Key Highlights

• Asian tech stocks rally as Nvidia beats earnings expectations and Trump’s semiconductor tariff plan may be delayed.
• Long-end JGB sell-off continues, with the 10y JGB yield surpassing China’s CGB equivalent.
• China weighs a new property stimulus package including raising income tax rebate and lowering transaction costs. 

Chart of the Day

ZAR rebalancing coming through after six months of heavy asset positioning

^{Source: BNY}

The South African Reserve Bank (SARB) is expected to cut rates by a further 25bp today to 6.75%. However, the currency’s overall performance has not been impacted much, given the recent decision to push the inflation target down to 3%, which over the medium term would be seen as strongly positive for real rates. For several months, we have identified the currency as being ripe for rebalancing risk because, along with strong flow and holdings performance for South Africa, the currency was also strongly bought. This has not materialized for five months, but it appears that FX hedging finally started coming through in October heading into the decision. While hedging costs are evidently becoming cheaper and it does make sense to lock in favorable valuations, there are other factors in play as well concerning underlying assets and the broader risk environment; we see the currency as a benchmark for FX markets’ carry sentiment and also for gold prices, given the country’s strong mining exposure. There is plenty of room right now for the exchange rate to absorb shocks, but the SARB will likely remain vigilant on the process, especially if terms of trade deteriorate further.

What's Changed?

The fear of a bubble has abated on Nvidia’s Q3 earnings release, but the doubts over Fed easing in December remain. The FOMC minutes highlighted the divisions between policymakers, and the jobs data ahead remain critical to the debate. The odds of a December cut have dropped to 33%, but January’s odds have risen. Rate cuts are needed to support the 493 other stocks that make up the S&P 500 and to cap U.S. long-end yields. Growth doubts are prevailing, with jobs seen as making the critical difference between a soft patch and something worse. The key driver for Q4 growth is now expected to be AI investments, with data centers, power demand and the like countering weaker consumers. How the U.S. Thanksgiving and holiday sales translate into spending will now be watched attentively. The relief rally that followed Nvidia’s reporting spread across APAC markets, but notably it did not lead to a weaker USD. USD remains bid in part because of U.S. investors hedging their foreign exposures, especially in Japan, where 158 JPY looks to be the line in the sand for MOF/BoJ resistance. However, the rate moves in Japan look important and difficult to ignore for U.S. bonds. Higher U.S. rates may follow should “good news” on the U.S. economy prove bad for diversification. There is another factor to consider today, supporting risk: the pushes for a Ukraine/Russia peace deal, with the focus on energy and EUR as barometers. Markets have turned a corner on sentiment, as momentum buying returns around the world, but the wall of worry remains the old job at hand. Rates look to be the next brick in the climb ahead, with USD no longer the safety line but more of a weight against easier conditions.

What You Need to Know

Global technology stocks rallied after Nvidia reported stronger-than-expected quarterly results, easing investor concerns about a potential AI bubble. Nvidia’s revenues rose 62% y/y to $57bn in the three months to October, beating forecasts of $55bn, while its shares jumped over 5% in after-hours trading. The upbeat results lifted Asian markets, with Japan’s Nikkei 225 up 2.7% and South Korea’s Kospi gaining 3%, while Nasdaq 100 and S&P 500 futures advanced by 1.8% and 1.3%, respectively. Nvidia CEO Jensen Huang dismissed AI bubble fears, citing sustained demand. Bitcoin rebounded 0.8% to $92,200 after recent losses. Meanwhile, Fed minutes revealed divisions over further rate cuts, tempering optimism despite improved risk sentiment.

White House officials have urged Congress to reject the GAIN AI Act, which would restrict Nvidia and AMD from selling advanced AI chips to China and other embargoed nations by prioritizing U.S. buyers. The bill, framed as “America first,” has bipartisan support but faces opposition from the administration and Nvidia, which argues there is no domestic shortage. Lawmakers are also drafting the Secure and Feasible Exports (SAFE) Act of 2025, which would require the Commerce Department to deny export licenses for chips more powerful than current limits for 30 months. Both measures reflect growing congressional interest in tightening AI chip controls amid U.S.-China tensions, even as the Trump administration remains open to selective, downgraded exports.

