Global Economic Outlook — November 2025

Emerging markets present a mixed landscape — some benefiting from improving capital flows and firm commodity support, while others continue to juggle FX volatility, energy exposure, and policy strain.

This outlook explores the macro themes shaping the months ahead: central bank direction, energy market dynamics, geopolitical tensions, liquidity conditions, and shifting investor sentiment. With a late-cycle global slowdown underway and monetary policy transitions accelerating, markets will continue to react sharply to data, policy guidance, and geopolitical developments as investors weigh opportunity against rising uncertainty.

USA

October showed cooler inflation, firm services, stabilizing factories, and mixed housing under still-high mortgage rates. Fiscal and liquidity settings stayed orderly. Sentiment softened, but not enough to derail activity. The Fed can stay patient and data-driven as the economy glides toward slower—but still positive—growth.

U.S. Economic Review — October 2025

Executive summary

October delivered a classic soft-landing mix: inflation continued to cool, services stayed firm, manufacturing showed early stabilization, and housing remained mixed under still-elevated mortgage rates. Fiscal and liquidity metrics pointed to controlled tightening alongside solid Treasury demand. Sentiment wobbled, but employment and credit conditions stayed supportive. Net-net: growth moderated without cracking, keeping the Fed comfortably data-dependent.

Data & indicators (concise)

• Inflation: Headline CPI ~3.0% y/y; core CPI ~3.0% y/y with a 0.2% m/m increase.
• Activity (national): S&P Global Composite PMI 54.8; Services 55.2; Manufacturing 52.2.
• Activity (regional): Philly Fed −12.8; Kansas City Manufacturing 15; KC Composite 6; Chicago PMI 43.8; Dallas Fed −5.0; Richmond Fed −4.
• Consumers: University of Michigan sentiment eased to 53.6 by late month (from ~55 earlier); Conference Board confidence 94.6. Inflation expectations: 1-yr 4.6%; 5-yr in a 3.7–3.9 range.
• Housing: Existing home sales 4.06m in September; pending sales stalled after a firm August. MBA 30-yr mortgage rate hovered ~6.3–6.4%; applications were subdued early in the month and improved modestly as rates stabilized.
• Fiscal & liquidity: September budget surplus ~$198B. Fed balance sheet ~$6.59T (gradual QT); bank reserves ~$2.93–3.03T.
• Rates & auctions: 10-yr auction 4.117%; 30-yr 4.734%. 4–8 week T-bills ~3.9–4.0%. 5-yr TIPS ~1.182%.
• Growth nowcast: GDPNow tracked ~3.9% for Q3 heading into the quarter’s close.
• Market tone: USD firm early month, range-bound late month; equities supported by stable earnings; yields eased into month-end.

Policy outlook (Fed)

• Inflation progress and steady labor conditions argue for holding the policy rate while QT proceeds at a measured pace.
• Communication focus shifts to timing/pace of 2026 easing rather than additional tightening; near-term stance remains “higher for longer, data-dependent.”

Markets snapshot & drivers

• Rates: Curve steepened on supply/fiscal concerns early in the month; yields eased later as inflation data and manufacturing stabilization tempered growth fears.
• FX: DXY supported by safe-haven and rate differentials early; drifted sideways into the month-end.
• Equities & credit: Earnings—led by large U.S. banks—surprised positively, underpinning risk sentiment despite higher financing costs.
• Credit & liquidity: Reserves remained ample; auctions cleared smoothly, keeping funding markets orderly.

U.S. Government Shutdown and Market Effects

The U.S. government shutdown began on October 1, 2025, after Congress failed to pass full-year appropriations or agree on another continuing resolution. It has now entered its fifth week (Day ~29–32), following multiple unsuccessful Senate votes to reopen federal agencies.

The standoff stems from disagreements over funding and policy riders — including disputes on healthcare subsidies and related provisions — with neither chamber able to produce a bipartisan compromise.

The CBO estimates the shutdown may cost $7–$14 billion in GDP, translating to roughly a 1–2 percentage-point drag on Q4 growth. A portion of this lost output, particularly from unpaid federal labor hours, is unlikely to be recovered.

Approximately 750,000 federal workers have been furloughed, while others continue working without pay. Key public services, including SNAP benefits, are facing disruptions, prompting several states to prepare emergency support measures.

Critical operations — such as national security, air traffic control, and essential law enforcement — remain active under “excepted” status. Military personnel are being paid, but civilian support functions are strained by reduced staffing and delayed funding.

Financial markets have shown moderate volatility, with investors monitoring negotiations closely. While lawmakers have expressed openness to a narrow deal, disagreements persist, and current discussions have produced only “cautious optimism” without resolution.

Overall, the prolonged shutdown has become a meaningful macroeconomic risk, with impacts spreading through federal paychecks, procurement, and benefit flows. A short-term funding measure could quickly reduce economic damage, but each passing week increases the risk of permanent, unrecoverable output losses.

U.S. Economic Outlook for November – Key Themes and Developments

The U.S. economy enters November with growth slowing from earlier momentum, inflation easing but still elevated, and policymakers operating with limited visibility due to a prolonged federal shutdown. The broad picture is one of gradual cooling across major economic pillars—demand, labor, housing, and business sentiment—while monetary and fiscal policy uncertainties add to the cautious backdrop.

