How growth, inflation and monetary policy affect global markets.
The September trade deficit fell to 105 billion dollars, below expectations; Goldman Sachs raised its tracking estimate for fourth-quarter GDP growth at a quarter-on-quarter annualized rate to 1.9%. October ADP employment increased by 86 thousand, but the bank kept its nonfarm payroll forecast unchanged.
Morgan Stanley believes Democratic victories in both chambers of Congress and the Texas gubernatorial election will increase data center permitting risks in some regions, but will not interrupt the overall AI capital spending cycle; fiscal and debt ceiling negotiations will also become a market focus.
JPMorgan expects the Federal Reserve to raise rates again in December and maintains its call for a steeper U.S. Treasury curve. It remains overweight emerging-market currencies, but rate volatility and growth pressures are prompting the bank to narrow its selections. Meanwhile, economic growth in multiple countries is accompanied by falling oil demand.
Manufacturing and construction PMIs fell back into contraction, with both declines exceeding their averages for the same period over the past five years. Export-oriented companies and high-tech manufacturing remained resilient, but employment and property demand were weak.
Stronger-than-expected nominal growth led Morgan Stanley to lower its 2030 debt-ratio forecast for developed economies, but higher interest rates will gradually feed through as old debt matures, and fiscal consolidation remains key to stabilizing debt.
On 4 November, the SSE STAR 50 Index rose nearly 10%, while turnover on the Shanghai and Shenzhen exchanges increased by 334.3 billion yuan from the previous trading day. Among stocks on the trading disclosure lists with institutional net purchases exceeding ten million yuan, Quectel and Piotech ranked near the top, while institutions were net sellers of some strong semiconductor stocks over the same period.
BofA believes crowded long positions in AUD/NZD make the exchange-rate impact of the election asymmetric: a Labour-led government could push the rate up to 1.26, while a National Party government remaining in power could drive it down toward 1.21.
US CPI inflation rose to 3.7% year over year in September. Real wage growth continues to support spending, but lower-income households face greater pressure from energy costs. Bernstein expects consumers to remain focused on value for money, with varying effects on retail, restaurants and home improvement.
Guests invited to a Goldman Sachs discussion on China’s macroeconomy expect the 2027 growth target to be no significantly lower than 4.5%, with government investment potentially continuing to compensate for insufficient private demand. Meanwhile, public finances face sustained pressure, and export growth could slow from more than 20% in the first three quarters of 2026 to about 10%.
As of 2 November, prediction markets implied a probability above 70% of Democrats winning a Senate majority, up from about 60% two weeks earlier; the probability for the House exceeded 90%. Goldman Sachs believes the House outcome matters more for the policy outlook, but key Senate races remain within polling margins of error.
The average of Nomura’s four valuation measures shows the dollar is overvalued by 14.7% and Asian currencies are undervalued by 8.6% on average; meanwhile, emerging-market funds’ allocation to the Indian rupee has rebounded, and bond supply outlooks differ across Asian countries.
The central bank will raise the foreign currency deposit reserve requirement from 15 November. Nomura estimates the move could absorb 24 billion dollars of long-term onshore foreign currency liquidity and believes the policy is focused on slowing the pace of appreciation.
US real GDP grew at an annualized quarter-on-quarter rate of 3.4% in the third quarter, but investment growth was concentrated in AI, while consumption also relied on a decline in the saving rate. JPMorgan expects growth to slow in the fourth quarter and judges that the Federal Reserve will raise rates in December.
The RatingDog manufacturing PMI edged lower, while output reached its highest level since April; companies’ inventory building diverged from trends in employment and selling prices, and the deployment of fiscal funds is key to a broader investment recovery.
As of September 2026, manufacturing investment fell 2.1% year on year, while nominal industrial output grew 8.2%, widening the gap between their growth rates to negative 10.3 percentage points. Morgan Stanley believes slower capacity expansion and profit growth help reduce risks in the industrial and financial systems, although earnings trends vary across industries.
Asia’s average manufacturing PMI for 9–October was higher than in 7–August. Excluding China, new orders were near an eight-month high, and the export recovery spread from technology products to non-technology products; China’s domestic demand remained weak.
A modest rebound in Hong Kong’s Hong Kong dollar loan-to-deposit ratio, together with US rate pricing nearing a level Nomura considers reasonable, prompted the bank to reduce its position; it still believes the market overestimates the extent of Hong Kong liquidity tightening.
Nomura lowered its confidence in shorting the US dollar against the offshore renminbi from the highest level of 5 to level 4 and revised its year-end exchange-rate target from 6.50 to 6.55; it still expects the renminbi’s medium-term appreciation trend to continue if additional intervention is limited.
The October survey shows that US consumers’ net outlook for the economy remains negative, while expectations for household finances and short-term spending continue to improve; Morgan Stanley expects benefit cuts to weigh on consumption growth in 2027.
Taiwan’s GDP grew 14.4% year over year in the third quarter of 2026, driven jointly by investment, exports and consumption. Citi raised its growth forecasts and expects inflation and financing demand to prompt the central bank to raise rates starting in December.
