The US dollar continues to consolidate after last week’s gains amid greater confidence that the Federal Reserve will likely raise rates next month. Similarly, after a steep sell-off, major bond markets are recovering today, partly in the face of a push lower in stocks. The US markets gave back 1% yesterday, and global equities are lower.
Sino–Japanese relations have not yet escaped from their most difficult period since the normalisation of diplomatic relations. Historical and territorial issues mean that mutual perceptions between these two Asian powers are still in the doldrums. In the context of a shifting balance of power and disagreement over specific regional issues, some Sino–Japanese competition seems inevitable. However, how will this affect the region?
One-third of the IMF’s funding will evaporate over the next two years as bilateral loans negotiated in 2012 start to expire. This is a major problem. In a global economy fraught within downside risks, the global financial safety net — essentially the resources provided by the IMF and other institutions reserved for fighting crises and preventing contagion — is too small, too unresponsive and too fragmented.
The G20’s tenth summit in Antalya, Turkey on 15–16 November 2015 promises to be a significant success. It will promote more inclusive growth through support for youth employment, small and medium enterprises (SMEs) and women’s empowerment. It will increase investment to reach the G20 goal of raising its economic growth by at least 2 percent above the beginning baseline by 2018.
The sharp US dollar rally in response to the unequivocally strong jobs data left short-term technical indicators a bit over-extended and the consolidative tone now is not unexpected. The dollar’s pullback is minor, and it did manage to extend its gains against the yen. It has pushed a little through the JPY123.50 high set on August 21 just before the August 24 collapse to almost JPY116.00.
Indonesian President Joko Widodo (Jokowi) visited China twice in his first year of presidency alone. In contrast, he made his first state visit to the United States only in October 2015. However, although Sino–Indonesian relations are currently strengthening, economic, and geostrategic obstacles are likely to limit progress.
The combination of the unequivocally strong US jobs report and the contrasting unexpected decline in German factory orders and industrial production reported last week sets the broad investment framework for the period ahead.
The US dollar and yields surged as the divergence meme, increasingly doubted, returned with a vengeance. The 271k rise in nonfarm payrolls was most this year. The 2.5% year-over-year increase in average hourly earnings is the most in six years.
When members of the United Auto Workers (UAW) approved a new contract with Fiat Chrysler on October 22, they ended a contentious round of negotiations that exposed rank-and-file discontent over a two-tier wage system that one worker described as “at odds with union principles.”
In a rare move just a few weeks earlier, Fiat Chrysler’s 36,000 workers had rejected an agreement proposed by their leaders, protesting that it failed to close a pay gap that kept newer employees lagging behind the earnings of their more senior counterparts.
The US jobs data was considerably stronger than expected and leave no doubt about the December meeting being live despite the year-end considerations that some had seen tying the Fed’s hands. The dollar broke through key chart points near JPY122 and $1.08 for the euro.
Nonfarm payrolls leapt 271k, nearly 100k more than the consensus anticipated. The August and September job growth revised higher by a minor 12k. September actually revised down by 5k, with August revised up 17k.