Growth: Slower but Still Positive

Economic activity remains positive but has clearly downshifted from the strong performance earlier in the year. With official Q3 GDP figures delayed by the shutdown, private estimates sketch a picture of solid yet slowing expansion, in the 2.5–3% range after Q2’s 3.8% surge. Strength in inventories and a narrower trade deficit supported recent momentum, but domestic demand is cooling, particularly as employment softens and housing downturns deepen. Into November, the growth pace is likely to hover near 2%, supported by steady (though moderating) consumer spending and ongoing business investment in technology. The economy remains well above stall speed, but demand is losing steam.

Inflation: Gradual Easing Continues

Inflation continues its slow drift lower. September CPI showed headline and core inflation both at 3.0% year-on-year, with core running at a subdued 0.2% monthly pace—one of the softest readings in several months. Shelter costs, a major inflation driver over the past year, are easing, helping cool price pressures. However, some categories remain sticky: energy prices spiked late summer, and food inflation is still near 3%. Tariff effects represent a key wildcard, with pass-through still progressing and likely to peak into year-end. Consensus expects October CPI, due mid-November, to keep inflation in the high-2% to 3% range. Real incomes are stabilizing but not yet accelerating meaningfully, maintaining pressure on household budgets.

Labor Market: From Strength to Softening

The labor market is entering a transitional phase. Hiring slowed materially through late summer, with just ~29,000 jobs per month added in June–August versus far stronger gains earlier in the year. The unemployment rate has edged up to 4.3%, reflecting weaker hiring conditions and higher labor force participation. With official October data delayed, private surveys are filling the gap—and they point to cooling job demand. ADP payrolls showed declines, and job openings in private data have fallen below the number of unemployed workers for the first time since 2019. November’s key focus will be whether hiring rebounds once data resumes, or whether the slowdown slips closer toward net job losses. Labor market data will be central to the path for both policy and consumer sentiment going forward.

Consumers & Retail: Holding Up, But Facing Strain

Consumer activity remains resilient, though signs of fatigue are building. Retail spending was solid in late summer, especially in services like travel and entertainment. Yet confidence has eased meaningfully and delinquency rates on consumer debt are creeping higher. Nominal wage growth (~4%) and gradually cooling inflation support real purchasing power, but shrinking savings buffers and weaker job creation may temper consumption into the holiday season. Retailers expect modest year-on-year growth heading into Black Friday, but sentiment will be a key swing factor.

Industry & Manufacturing: Soft but Stabilizing

Manufacturing remains weak but shows signs of bottoming. The September ISM Manufacturing PMI improved slightly to 49.1, still signaling contraction but at a slower pace. Industrial output in August was flat to mildly positive, boosted by auto production. October's early indicators suggest stabilization, and easing supply chain pressures are helping. However, softer global demand and tariff-related cost pressures remain headwinds. Industrial output is expected to remain broadly flat to slightly positive in November.

Services Sector: Cooling but Still Expanding

The services economy, previously a key growth engine, stalled in September with ISM Services falling to 50.0. Weakness appeared in finance, professional services, and hospitality, while travel remains resilient. Confidence indicators have slipped alongside broader economic uncertainty. Still, structural labor demand—particularly in healthcare and education—supports ongoing service-sector hiring. Seasonal travel and holiday spending should help activity resume at a modest pace in November.

Housing: High Rates Hit Activity

Housing is the economy’s most visible area of weakness. Surging mortgage rates near 8% have driven housing starts to multi-year lows and cooled sales activity. Homebuilder sentiment has turned negative, and residential investment likely fell in Q3. Home prices remain stable thanks to tight supply, but continued high borrowing costs will hold back construction and sales into November. Some pent-up demand could emerge if mortgage rates ease, but for now, housing is a meaningful drag on growth.

Policy: Fed Easing Gradually, Fiscal Stalemate Continues

The Federal Reserve shifted into easing mode this fall, delivering a second 25-bp cut in late October and halting balance sheet runoff from December. However, policymakers remain cautious, signaling that further cuts in December or early 2025 are possible but not guaranteed. Inflation data and labor market trends will drive decisions.

On the fiscal front, the U.S. remains in a partial government shutdown, now in its fifth week. While economic effects should be temporary, the data blackout complicates policymaking and market expectations. Pressure is mounting for a continuing resolution to end the stalemate, and baseline expectations are for resolution this month, though political volatility remains a risk.

Key Data to Watch in November

• Delayed October jobs report and labor indicators
• ISM and PMI momentum across sectors
• CPI/PPI and PCE inflation confirmation
• Retail strength heading into the holiday season
• Fed minutes and policy speeches
• Earnings updates for margins and pricing trends

Bottom line: The U.S. economy is moving from strong expansion toward slower but still positive growth. Inflation is moderating, the labor market is cooling, and housing is firmly in a downturn. November will test consumer resilience and policy clarity as markets navigate reduced government data visibility and persistent political noise.

Wall Street: Cautious Optimism with Momentum

U.S. equities enter November carrying strong upside momentum and favorable seasonal dynamics. The S&P 500 extended its rally into October with a +2.3% gain, marking six consecutive monthly advances and fresh record highs. The Nasdaq continued its powerful rise as well, driven by booming investor enthusiasm around artificial intelligence and strong earnings from mega-cap tech leaders. Year-to-date, the S&P 500 is up around 16% and the Nasdaq roughly 23%, supported by disinflation, the initiation of Fed rate cuts, and robust corporate profit performance.

