnation that amplifies public unease.

Government Shutdown Disrupts Economic Clarity

Entering its sixth week, the federal government shutdown has not only paralyzed administrative operations but also obstructed the Bureau of Labor Statistics from releasing critical reports, including October’s job data and the Consumer Price Index (CPI). While the Fed had access to core inflation data for its October rate cut, the absence of labor indicators has created a critical information gap.

This lack of clarity hinders policy accuracy. Bloomberg Economics noted that without official BLS figures, the labor market outlook becomes “opaque,” forcing the Fed to rely on private data which presents mixed signals. For instance, unemployment claims remain stable, while ADP and Challenger data reflect weakening hiring trends.

The Congressional Budget Office warned that if the 650,000 furloughed federal workers are classified as unemployed, the national jobless rate could rise by 0.4 percentage points. This introduces significant volatility into labor statistics, complicating the Fed’s ability to assess the real strength of the economy.

Diverging Views Within the Fed

The Federal Reserve remains divided on the direction of monetary policy. One faction is growing concerned about the rising risk of recession and employment weakness, while another believes inflationary pressures remain too persistent to justify further rate cuts. Chairman Jerome Powell has already hinted that another rate reduction in December "will not be easy."

Despite internal divisions, markets continue to expect another rate cut. Interest rate futures suggest a probability exceeding 50% that the Fed will reduce rates again in December. However, analysts stress that this expectation is conditional on the shutdown ending soon and the subsequent release of clean, comprehensive economic data.

Michael Reid of RBC Capital Markets warned that “data quality will be under scrutiny,” and this uncertainty is likely to fuel further debate among Fed members. Without clarity on employment and inflation trajectories, policymaking risks becoming speculative rather than data-driven.

Spending Still Holding Steady for Now

While consumer sentiment has weakened significantly, actual consumer spending has not contracted sharply. Thomas Ryan of Capital Economics argues that the historical link between sentiment and spending has softened in recent years. He projects that Q4 consumption will still grow, albeit at a slower pace, thanks to easing inflation and slightly improved access to consumer credit.

Indeed, the New York Fed reported that fewer households are experiencing difficulty securing loans the lowest level since 2022. This subtle loosening in the credit environment is a positive signal amidst broader uncertainty, suggesting that the economy still retains some resilience despite high policy rates (currently between 4.75% and 5%).

Data Fog Clouds Fed’s Next Move

As consumer confidence plummets and labor market fragility grows, the Fed faces mounting pressure to support economic stability. However, the current data blackout driven by the government shutdown has made it harder to assess the timing and magnitude of the economy’s slowdown. While markets anticipate another rate cut in December, the Fed’s decision will hinge on whether incoming data after the shutdown provides a clear enough signal to justify further easing.

Ultimately, the US economy sits at a crossroads: sentiment is weakening, job security is fading, and official data is lacking. If the political impasse persists, the risk of policy missteps grows potentially exacerbating a downturn that may already be in motion.

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