Metals have rallied as reports suggest China is weighing new nationwide measures to stabilize its property market on concerns that prolonged weakness could threaten financial stability. Policymakers, including the housing ministry, are considering mortgage subsidies for first-time homebuyers, higher income tax rebates for mortgage holders and lower home transaction costs. The plan, which has been under discussion since the third quarter, aims to revive demand as home sales and prices continue to slump. Developer stocks rose by as much as 3.3% on the news. Analysts say fiscal easing could help boost activity but confidence depends on stabilizing property prices. The downturn, now in its fourth year, has acted as a drag on investment and consumption, while banks’ bad loans had climbed to a record ¥3.5tn by end-September.

What We're Watching

The South African Reserve Bank is expected to cut rates by 25bp to 6.75%, with the inflation target officially lowered to 3% and the country expected to make steady progress in that direction. October inflation surprised to the downside at 3.6% y/y and 0.1% m/m, further consolidating easing expectations.

U.S. weekly initial jobless claims expected at 226k.

U.S. September nonfarm payrolls forecast at 54k from 22k in August, with unemployment expected to stay unchanged at 4.3% and average hourly earnings also expected to stay unchanged at 0.3% m/m.

U.S. November Philadelphia Fed Business Outlook seen improving to 1 from -12.8

U.S. October existing home sales are seen at 4.08 million, +0.5% m/m, from 4.06 million, +1.5% in September.

Central bank speakers: Cleveland Fed President Beth Hammack gives opening remarks at the 2025 Financial Stability Conference; Federal Reserve Governor Lisa D. Cook attends an event on financial stability at Georgetown University; Chicago Fed President Austan Goolsbee speaks in moderated discussion.

U.S. Treasury sells $110bn in 4-week bills and $95bn 8-week bills and $19bn in a reopening of 10y TIPS.

What iFlow is Showing Us

Mood: iFlow Mood has continued its upward momentum toward statistically significant levels. Risk-reduction mode has continued, with accelerated selling in both core sovereign bonds and equities. iFlow Mood is at 0.0946.

FX: Notable observations included significant ILS outflows, against strong demand for CHF. Flows in the rest of the iFlow universe were mixed and light. EUR, GBP, AUD, COP and KRW were lightly bought, against outflows in USD, JPY, NZD, CLP and THB.

FI: Active and strong cross-border activity, with significant selling in U.K. gilts and Danish government bonds, followed by South Africa bonds, against significant buying in Australia, Chile, Mexico and Philippines government bonds. Elsewhere, Eurozone and Japanese government bonds were lightly bought, against selling in Israeli, South African, Chinese and Thai government bonds.

Equities: Large-scale selling pressure in New Zealand, Brazilian and South African equities, followed by the U.S, Hungary, Israel and U.K. Peruvian equities were most bought. Within EM EPAC, the energy, consumer discretionary and utilities sectors were bought, against the heaviest selling in the information technology sector. 

Quotes of the Day

“Jobs are a centuries-old concept created during the Industrial Revolution. Despite the reality that we’re now deep in the Information Age, many people are studying for, or working at, or clinging to the Industrial Age idea of a safe, secure job.” – Robert T. Kiyosaki

“I’m from the old school; hard work pays off.” – John David Washington

Economic Details

Germany producer prices fell by 1.8% y/y in October, marking the eighth consecutive annual decline, though they were up 0.1% m/m. The drop was mainly driven by a 7.5% y/y fall in energy prices, including falls of 12.1% for natural gas and 8.3% for electricity, while mineral oil products decreased by 4.3%. Excluding energy, producer prices rose 0.8% y/y but slipped 0.1% m/m. Intermediate goods prices fell 0.5% y/y due to cheaper chemicals and paper, while investment goods rose by 1.9%, consumer goods by 2.3% and durable goods by 1.7%. Food prices increased by 2.3%, led by sharp rises for beef (+34.3%) and coffee (+24.7%), offset by steep drops for butter (-21.8%) and sugar (-18.3%). Precious metals surged, with gold up 43%. DAX +0.701% to 23325.28, EURUSD -0.372% to 1.1526, 10y Bund +1.1bp to 2.722%.