Fundamentals remain constructive. More than 80% of reporting companies have exceeded earnings expectations in Q3, with aggregate S&P earnings tracking +13.8% year-on-year. Historical seasonality favors continued strength: November has historically been the best month for the S&P, and when the index rises more than 15% through October—as it has this year—it has typically continued climbing into year-end. Hopes for a “Santa Claus rally” are supported by improving risk appetite and expectations that the Fed will stay market-friendly.

However, valuations are stretched. The S&P trades around 23x forward earnings—levels not seen since the early-2000s tech boom—raising vulnerability to downside shocks. The rally has also been narrowing, concentrated in large-cap tech, though late October saw tentative sector broadening. Markets remain sensitive to inflation data, Fed communication, and geopolitical risks. Any negative surprise—an inflation uptick, tech sector correction, or financial shock—could trigger volatility. The base case remains constructive, with moderate further gains likely, but conditions argue for measured optimism rather than complacency.

U.S. Dollar: Supported Early, Potential Softening Later

The U.S. dollar begins November firm. It strengthened in late October after the Fed’s cautious tone dampened hopes for rapid rate cuts, pushing the DXY into the high-90s. Higher Treasury yields and safe-haven flows contributed as well. With the Fed easing only gradually, U.S. yields remain attractive relative to global peers, supporting the currency.

Looking ahead, the dollar is likely to trade range-bound with a slight upside bias in early November, particularly if U.S. data hold up better than European or Asian counterparts. Persistent geopolitical uncertainty and any equity market weakness would further support safe-haven demand. However, upside looks limited: easing inflation, the Fed’s dovish bias, and eventual stabilization in global growth could weaken the dollar later in the month.

EUR/USD is expected to hover near the mid-1.15s, while USD/JPY may remain in the mid-150s absent policy surprises. A meaningful shift in Fed tone or sustained global risk-on sentiment would favor a softer dollar as November progresses.

Bottom line: Equities have room to grind higher with strong earnings and seasonal tailwinds, while the dollar starts firm but may fade if risk appetite and Fed-easing expectations strengthen.

UK

October showed gradual stabilization: inflation cooled further, PMIs edged into expansion, retail improved, and housing firmed as mortgage rates eased. Growth is modest and uneven—construction lags—but the overall tone supports a BoE hold while waiting for clearer declines in wages and services inflation.

UK Economic Review — October 2025

October points to a gentle turn higher in UK momentum: inflation eased further, retail and confidence firmed into month-end, PMIs nudged above 50, and housing stabilized as mortgage rates drifted lower. Growth is still modest and interest-rate sensitive, but the data lean toward a soft-landing path with the BoE staying on hold while monitoring wage trends and services inflation.

Data & indicators (concise)

Growth & activity:

• GDP (Aug) +0.1% m/m; 3-month GDP +0.3%.
• S&P Global Composite PMI 51.1; Manufacturing PMI 49.6; Services PMI 51.1.
• Construction PMI 46.2 (ongoing contraction).

Consumers & retail:

• GfK confidence −17 (improved); CB confidence mixed; PCSI 48.3 (soft).
• Retail sales Sep: headline +0.5% m/m (+1.5% y/y); core +0.6% m/m (+2.3% y/y).
• BRC shop price inflation slowed to 1.0% y/y.

Labour market:

• Unemployment rate 4.8%; employment change +91k; claimant count +25.8k.
• Average earnings ex-bonus ~4.7% y/y; total pay ~5.0% y/y.

Inflation:

• Headline CPI ~3.8% y/y; core CPI ~3.5% y/y; monthly prints flat.
• PPI input −0.1% m/m; output 0.0% m/m.

Housing & credit:

• Halifax HPI −0.3% m/m in Sep; Rightmove HPI +0.3% m/m in Oct.
• Nationwide HPI +0.3% m/m in Oct; +2.4% y/y.
• Mortgage approvals 65.9k; average mortgage rate eased toward ~6.7%.
• Net lending to individuals £7.0bn.

External & fiscal/markets:

• The trade deficit narrowed slightly.
• 5-year gilt auction ~4.00%. GBP is broadly stable; gilt yields edged lower late month.

UK Economic Outlook — November 2025

The UK economy enters November on a delicate footing, balancing persistent inflation with weak growth momentum. GDP expansion remains positive but subdued, with forecasts pointing to quarterly growth of just 0.2–0.4% through 2026. Full-year growth is projected at 1.4% in 2025, easing to 1.2% in 2026. Inflation remains the key headwind: consumer prices have held near 3.8% in recent months—well above the Bank of England’s 2% target. International forecasts echo this trend, with the IMF expecting the UK to record the highest inflation in the G7 this year (3.4%), before easing mildly to 2.5% in 2026. Elevated inflation and structurally weak productivity continue to support higher interest rates and restrained market sentiment.

Labor market conditions are softening. Unemployment has climbed to 4.8% four-year highland is set to approach 5% by year-end as firms scale back hiring and vacancies decline. While wage growth remains resilient, a cooling jobs market is expected to help ease domestic inflation pressures ahead. Sentiment is slowly stabilizing. PMIs indicate modest improvement in private-sector activity, while consumer confidence has risen from summer lows, though household budgets remain tight.

Overall, November’s outlook is one of cautious optimism on inflation moderation, countered by continued sluggish growth and looming fiscal tightening.

Key November Watchpoints

PMI Surveys (early November): Manufacturing (3 Nov) and Services/Composite (5 Nov) data will indicate early Q4 business momentum and inflation trends in input costs.

Bank of England Decision (6 Nov): The MPC meeting and Monetary Policy Report will guide rate expectations. Markets will assess whether easing in 2026 remains likely amid stubborn inflation.

