Articles

Summary

• Core CPI held at 3.0% in November
• Underlying inflation pressures remain firm
• Data supports gradual BoJ tightening

Japan’s nationwide inflation data for November showed price pressures remaining firmly entrenched, reinforcing expectations that the Bank of Japan will continue its gradual path toward policy normalisation.

Government data released on Friday showed core consumer prices rose 3.0% year-on-year in November, matching market expectations and marking another month of inflation running well above the Bank of Japan’s 2% target. The core measure excludes fresh food prices but includes energy, making it one of the most closely watched gauges of underlying inflation trends.

Headline inflation was little changed, with overall CPI rising 2.9% year-on-year, underscoring persistent price pressures across the economy despite recent volatility in energy markets and a modest slowdown in global growth momentum.

A broader measure of underlying inflation, which excludes both fresh food and energy prices, also rose 3.0% from a year earlier. The strength of this “core-core” gauge suggests inflation is no longer being driven solely by imported cost pressures, but is increasingly supported by domestic factors such as services prices, labour costs and corporate pricing behaviour.

The November data reinforces the view that Japan’s inflation backdrop remains fundamentally different from the deflationary environment that characterised much of the past two decades. While policymakers continue to stress the need for sustainable, demand-driven inflation, recent readings point to a more persistent trend than initially expected.

From a policy perspective, the inflation figures strengthen the case for the Bank of Japan’s expected rate hike, which would take its policy rate to the highest level in roughly three decades. However, officials are likely to maintain a cautious tone, mindful of the recent rise in Japanese government bond yields and the sensitivity of financial conditions to further tightening.

For markets, the data is broadly in line with expectations and therefore unlikely to trigger significant volatility on its own. Instead, attention is expected to remain focused on the BoJ’s policy guidance and Governor Kazuo Ueda’s assessment of whether current inflation dynamics are sufficiently durable to justify further rate increases over time.

This article was written by Eamonn Sheridan at investinglive.com.

Summary

• PM office source raises nuclear weapons debate

• Comments clash with Japan’s non-nuclear tradition

• Security concerns driving renewed discussion

Japan’s long-standing stance on nuclear weapons has come under renewed scrutiny after a source within the prime minister’s office suggested the country may ultimately need to possess nuclear arms, comments that risk sparking political backlash both domestically and internationally. Kyodo reporting.

Speaking to reporters on Thursday, the source — who is involved in shaping security policy under Prime Minister Sanae Takaichi’s government — said Japan should consider nuclear weapons in principle, while simultaneously acknowledging that such a move would be highly impractical. “I think we should possess nuclear weapons,” the source said, adding that “in the end, we can only rely on ourselves,” while stressing that nuclear armament is not something that could be achieved quickly.

The remarks come as Prime Minister Takaichi, known for her hawkish views on national security, weighs whether to review Japan’s Three Non-Nuclear Principles, which prohibit the possession, production, or introduction of nuclear weapons. First articulated by then-Prime Minister Eisaku Sato in 1967, the principles became a cornerstone of Japan’s postwar identity. Sato later received the Nobel Peace Prize in 1974 for his role in promoting nuclear restraint.

Any attempt to revisit Japan’s nuclear policy remains deeply controversial. Public opposition is rooted in the country’s pacifist constitution and its unique historical experience as the only nation to have suffered atomic bombings. The issue also conflicts with Japan’s longstanding diplomatic commitment to nuclear disarmament, a cause strongly supported by survivors of Hiroshima and Nagasaki.

At the same time, critics note that Japan already relies on the U.S. nuclear umbrella for deterrence, a dependence some argue sits uneasily alongside the non-nuclear principles. This tension has periodically resurfaced during periods of heightened regional security risk.

The prime minister’s office source said there had been no direct discussion with Takaichi on formally revising the principles. Still, the comments have revived memories of past political fallout: in 1999, then parliamentary vice defence minister Shingo Nishimura was dismissed after suggesting Japan consider nuclear armament.

For now, the remarks underscore the growing strain between Japan’s historical pacifism and evolving regional security realities.

—

When these guys are your near neighbor …

Anyway, more near term, the BoJ is set to make history today:

• Economic and event calendar in Asia December 19, 2025 – Bank of Japan rate hike expected

This article was written by Eamonn Sheridan at investinglive.com.