Germany’s hospitality sector turnover fell 1.3% m/m in real terms and 0.4% in nominal terms in September 2025, according to preliminary Destatis data. Compared with September 2024, sales declined by 4.9% in real terms and 1.4% nominally. Hotels and other accommodation providers recorded a sharp 3.1% real and 0.9% nominal monthly fall, with turnover down 6.1% y/y in real terms. Restaurant revenues also weakened, dropping 1.8% m/m in real terms and 1.6% nominally, while falling 3.6% y/y in real and 0.4% nominal terms. The sector has now seen two consecutive months of contraction, following August’s revised 1.6% real decline.

Spain’s foreign trade in September 2025 saw exports of €32.4bn, up 2.6% y/y, and imports of €38.4bn, up 10.1% y/y, resulting in a trade deficit of €6.0bn and coverage ratio of 84.4%. In the first nine months of the year, exports rose 0.5% y/y to €288.3bn, while imports grew 5.0% to €329.4bn, widening the cumulative deficit to €41.1bn. Non-energy exports increased by 2.5% in September, offsetting a 3.8% rise in energy exports. By sector, the strongest export growth came from food and chemicals, while machinery and automotive showed modest declines. Exports to the EU rose 4.4%, led by Germany (+8.3%) and France (+5.5%). By region, Catalonia and Madrid led exports, while Andalusia and Aragón also posted gains. IBEX 35 +0.524% to 16011, EURUSD -0.372% to 1.1526, 10y Bono +0.6bp to 3.215%.

The Netherlands’ unemployment rate held steady at 4.0% in October, with 411,000 people unemployed and 3.2 million outside the labor force, many being retirees or unable to work. The number of people outside the labor force fell by an average of 4,000 per month over the past three months. According to the UWV, unemployment benefit recipients rose by 8,000 m/m to 195,400, marking a 9.1% y/y increase. Gains were broad-based with the exception of temporary employment agencies (-1.4%); the largest rises came in other manufacturing (+24.6%), the public sector (+23.2%) and agriculture (+20.6%). Labor flows remained balanced, as 237,000 previously unemployed people found jobs while 259,000 became unemployed in October. AEX +0.537% to 938.35, EURUSD -0.372% to 1.1526, 10y NGB +1.1bp to 2.869%.

Dutch consumer confidence improved to -27 in November from -30 in October but remained well below the long-term average of -10. The economic sentiment component rose sharply from -46 to -34, reflecting reduced pessimism about the outlook for the next 12 months. Willingness to buy also strengthened, improving to -12 from -14, as consumers were more optimistic about their future personal finances and less negative about their past financial situation. Sentiment regarding large purchases also became less downbeat. Despite these gains, confidence remains subdued compared with historical norms, with the indicator still far below the 20-year average and well off the record high of 36 set in 2000.

Switzerland’s October foreign trade stabilized, with exports down 0.3% m/m to CHF 22.5bn and imports up 0.2% to CHF 19.9bn, leaving a trade surplus of CHF 2.6bn, the fourth consecutive monthly decline. Export weakness stemmed from sharp falls in vehicles (-39.5%) and jewelry (-13.6%), while gains were recorded in chemicals, machinery, metals, food and watches (+1.9%). Exports to Europe rose 6.9%, led by Germany (+12.8%) and Slovenia (+61.9%), but there were declines in exports to the U.S. (-5.5%) and Asia (-3.1%). Imports were stable overall, with falls in chemicals (-1.4%) and jewelry (-3.7%) offset by higher energy and vehicle imports (together +CHF 168mn). Sharp rises were recorded in imports from Germany (+9.5%), Austria (+21.6%) and Ireland (+31.6%). SMI +0.219% to 12558.08, EURCHF +0.027% to 0.92876, 10y Swiss GB +0.6bp to 0.186%.

Poland’s November consumer sentiment improved for current conditions but weakened for future expectations. The current consumer confidence indicator rose 1.0 points to -9.9, driven by better assessments of households’ future finances (+2.1 percentage points) and ability to make major purchases (+2.4 percentage points), though views on current finances worsened (-2.0 percentage points). The leading consumer confidence indicator fell 0.9 points to -7.5, reflecting more pessimistic expectations about unemployment and saving ability (-4.7 and -1.9 percentage points, respectively). Both indicators remain higher than a year earlier, up 7.2 and 4.1 percentage points. Meanwhile, 27.3% of respondents viewed the war in Ukraine as a major threat to Poland’s economy, while 29.6% saw it as a major risk to national sovereignty. WIG +0.239% to 110494.2, EURPLN +0.234% to 4.2321, 10y PGB +0.7bp to 5.356%.