Labor Market Report (11 Nov): August–October figures on unemployment and earnings will signal whether labor cooling is accelerating.

Q3 GDP Estimate (13 Nov): Expected ~0.3% QoQ growth, confirming modest expansion and setting the tone for Q4 expectations.

CPI Report (19 Nov): A pivotal release. Any inflation downside would strengthen rate-cut expectations; upside surprises could delay easing.

Retail Sales (21 Nov): A test of household resilience amid higher living costs, key for Q4 consumption.

Autumn Budget (26 Nov): The most important event. Chancellor Rachel Reeves is expected to announce tax increases and spending restraint to close a £35–40B fiscal gap. Fiscal tightening will weigh on growth but aims to reinforce fiscal credibility and market confidence.

Bank of England Monetary Policy Expectations

The Bank of England is expected to leave the Bank Rate unchanged at 4.00% on November 6, pausing its easing cycle after cutting rates by a cumulative 125 bps since August 2024. Holding steady reflects policymakers’ desire to evaluate incoming data and the UK government’s upcoming budget before determining the next policy move.

Despite the likely pause, the MPC will maintain a dovish bias. Inflation remains above target at 3.8%, with core inflation also above 3%, prompting caution. Yet disinflation signals are building — September CPI undershot the BoE’s expected autumn peak, and private surveys show input costs at their slowest pace in nearly a year. This supports the view that the Bank is near, but not quite ready to resume cutting.

Markets see November as a “skip, not stop” moment. Futures prices imply a 60–75% chance of a 25 bp cut in December, reflecting expectations that easing will resume soon, particularly after the November 26 Autumn Budget clarifies fiscal tightening. The MPC has hinted it prefers to incorporate fiscal policy effects—potential tax hikes and spending restraint—before making further decisions.

The Monetary Policy Report is likely to reaffirm that inflation should glide toward ~2% medium-term, while growth stays subdued. Communication will be critical: a unanimous hold with dovish guidance is the base case, although a minority of analysts still argue for a pre-emptive November cut to support growth.

In short, the BoE is expected to hold rates in November but keep an easing bias, teeing up potential rate cuts at year-end or early 2026 as inflation cools and fiscal tightening bites.

British Pound (GBP) Outlook — November 2025

The British pound enters November under notable pressure, with risks skewed to the downside. Sterling fell more than 2% in October, sliding to its weakest levels since spring and trading near $1.31–1.32 versus the U.S. dollar by late month, well below its July peak near $1.38. Against the euro, GBP dropped to 2.5-year lows, with EUR/GBP above 0.87–0.88, reflecting weakening confidence in the UK’s macro trajectory.

The main weight on GBP is monetary policy divergence. Markets now expect the Bank of England to ease earlier and more aggressively than previously assumed, softening UK gilt yields relative to U.S. Treasuries and bunds. At the same time, the Federal Reserve’s hawkish tone and stronger U.S. data environment have supported the dollar. With the BoE leaning dovish and major peers on hold, FX flows favor the USD and EUR over sterling.

The Autumn Budget on November 26 is a major event risk. A credible deficit-cutting package—likely tax hikes and spending restraint—may reduce pressure on gilts but also dampen growth expectations, reinforcing a dovish BoE outlook and potentially weighing on GBP. Conversely, a budget viewed as insufficient could revive fiscal-credibility worries and pressure sterling via risk-premium channels. Thus, the pound may remain defensive and volatile ahead of the budget.

Strategists generally expect GBP/USD to test the $1.30 area, barring a BoE surprise. Upside risks mainly stem from a hawkish Bank stance or stronger-than-expected data. Yet without such catalysts, the path of least resistance appears lower, with range-trading and spikes in volatility likely around the BoE meeting and fiscal announcement.

FTSE 100 Outlook — November 2025

The FTSE 100 begins the month near record highs, after touching an intraday peak above 9,715 on October 28. Strong corporate earnings, easing inflation expectations, and hopes for lower BoE rates have driven gains. A weaker pound has also boosted the index by lifting the sterling value of overseas revenues — particularly benefiting exporters and global multinationals that dominate the FTSE.

Looking ahead, the FTSE’s backdrop is a mix of supportive monetary conditions and fiscal uncertainty. If gilt yields drift lower and sterling stays soft, the index may continue to find buyers, especially in globally-oriented sectors such as energy, mining, and pharmaceuticals. A gradual BoE easing path could further attract inflows into UK equities, particularly from yield-sensitive investors.

However, the Autumn Budget introduces risk. Expected tax increases or fiscal tightening could weigh on domestically-focused sectors—retail, financials, utilities—by dampening consumer demand and profit margins. With the index at record highs, investors may also take profits or demand fresh catalysts to drive new highs. Sector rotation and policy-driven volatility are therefore likely.

Base case: the FTSE 100 holds near record territory with potential modest upside, possibly approaching 10,000, provided the BoE stays dovish and the budget reassures markets without strangling growth. Still, volatility is expected, and sentiment could turn quickly if policy communication or data disappoints.

Bottom line: November could be choppy for UK markets. The pound leans weaker amid dovish BoE expectations and fiscal uncertainty, while the FTSE stays supported by global exposure, softer sterling, and easing hopes — but faces event-driven swings as investors parse the BoE and Autumn Budget.

Eurozone

October delivered stabilizing activity and cooling inflation near target, with core still a touch high. Services led, manufacturing found a floor, construction stayed weak, and credit crawled. The ECB can remain on hold as the bloc navigates a low-growth, soft-disinflation path into year-end.

