Daily Brief Macro: UK Labour Party: Damned If They Do… and more

• Whatever Rachel Reeves comes up with in her 26 November budget, she is bound to run into criticism from within her own parliamentary party.
• Bond markets seem set to react badly to this, especially if it seems likely that her overall objectives will be undermined by internal resistance to proposed measures.
• She and the PM will probably survive this, but a market-unsettling change and slide to the left look increasingly likely by mid-2026, followed by defeat at the next election.

• Gold prices have been steadily rising, with projections of reaching $10,000, possibly as soon as 2026.
• The recent surge in gold prices has attracted more institutional investors and retail buyers, especially in countries like Australia and China.
• The volatility in gold prices has also increased, with the potential for rapid gains as smaller percentage increases can lead to significant profits.

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• Strong gold demand in 3Q25, totaling almost 980 tons, leading to a surge in demand inflow
• Expectation of continued central bank buying and investor demand growth in 2026
• Bullish outlook for gold prices, with potential risks including rate sensitivity and potential tariff uncertainties for other precious metals

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Highlights

• Consumption outpaces domestic production growth

• Imports decline despite steady industrial demand

• Fresh probe into halobutyl rubber dumping

The first four months of the financial year illustrated an industry striving for balance — one still navigating between domestic self-sufficiency ambitions and dependence on imports for certain specialized grades. Demand from tire makers, which account for nearly two-thirds of synthetic rubber use in India, remained stable amid mixed trends in automotive production and exports. 

• ASEAN is scaling into a top-tier economic engine, targeting a US$4.2T GDP in 2025 and cementing its position as the world’s fifth-largest bloc.

• Regional exports are set for a breakout phase—BCG projects ~90% growth by 2031 to US$3.2T annually, far outpacing sub-30% global trade expansion.

• The uplift is anchored by supply-chain integration across autos, electronics, apparel, agri-food, and data/IT services, supported by policy tailwinds and US–China realignment.

• Prolonged quantitative easing by the Fed has made balance sheet shrinkage difficult without producing periods of cash shortages in the banking system, and has raised the neutral federal funds rate.
• Regional Federal Reserve Bank Presidents have become more hawkish since September about  inflation, arguing against a December policy easing, but September’s Employment Situation report did justify previous policy rate reductions.
• Chairman Powell remains cautious about tariffs. Recent historical research by the Federal Reserve Bank of San Francisco suggests that higher unemployment and disinflation are the long-term outcomes of higher tariffs.

• Ray Dalio actually made an art form of it: his All-Weather Portfolio spreads risk across economic scenarios like inflation, deflation, growth, and slowdowns.
• You can improve on it by layering a simple trend filter on top. Do that, and the risk-adjusted returns get a serious boost: drawdowns shrink and the ride is smoother.
• The traditional All-Weather Portfolio, 2x leveraged, delivered an 8.7% annual return with 13.8% volatility, and a Sharpe of 0.48. The trend-filtered version 8.2% return and a Sharpe 0.71.

• Technological revolutions follow a sequence: they start with a disruptive “installation phase”, then go through a critical “turning point”, and are finally followed by a “deployment phase”.
• According to Carlota Perez, AI isn’t the start of a new technological revolution: it’s a critical milestone in the current, longstanding “information and telecommunication” revolution.
• Being aware of different phases is valuable when investing. It can help you play the contrarian card – staying cautious during the frenzy and making bolder bets during the downturns.

• Aluminium prices have been hitting three year highs and outperforming copper
• China’s five year plan emphasizes consumption and trade links, but there are concerns about economic slowdown
• Chief economist Doug Porter discusses Fed funds rate and potential rate cuts, leaning towards a dovish view for 2026

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• Webinar with former Prada board member discussing luxury landscape and investor trends
• Nvidia’s strong earnings initially sparked global rally, but tech stock sell-off signals market caution
• Dior executive predicts return to growth in luxury market by 2026, emphasizes product innovation and pricing discipline for success

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