Türkiye’s November consumer confidence index rose 1.6% m/m to 85.0 points, up from 83.6 in October. The sub-index for households’ current financial situation increased 2.7% to 69.6, while expectations for household finances over the next 12 months rose 1.9% to 85.7. The general economic situation expectation improved by 1.3% to 79.6, and the assessment of spending on durable goods gained 0.9% to 105.0. Despite the uptick, the overall index remains below the neutral level of 100, indicating continued pessimism among consumers. BI 100 +0.423% to 10950.02, USDTRY -0.036% to 42.3699, 10y TGB 0bp to 32.4%.

Türkiye’s non-domestic producer price index (ND-PPI) rose 0.9% m/m and 28.75% y/y in October 2025, while the 12-month average increase reached 25.13%. Manufacturing prices climbed 28.68% y/y, with a rise of 32.78% for mining and quarrying. By industrial group, intermediate goods rose by 25.85%, durable consumer goods by 35.80%, non-durable goods by 36.17%, energy by 14.35% and capital goods by 27.64%. On a monthly basis, there were rises for manufacturing (+0.83%), mining (+4.74%), intermediate goods (+1.12%), durable goods (+2.82%) and non-durable goods (+1.95%), while energy prices fell 3.50%. The largest annual gains were seen in metal ores (+61.99%) and tobacco products (+54.53%), while energy-related items such as refined petroleum products fell.

The Australian Prudential Regulation Authority (APRA) has launched a new report on its assessment of risks and vulnerabilities facing the Australian financial system. Key insights from this first publication include: 1) Risks to the Australian financial system from overseas are heightened, and the geopolitical environment is expected to remain volatile for some time. While the system is well-placed to absorb potential shocks from overseas, this resilience could be eroded if institutions are not prepared for a wide range of scenarios. APRA and the other agencies on the Council of Financial Regulators are strengthening the system’s resilience through a dedicated geopolitical risk work program. 2) APRA is closely monitoring any build-up of domestic vulnerabilities, particularly in the housing market, including high household debt. While overall housing lending standards remain sound, APRA is seeing some signs of a pick-up in higher-risk lending, particularly high debt-to-income borrowing by investors. 3) The increasing interconnectedness of the financial system has elevated the potential for shocks in one sector to have a system-wide impact. ASX +0.607% to 5150.04, AUDUSD -0.062% to 0.6482, 10y ACGB +5.1bp to 4.467%.

Indonesia’s overall balance of payments came in at a deficit of $6.4bn, mainly due to a capital and financial account deficit of $8.1bn. The current account returned to a surplus of $4.0bn (1.1% of GDP), from a $2.7bn deficit in Q2 (0.8% of GDP). The current account improvement was driven by a wider non-oil and gas trade surplus and a smaller services trade deficit on rising inbound tourism. The primary income deficit narrowed due to reduced profit repatriation and interest payments, though the oil and gas deficit widened on higher import demand. On the financial side, direct investment remained in surplus, reflecting sustained foreign investor confidence, while portfolio outflows – mainly from debt securities – and private sector loan repayments led to the overall capital account deficit. FX reserves stayed strong at $148.7bn, covering six months of imports and debt service, well above international adequacy standards. Bank Indonesia reaffirmed its commitment to policy coordination to preserve external stability and support continued FDI inflows. CI +0.159% to 8419.917, USDIDR -0.174% to 16732, 10y IDGB +2.6bp to 6.169%.

In China, state-led consolidation of brokerage firms is gathering pace to meet the country’s goal of creating a first-class investment bank and supporting the reform of the financial market and the high-quality development of the securities industry. The government has announced plans for a large state-backed broker to absorb smaller firms, creating a new entity with over ¥1tn in assets. China has kept its 1y and 5y year loan prime rates unchanged at 3.0% and 3.5%, respectively. The rates have been at these levels since May, as strong export growth has reduced the need for additional stimulus. However, it remains to be seen whether such efforts can result in significant reflation without sufficient fiscal support. CSI 300 -0.509% to 4564.95, USDCNY -0.009% to 7.1146, 10y CGB +0.1bp to 1.811%.