Eurozone Economic Review — October 2025

Executive summary

October showed “soft disinflation, soft growth.” Headline CPI edged close to target while core held slightly higher; PMIs improved into marginal expansion, led by services and tentative stabilization in manufacturing. GDP prints confirmed low but positive growth, sentiment ticked up from weak levels, and credit expanded slowly. Construction and parts of the German industry remained drags. Net read: conditions stabilized, but momentum is modest; the ECB can stay on hold and watch wages, services prices, and credit.

Data & indicators (concise)

• Growth: Flash Eurozone GDP +0.2% q/q in Q3; +1.3% y/y.
• PMIs (HCOB): Composite 52.2; Manufacturing 50.0; Services 52.6.
• Prices: Headline CPI 2.1% y/y (Oct flash); Core 2.4% y/y; m/m ~0.2%.
• Producer prices: Germany PPI −0.1% m/m, −1.7% y/y; Spain PPI +0.3% y/y.
• Sentiment: Sentix −5.4; EC Economic Sentiment 96.8; Consumer −14.2.
• Money & credit: M3 +2.8% y/y; Private loans +2.6% y/y.
• Retail: Eurozone retail sales +0.1% m/m, +1.0% y/y (Aug).
• Industry & construction: Euro-area IP −1.2% m/m (Aug); Construction PMI 46.0.
• Current account: €11.9bn surplus (Aug).
• Retail sales and labour prints for signals on real demand.

Country color:

• Germany: Composite PMI 53.8; HICP ~2.3–2.4%; ZEW expectations firmer; industry still soft.
• France: Services lag; inflation low (~1.2%).
• Italy: Inflation ~1.2–1.6%; construction weak.
• Spain: GDP +0.6% q/q; CPI ~3.0–3.1%.

Economic context

The Eurozone avoided recession through 2025, but growth remains lackluster. The flash GDP estimate for Q3 showed just +0.2% QoQ growth, reflecting a fragile recovery. Growth is uneven across countries – for example, Spain’s economy (+0.6% QoQ) is outpacing Germany’s (0.0%). Consumer prices have largely converged to the ECB’s “~2%” target: headline inflation eased to 2.1% in October, continuing a steady decline from higher levels earlier in the year. Core inflation remains slightly above target at 2.4%, indicating underlying price pressures (particularly in services at +3.4% YoY) are still present, though moderating.

Meanwhile, the labor market stays robust – the Eurozone unemployment rate is 6.3%, near its lowest on record. Employment growth has cooled but joblessness remains stable, suggesting the economy retains some underlying strength. Consumer activity is mixed: retail sales volumes are growing only marginally (+0.1% MoM in August), signaling cautious household spending as high borrowing costs and past inflation squeeze consumers. Business surveys offer a cautiously optimistic signal: October’s PMI readings showed the composite output index at 52.2, a 17-month high, with services expanding solidly (52.6) and manufacturing output finally stabilizing (manufacturing PMI hit 50.0). This uptick in sentiment suggests the economy may have gained a bit of momentum entering Q4. Indeed, the European Commission’s Economic Sentiment Indicator rose to 96.8 in October (an eight-month high), though it remained below its long-term average of 100, reflecting only modest confidence.

Eurozone Economic Outlook — November 2025

The Eurozone heads into late 2025 with gradually improving but still modest growth prospects. Forecasts point to GDP rising around 1.2% in 2025, up from about 0.8% in 2024, supported by easing inflation and improving household purchasing power. Growth is expected to remain near stall speed, with the expansion uneven across member states and reliant partly on government spending, including German investment in defense and infrastructure. Public debt levels are projected to increase as fiscal support persists. A further pickup toward 1.3% growth is expected by 2027, according to ECB projections, while the European Commission and IMF forecasts broadly align around the 0.9–1.2% range for 2025.

Inflation continues to moderate toward the target, with headline HICP expected near 2.1% in 2025 and falling below target in 2026 before stabilizing around 2% later in the decade. Core inflation is projected to cool to 2.4% in 2025 and 1.9% in 2026 as wage growth normalizes and prior energy-related pressures fade. With price stability in sight, the ECB is expected to keep rates on hold, having likely completed its rate-cut cycle barring major shocks.

Overall sentiment is cautiously positive but fragile. Modest growth, easing inflation, and improving real incomes support the outlook, but risks remain from fiscal tightening, reform delays, external trade uncertainty, and geopolitical tensions. The baseline view: steady but subdued growth and anchored inflation — with vigilance toward potential global and policy shocks.

Key Eurozone Data & Events — November 2025

November brings several important data releases and policy signals that will shape the Eurozone’s late-2025 outlook and market tone. Early in the month, attention will fall on September retail sales and industrial production figures. These will reveal whether household spending and factory output strengthened heading into Q4 after a sluggish summer. Combined with recent improvements in PMIs, these indicators will help determine whether the economy is gaining real traction or merely stabilizing at low levels.

On November 14, Eurostat publishes the second estimate of Q3 GDP. This release will refine the initial +0.2% QoQ reading and provide a detailed breakdown by demand components (consumption, investment, trade), offering clues on resilience across member states. Any upward revision or evidence of firming domestic demand would support the narrative of gradual recovery; weak details could reignite stagnation concerns.

The focus then shifts to flash PMIs on November 23, a key forward-looking gauge. October’s upside surprise saw the composite index rise to 52.2, the strongest in over a year. Markets will monitor whether November data sustain expansion — especially manufacturing staying around or above 50 and services maintaining momentum. Germany and France will be scrutinized for continued divergence.

