Interest Uncertainty in Japan, Kashkari's Recent Remarks, Election Debates in Germany: What's Happening in Global Markets?
Political and economic developments continue unabated across the globe. While early election dates are being discussed in Germany, rising wholesale prices in Japan are creating uncertainty regarding interest rate hikes. Meanwhile, discussions about interest rates and budget management persist in the US and Europe. The growth occurring in the electric vehicle market, along with China's steps in the real estate sector and the investment climate in the US, provide clues on how the global economy may shape in the upcoming period.
In Japan, wholesale prices are increasing uncertainty about interest rates In Japan, wholesale goods inflation accelerated in October, particularly due to the depreciation of the yen raising import costs, making it difficult for the Bank of Japan to decide on interest rates. According to the bank, the corporate goods price index (CGPI) rose by 3.4% year-on-year in October, surpassing market forecasts. The yen-based import price index, reflecting import costs in Japan, increased by 3% month-on-month in October. Following the termination of negative interest rates in March, the Bank of Japan is continuing its efforts to achieve an inflation target of 2%. Bank Governor Kazuo Ueda stated that strong domestic demand and wage increases could impact interest rates.
Minneapolis Fed President Kashkari believes interest rates have not reached a neutral level Minneapolis Fed President Neel Kashkari expressed that current interest rates are not at a neutral level and that the economy is still experiencing modest contraction. “We have lowered interest rates by 75 basis points, but we are not yet in a neutral environment," he said. Kashkari emphasized that the economy has remained resilient and is performing well, and he is confident that the central bank will achieve its goal of bringing inflation down to 2%. He also touched on Donald Trump’s plans to impose tariffs on certain goods, suggesting that such a move could create long-term inflationary effects due to countermeasures from other countries. However, these tariffs are considered to only cause a one-time change in the prices of goods.
BofA CEO calls on Trump administration regarding the budget Bank of America CEO Brian Moynihan stated that he expects President-elect Donald Trump’s administration to rectify the US budget. He mentioned that elements within Trump’s economic plans, such as tax cuts and tariffs, could increase the budget deficit alongside rapid growth and inflation. In his remarks at the Yahoo Finance Invest conference, Moynihan stressed the need for better management of the budget. He stated that fluctuations in government bonds do not indicate an imminent crisis regarding the economy, but emphasized the importance of taking careful steps.
Bank of France forecasts economic stagnation in Q4 The Bank of France predicts that economic growth will remain flat in the last quarter of the year due to a slowdown in economic activity following the Olympic Games. The French economy grew by 0.4% in the third quarter, benefiting from tourism revenues and profits from broadcasting rights for the Games. Based on survey data from 8,500 executives across various sectors, the bank anticipates that commercial activities will trend slightly positively in the fourth quarter. These developments are thought to increase uncertainties among economic agents regarding the future.
February 23 suggested as early election date in Germany German President Frank-Walter Steinmeier has considered February 23, 2025, as a realistic date for new elections. Steinmeier highlighted that the early election process should proceed transparently and orderly, welcoming the planned vote of confidence scheduled for December 16. These developments are causing dynamic days in Germany's political agenda. Achieving consensus on early elections is critically important for the future political stability of the country. The current political dynamics in Germany appear to be decisive for the formation of a new government.
ECB member Kazaks suggests gradual reduction of interest rates Martins Kazaks, a member of the European Central Bank (ECB) Governing Council, stated that a gradual reduction of interest rates is the baseline scenario. According to Kazaks, lowering interest rates should be aligned with developments in the economy. The ECB has reduced borrowing costs three times since June, with expectations to repeat this action in the last policy meeting of the year in December. The aim of this process is to create a conducive environment for economic recovery and sustainable economic growth.
Global electric vehicle sales increased by 35% in October According to market research firm Rho Motion, global sales of electric and plug-in hybrid vehicles rose by 35% in October. Sales in China hit record levels with a 54% increase, bringing global electric vehicle sales to 1.72 million units. Data manager Charles Lester noted that sales in Europe increased by only 0.8%; however, the upward trend is promising. In the United States and Canada, sales rose by 11.4% to reach 0.16 million units, while in Europe, there was a decline of 14%, totaling 0.26 million units.
Bridgewater investment official offers positive comments on US stocks Bridgewater Associates investment official Karen Karniol Tambour stated that economic growth in the US will strengthen during Donald Trump’s presidency, and thus US stocks should be held. She noted that after the fluctuations in financial markets, the US economy is showing a growth trend. Karniol Tambour expressed that even a scenario of tariffs amidst various uncertainties could support growth. The strong fundamentals of the US economy and investment opportunities are boosting the attractiveness of stocks.
China's plan to purchase idle land may relieve the real estate sector Analysts at CGS International indicated that China’s plan to repurchase idle land from real estate development companies could alleviate liquidity issues in the sector. This plan, announced by the Ministry of Natural Resources, will be financed through special-purpose bonds to support struggling real estate companies. Analysts project that a fund ranging from 0.5 to 1 trillion yuan could be sufficient to address the issues within the real estate sector. These initiatives, set to begin in the first quarter, are expected to provide stability in the sector.