The Week Ahead - 8 - 12 December 2025

United States – The main event next week is Wednesday's FOMC decision. We continue to expect a 25bps cut, based on both hard and soft data. Despite it being relatively old data, the unemployment rate ticked up to 4.44% in September. We think the 'hard' labour market data from ADP since then, which has been very weak, will not carry much weight. Soft data, particularly the Fed's own Beige book, will be quite influential. It also pointed to a weakening labour market in the period until mid-November, while the assessment of inflation remained the same. The defining moment for market pricing to switch back to a rate cut was when New York Fed President Williams, who, like Powell, is neither an outspoken hawk nor dove, suggested more easing this year was appropriate. Powell did not push back directly or in the media against this idea, suggesting he's on board too and will seek the support of the committee. We think he'll succeed, but not unanimously, and dissents are likely. We'll also get new projections and a dot plot. The end-of-2025 dots will show the still divided stance of the committee, and will reveal what Powell was up against. The 2026 dots will likely be dispersed, with both substantial rate cuts, rate hikes, and everything in between, reflecting the uncertainty in the outlook. We expect the projections to show moderately higher unemployment, while inflation projections are likely relatively stable. China – Annual export growth for November is expected to turn positive again, after holiday distortions and base effects drove a contraction in October. Import growth is also expected to accelerate somewhat. Consensus expectation including ours is for CPI inflation to have picked up in November (although remaining low), mainly driven by base effects from last year.