Late November brings the flash HICP inflation estimate for the month (around Nov 29–30). With inflation hovering just above target, any additional cooling would reinforce expectations of a prolonged ECB policy pause. Conversely, a surprise uptick — particularly in core services — could complicate the rate-path narrative.

In early November, the European Commission’s Autumn 2025 forecast will update official projections for growth, inflation, and fiscal balances. Any meaningful changes to the ~1% growth outlook could shift expectations on policy coordination and fiscal stance.

While the ECB has no meeting this month, policy speeches and global developments — particularly U.S. monetary policy shifts or geopolitical events — may influence sentiment. Overall, November’s data will be pivotal in confirming whether the Eurozone is truly entering a modest recovery phase or risks slipping back toward stagnation.

Euro Market Sentiment & Currency Drivers — November 2025

Euro market sentiment has turned cautiously constructive heading into late 2025, though conviction remains limited. After a volatile October, EUR/USD is trading in the mid-$1.15s, having briefly tested above $1.16 before losing momentum. Attempts at sustained rallies have faded, underscoring a lack of strong catalysts. Positioning data suggest traders hold modest long-euro exposure, reflecting mild optimism but no aggressive bullish stance. Improved growth signals — notably easing recession fears and better PMIs — support sentiment, yet sub-trend Eurozone growth and lingering uncertainty cap upside. In essence, markets view the Eurozone as past its worst phase but not yet set for a robust expansion, leaving the euro in a wait-and-see trading range. Investors are watching for clearer signals that either European growth will strengthen or U.S. momentum will weaken before confidently pushing EUR/USD higher.

Monetary Policy & Rate Differentials

Interest-rate expectations have shifted in the euro’s favor compared to earlier in 2025. The ECB has paused cuts, holding the deposit rate at 2.00% and signaling a prolonged wait-and-see stance while inflation sits near target. Consensus suggests the ECB is likely finished easing, barring an unexpected shock. Meanwhile, the Federal Reserve has entered a cutting cycle, delivering another 25 bps cut in late October and narrowing the transatlantic rate differential.

This shrinking yield gap makes euro-denominated assets relatively more attractive and reduces one of the dollar’s biggest advantages from the prior cycle. Still, Fed guidance remains data-dependent, and expectations could shift quickly. If U.S. data weaken further or markets price more aggressive Fed cuts, the euro could benefit. Conversely, upside inflation surprises in Europe — or renewed global risk aversion — could restrain gains.

Bottom Line

The euro enters November with balanced positioning, moderate support from narrowing rate spreads, and cautious optimism on growth, but remains capped by fragile fundamentals. A sustained move higher likely requires clearer confirmation of Eurozone recovery or stronger conviction in ongoing Fed easing.

China

October delivered a cautious stabilization: trade and industrial output supported growth, prices stayed soft with deflation easing, credit and reserves improved, and the CNY was steady. Late-month PMIs signaled fragile momentum and ongoing property headwinds. Policy stays supportive and targeted as China heads into Q4 with moderate, policy-aided growth.

China Economic Review — October 2025

October showed a cautious stabilization: external trade improved, prices stayed soft with deflation easing, credit flows picked up, and FX reserves edged higher. Growth decelerated from mid-year but remained positive, while property stayed weak and manufacturing momentum softened late in the month. Policy remained accommodative and targeted, balancing CNY stability with support for credit and investment.

Data & indicators (concise)

• Growth: Q3 GDP +4.8% y/y, +1.1% q/q; YTD growth ~5.2%.
• Activity: Industrial production (Sep) +6.5% y/y; Retail sales (Sep) +3.0% y/y; Fixed-asset investment (Sep) −0.5% y/y.
• Labor: Surveyed unemployment at 5.2%.
• Prices: CPI −0.3% y/y, +0.1% m/m; PPI −2.3% y/y.
• Credit & liquidity: New loans ¥1.29T; TSF ¥3.53T; M2 +8.4% y/y; outstanding loans +6.6% y/y.
• External: Exports +8.3% y/y; imports +7.4% y/y; trade surplus $90.45B. FX reserves $3.339T.
• Housing & rates: New home prices (Sep) −2.2% y/y; 1-yr LPR 3.00%, 5-yr LPR 3.50%.
• PMIs (Oct official): Manufacturing 49.0; Non-manufacturing 50.1; Composite 50.0.
• Profits: Industrial enterprise profits +3.2% YTD through Sep.
• Sentiment: PCSI 74.19.

How October evolved

• Early months data showed firmer exports/imports, better industrial output, and improving consumer sentiment.
• Mid-month credit prints and reserves reinforced stabilization.
• Late-month official PMIs slipped (manufacturing <50; composite ~50), highlighting fragile momentum and persistent property drag.

Risks to monitor

• Property sales, developer liquidity, and local-government financing.
• External demand softness and trade frictions are impacting export orders.
• Private-sector capex appetite despite higher TSF.
• Labor underemployment pockets (including youth) are weighing on consumption.
• FX stability versus growth support if global rate differentials stay wide.

