Daily Brief Macro: HEM: Oct-25 Views & Challenges and more

• Hawkish inflation and policy rate pricing shifts toward our UK/EA view did not stop US rates frontloading more cuts.
• We still see markets overpricing easing, with UK inflation expectations stuck above target, and neutral rates high.
• A break in activity data, especially unemployment, and underlying price/wage inflation, would threaten our view.

• Recent data has shown better-than-expected growth globally, leading to a shift in the macro landscape.
• The US economy has shown signs of weakness, particularly in the labor market, but overall growth forecasts have been revised upwards.
• Emerging markets have maintained a positive bias, with inflows steadily coming in, but there are concerns about potential vulnerability in EM currencies and local rates markets if the US growth environment remains strong.

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• Newly-Appointed Fed Governor Miran has shifted his attention of monetary policy conduct away from data dependency towards r*, the neutral real policy rate. Data-dependent policy has been detrimental to credibility. 
• Governor Miran believes r* will fall due to the impact of President Trump’s policies on inflation, including lower immigration and lighter business regulation, as well as lower structural budget deficits.
• Stronger-Than-Expected economic data has resulted in some Federal Reserve Bank Presidents cautioning against continued near-term policy easing, citing lingering inflation concerns. Chairman Powell wants policy easing twice more in 2025.

• China holding large soybean inventories and US soybean exports to China at zero for the 2025-26 marketing year
• President Trump late in addressing trade issues with China, leaving US farmers and exporters struggling to recapture market share
• US seeing strong exports of corn and wheat due to competitive prices, with potential exemptions for certain agri products from tariff rates in trade deals

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• After the remarkable bull market in frozen orange juice concentrate futures (OJ) between 2022 and 2024, the market topped out during the early days of 2025.
• Since then, the market corrected 60% from its highs. But for the most part of 2025 the market is actually in a consolidation phase.
• From a chart perspective, the market offers now an interesting setup

• China and the U.S. are discussing the a potential trillion dollar investment from China to help “Make America Great Again.” China is setting its terms for the investment.
• China hawks in the Administration have had their wings clipped, while many Congressional hawks remain vocal as Trump drops barriers to technology exports to China.
• In a sign of U.S. trade policy failure, tariffs on China have not reduced the U.S. trade deficit nor have they had any meaningful impact on China’s exports or economy.

• Crude oil futures opened the week higher after OPEC+ over the weekend announced a relatively modest output increase for November, coming in at the low end of expectations.
• Front-month Dec25 ICE Brent futures were trading at $65.47/b (2011 BST) versus Friday’s settle of $64.53/b, while Nov25 NYMEX WTI was at $61.68/b against a previous close of $60.88/b.
• The production group agreed to add 137,000 bpd to quotas in November, citing “steady global economic outlook and current healthy market fundamentals” for what is now an eighth consecutive monthly rise.