Daily Brief Macro: Monetary Policy Tide Is Turning Up and more

• Markets are already pricing the return of rate hikes in 2026 for Canada, Australia and New Zealand, while policymakers elsewhere are starting to warn of the possibility.
• Transitional support to structural adjustments needs unwinding, as Canada signals most prominently. Broader activity resilience and inflation reveal the risk of overstimulation.
• The BoE already committed a policy mistake by easing too early, and is split by those recognising the persistent danger. Market pricing remains too dovish for 2026.

Highlights

• Exports dip nearly 7% YoY in September due to weak tire shipments

• President firm on SVAT removal, raising liquidity concerns

• EUDR compliance becomes key export test in days to come

• During the first nine months, total export earnings fell 5.97% to US$713.62 million, largely driven by a 16.3% drop in tire and tube shipments.

• Crude oil futures recovered from monthly lows Wednesday after reports that the US had seized a Venezuelan tanker, although fears over a massive surplus kept benchmarks at the low end of the December trading range.
• Front-month Feb26 ICE Brent  futures were trading at  $62.67/b (2042 GMT) versus Tuesday’s settle of $61.94/b, while Jan26 NYMEX WTI  was at  $59.02/b against a previous close of $58.25/b.
• Brent recovered from an intraday low $61.35/b after officials confirmed that the US Coast Guard had led an operation to seize the vessel carrying Venezuelan oil.

• The BSP unsurprisingly cut rates by 25bps to 4.50% and signalled the cycle as near its end despite weakness; this matched the consensus but marks the fifth consecutive cut with 200bps total easing since August 2024.
• Growth decelerated to a three-year low of 4.0% in Q3 amid governance concerns and trade policy uncertainty. Recovery is dependent on improved fiscal spending and confidence restoration.
• Inflation forecasts are revised upward to 3.2% (2026) and 3.0% (2027), approaching the upper target band. Further easing is “likely limited” pending data showing effective transmission.

• Without warning, the Fed announced it is restarting a substantial QE program under the pseudonym “Liquidity Management”.  Starting immediately, it will purchase $40 billion in Treasuries per month. 
• The Fed is using its concept of “ample reserves” to begin its monetary easing policy.  Initiated following the 2008 GFC, the ample reserves monetary policy was formally adopted in 2019.
• This new QE program will increase already rising global inflation.  Commodity prices are reflecting the anticipated higher inflation rates as the pace of declines in real rates is increasing. 

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• Crude oil futures on Thursday were trading at multi-week lows as geopolitical events vied with growing surplus concerns to set the direction of travel for the remainder of 2025.
• Front-month Feb26 ICE Brent  futures were trading at  $61.47/b (2021 GMT) versus Wednesday’s settle of $62.21/b, while Jan26 NYMEX WTI  was at  $57.78/b against a previous close of $58.46/b.
• But the glut scenario was clearly winning over this week, said analysts, with continued expansion on the supply side met with only modest demand growth.

• The SNB holds its policy rate at 0% in line with consensus. Markets now expect a prolonged pause, with little chance of negative rates in the near term.​
• Despite near‑zero inflation, the SNB’s medium‑term forecasts justify keeping rates on hold, pointing to 0% policy rates well into 2026.​
• Future rate moves hinge on franc strength, global trade risks and inflation persistence, with FX intervention preferred over renewed negative rates.​