China Economic Outlook for November 2025

Growth and GDP: China’s economic growth is expected to moderate in the final quarter of 2025, after the solid 5.2% expansion in the first three quarters. Major forecasters see full-year 2025 GDP growth around 4.8%–5.0%, essentially on target. The IMF projects 4.8% growth in 2025, easing to 4.2% in 2026. Similarly, the World Bank raised its 2025 forecast to 4.8% (from 4.0% earlier) given stronger-than-expected output this year, but it foresees momentum slowing to 4.2% next year as export growth and fiscal support ebb. These forecasts assume that China’s economy maintains its current pace but doesn’t reaccelerate dramatically in Q4. In other words, November’s outlook is one of steady yet constrained growth, with the economy operating below its potential due to internal headwinds.

Key Drivers & Risks

China enters November balancing modest external-led growth against persistent domestic weakness. Export strength—supported by trade diversion, competitive pricing, and a weaker yuan—continues to cushion the economy, but household demand and property investment remain fragile. The economic mix is unbalanced, raising concerns about sustainability. November’s growth trajectory will hinge on whether consumer activity picks up around Singles’ Day (11/11) and whether infrastructure spending accelerates as authorities push to meet year-end targets. Without a material improvement in household sentiment, late-2025 growth will lean heavily on exports and public-sector investment.

Deflation & Inflation Outlook

China remains close to deflation, with CPI down 0.1% YoY through September. Economists expect price pressures to turn slightly positive in Q4 as base effects fade; core inflation has already ticked higher to a 19-month high. Still, analysts warn demand is too weak for a strong rebound, and some expect both CPI and PPI to hover near zero or negative through early 2026. The October inflation report (due mid-November) will be pivotal in confirming whether China has finally exited deflation territory.

Property Sector Drag

Real estate remains the largest domestic risk. Home prices continue to fall (-2.5% YoY in August, with further declines in September), investment has plunged (-13.9% YTD), and developers face liquidity strains. Policy easing—lower mortgage rates and loosened purchase rules—has sparked tentative stabilization in top cities, but confidence is weak and analysts do not expect a broad housing bottom until H2 2026. Property stress will keep pressure on construction, household spending, and local government finance.

Trade Truce & External Conditions

Markets welcomed a one-year trade truce with the U.S. announced at the late-October APEC summit, which paused threatened 100% tariffs and eased some export controls. This removes a near-term downside risk and may support orders for exporters in November. However, underlying geopolitical tensions persist, and global demand is expected to soften next year. Net exports will likely contribute positively to Q4 GDP, but cannot fully offset domestic drags if consumption and housing remain weak.

Policy & Institutional Tone

Beijing projects confidence while prioritizing stability over large-scale stimulus. At the October Fourth Plenum, President Xi emphasized “high-quality development” and a medium-term path toward modernization, while acknowledging global competition and domestic strains. Authorities appear set to maintain targeted support—not aggressive stimulus—to hit 2025 goals while avoiding financial excess. The IMF and World Bank share cautious optimism: growth has held, but risks of a debt-deflation trap remain due to property stresses and weak demand.

China: Key Data & Events to Watch — November 2025

November will deliver a dense run of economic data and policy signals that will help determine whether China’s late-2025 stabilization gains traction or fades again.

Manufacturing & Services PMI

The month opened with October PMIs showing manufacturing back above 50 for the first time since early 2025, hinting at renewed momentum driven by exports. Services remain modestly expansionary (~50–52). The November PMIs (due end-of-month) will indicate whether this upswing is sustainable or temporary.

China International Import Expo (Nov 5–10)

The CIIE in Shanghai functions as both an import showcase and a policy signaling event. Markets will focus on:

• Major purchase agreements
• Messages on market openness and “dual circulation”
• Signals of consumer appetite via imported goods demand

Authorities may use the platform to reinforce confidence and highlight import expansion commitments.

Inflation Data (Nov 10)

October CPI and PPI will be critical for assessing China’s transition out of deflation. A shift to slightly positive CPI (~+0.1–0.2% YoY) would confirm stabilization, while another negative print would highlight lingering demand weakness. PPI deflation is expected to narrow further. The results will influence expectations for future monetary easing.

Credit & Trade (Nov 10–15)

New lending and total social financing will show whether policymakers are sustaining stimulus momentum. Robust credit growth would point to continued fiscal-bond issuance and infrastructure push; weak figures would signal throttled demand.

Trade data will reveal whether September’s export surge persisted and whether imports—particularly consumer goods and industrial inputs—are recovering.

Monthly Activity Data (around Nov 15)

Key indicators include:

• Industrial production — Can ~6.5% growth be sustained?
• Retail sales — Expected mild rebound after soft September; a weak print would reinforce consumer caution.
• Fixed-asset investment — Infrastructure may rise, property still contracting.
• Urban unemployment — A stable ~5.2% would support sentiment.

These releases will be critical for the Q4 GDP trajectory.

PBOC Loan Prime Rate Decision (Nov 20)

Markets are watching for a potential LPR cut (1-yr at 3.00%, 5-yr at 3.50%). While consensus leans toward a hold, a surprise 5–10 bps cut is possible given low inflation. If unchanged, guidance and liquidity operations (or a possible RRR cut) will be scrutinized.

Policy Signals & External Developments

Regulators may unveil additional property support or fiscal acceleration measures to meet year-end growth goals. Markets will also track:

• Follow through on the U.S.–China trade truce
• Timing of any RRR cuts
• Early hints for December’s Central Economic Work Conference

Market Outlook: Yuan, Stocks & Financial Markets — November 2025

RMB Outlook: Stable with Mild Upside Bias

The Chinese yuan has stabilized after a volatile 2025, trading near 7.10–7.15 per USD in early November—firmer than the 7.30+ levels seen earlier this year. Support has come from the U.S.–China trade truce, more controlled capital flows, and expectations of a softening U.S. dollar as the Federal Reserve approaches an easing pivot.

Markets anticipate a narrow trading band near 7.05–7.25 in November. The PBOC has been actively managing stability through strong daily midpoint fixes, liquidity tightening offshore, and guidance to limit speculation. A meaningful move below 7.0 would require sustained USD weakness and stronger Chinese data, while a break above 7.25–7.30 would likely trigger intervention. The 7.50 level remains a “do-not-cross” line in the event of renewed trade tensions.

Consensus: guarded yuan appreciation if global risk sentiment improves and Fed easing signals strengthen, but volatility remains tied to U.S. politics and trade rhetoric.

Chinese Equity Markets — November 2025 Outlook

Chinese equities enter November after a powerful rally and now face a period of consolidation and reflection. The Shanghai Composite is near 4,000 — close to a 10-year high — with gains of ~15% YTD, while the CSI 300 is up ~20%, its best year since 2019. Hong Kong’s Hang Seng has surged ~31% YTD, making it one of the world’s top performers in 2025, supported by tech strength and strong southbound mainland flows.

The U.S.–China trade truce has removed a key risk overhang, improving sentiment and encouraging selective foreign inflows. However, the rally has been powered primarily by domestic investors, reallocating from property and deposits into equities. China’s households still hold only ~5% of their wealth in stocks — suggesting more room for participation if confidence improves — and insurers have increased allocations, adding structural liquidity support.

Despite strong performance, risks are rising. Gains have been concentrated in AI, chips, and strategic tech — sectors where valuations have stretched after 80–100%+ moves. Meanwhile, “old economy” sectors lag, earnings momentum remains modest, and margin debt has reached record levels, drawing regulatory vigilance. Authorities are balancing support for markets with efforts to avoid a leverage-driven bubble, and the “National Team” stands ready to stabilize sentiment during volatility, as seen during October’s trade-scare dip.

November Outlook

Markets are expected to be range-bound with a slight upside bias. Policy support, improving PMIs, and potential easing keep downside risk limited, but stretched valuations in hot sectors and economic uncertainty argue for caution. A rotation trade into financials, industrials, and lagging value names could emerge if macro data continue improving and the trade truce holds.

Japan

Japan closed October with firm inflation, a rebound in industrial production, resilient services, and a weaker—but volatile—yen. Housing was uneven, construction orders were strong, and wages were improving modestly. With growth moderate and prices sticky, the BoJ stays patient and accommodative while watching the yen and wage-price dynamics into year-end.

Japan Economic Review — October 2025

October delivered a steadier—but still uneven—backdrop. Prices stayed above the BoJ’s target, industrial output firmed into the month-end, services remained resilient, and the yen was volatile around policy headlines. Housing was mixed, capex signals improved at the margin, and foreign inflows stayed constructive. Policy remains accommodative with a gradualism bias as authorities balance yen stability, inflation persistence, and growth support.

Data & indicators (concise)

Growth & activity

• Industrial production (Sep): +2.2% m/m; near-term outlook: Oct +1.9%, Nov −0.9% (METI projections).
• au Jibun Bank PMIs (Oct): Composite 50.9, Services 52.4, Manufacturing 48.3.
• Leading Index: 107.0; Coincident Index: −1.3% m/m.
• Economy Watchers Index: 47.1.

Prices

• National Core CPI 2.9% y/y (Sep); Tokyo Core CPI 2.8% y/y (Oct).
• BoJ core gauge: 2.1% y/y.
• PPI (Sep): +0.3% m/m, 2.7% y/y.

Labor & income

• Unemployment: 2.6%; jobs-to-applicants 1.20.
• Average cash earnings: +1.5% y/y.
• Household confidence: 35.8 (Oct); PCSI 35.21 (early Oct).

External

• Exports (Sep): +4.2% y/y; Imports +3.3% y/y; trade balance −¥234.6bn.
• Foreign flows: strong equity inflows; mixed bonds.

Credit & money

• Bank lending: +3.8% y/y.
• Money supply: M2 +1.6% y/y; M3 ~¥2,228.9T.

Capex & orders

• Machine tool orders: +9.9% y/y.
• Core machinery orders: softer through Aug.

Housing & construction

• Construction orders: +34.7% y/y.
• Housing starts: −7.3% y/y.

Markets

• Nikkei 225 climbed during the month; USDJPY moved above 150 at times.
• JGB auctions: 5-yr ~1.233%, 30-yr ~3.248%; 2-yr ~0.93%.

Markets snapshot & drivers

• FX (JPY): Volatile around policy/fiscal headlines; bouts of firmness on CPI releases followed by stabilization.
• Rates (JGBs): Long end repriced higher term premium; auction demand remained orderly.
• Equities: Gains led by exporters, semis, machinery; domestic defensives supported by stable services demand.
• Credit/liquidity: Bank lending growth steady; funding markets calm.

How October unfolded

• Early month: Political shift (LDP leadership to Sanae Takaichi) boosted fiscal-support expectations; equities rallied, JPY weakened.
• Mid-month: Inflation prints steady above target; services stayed firm, manufacturing soft.
• Late month: Industrial output rebounded; Tokyo CPI firm; labor indicators stable; housing mixed, but construction orders strong.

Risks to monitor

• Yen depreciation re-pressurizes import costs.
• Manufacturing softness persists despite export support.
• Wage gains lag inflation, capping consumption.
• Housing weakness is spilling into broader domest