New Zealand recorded a monthly trade deficit of NZ$163 million in November, as import growth slightly outpaced exports, according to data released by Statistics New Zealand. While the deficit was relatively modest in monthly terms, the figures highlight the ongoing challenge of balancing external trade amid uneven global demand and domestic consumption trends.

Total exports rose to NZ$6.99bn in November, reflecting steady shipments across key commodity categories, including dairy and agricultural products. However, imports climbed to NZ$7.15bn, resulting in the net deficit for the month. The strength in imports suggests resilient domestic demand and ongoing investment needs, though it also points to continued pressure on the external balance.

On an annual basis, New Zealand’s trade deficit widened to NZ$2.06bn, underscoring the structural imbalance between export earnings and import spending over the past year. While export performance has improved from earlier lows, it has not yet been sufficient to fully offset higher import volumes and prices, particularly for capital goods and energy-related items.

For financial markets, the trade data offers a mixed signal. A narrower-than-feared monthly deficit may provide some reassurance around near-term external stability, but the persistent annual shortfall reinforces the view that net trade is unlikely to be a strong driver of economic growth in the near term. Currency markets tend to focus less on the headline deficit and more on broader macro dynamics, including interest-rate expectations and global risk sentiment.

From a policy perspective, the data is unlikely to materially alter the Reserve Bank of New Zealand’s near-term outlook on its own. However, sustained trade imbalances could remain a background consideration as policymakers assess growth momentum, inflation pressures and the transmission of monetary policy through the economy.

Overall, November’s trade figures point to steady but unspectacular export performance, offset by firm import demand, leaving New Zealand’s external position modestly in deficit as the year draws to a close.

This article was written by Eamonn Sheridan at investinglive.com.

• US November CPI 2.7% y/y vs 3.1% expected
• ECB leaves rates unchanged at 2.00% as expected, but lifts 2026 inflation forecast
• Bank of England rate decision: A quarter-point rate cut as expected
• US initial jobless claims 224K versus 225K estimate.
• Fed’s Goolsbee: The latest inflation data was favorable
• ECB sources report: Policymakers had no appetite to take rate cut off the table
• Carney: Sectoral deals are unlikely, talks likely to roll into USMCA review
• BOE’s Bailey: I’m ‘very encouraged’ by progress in hitting inflation target
• ECB’s Lagarde: Economy resilient, service-led growth expected to continue

Markets:

• WTI crude flat at $56.04
• US 10-year yields down 3.3 bps to 4.12%
• Gold down $10 to $4330
• S&P 500 up 0.8%
• EUR lags, AUD leads

For such a lively day in terms of economic data, the FX market was surprisingly flat at the finish. The moves have been limited to 16 pips or less, with a modest decline in the euro as the most-notable move. It came as an ECB sources report following the decision highlighted that the governing council isn’t ready to let go of dovish optionality, given a number of risks to growth next year.

The CPI report sparked some serious confusion. The big downside miss on headline and core initially sparked USD selling but skepticism arrived shortly afterwards. The BLS chose not to estimate a number of items and instead left them as zeros for October’s data. This is the first real report since the government shutdown and the inability to collect data during that period forced a series of assumptions. For what it’s worth, two-year yields are virtually flat since the report even with Goolsbee offering a dovish take.

The Bank of England decision was not a big surprise but initially led to some good sized GBP bids as cable ran to 1.3448 in a nearly 1 cent rally. It couldn’t hold on though and gave the vast majority back, in part due to some more-dovish comments from Bailey later.

Gold went on a $40 round trip to $4371 and back down to $4331 while silver cooled a tad from its earlier record.

The big winner on the day was stocks in part due to a huge revenue beat from Micron. Megacap tech was bid and the Nasdaq led the way in a partial reversal following four days of declines. Is Santa finally arriving to the market? Fedex reported after the bell and the early indications are 4% and that’s good news from the economic bellwether.

This article was written by Adam Button at investinglive.com.

At the end of the day, a government’s economic job is to spend money and collect taxes.

The ones that spend too much ultimately have to pay it back, with interest. Running deficits is almost always popular with voters (and certainly with donors), particularly when it makes the stock market go up.

BCA today has a great chart showing just how much more the US has been spending than any other major economy. The deficits are out of control and were worsened further this year by latest round of corporate tax cuts.

The damage started with Trump’s election really. That tamed the Tea Party movement and it’s since been wiped out completely. the The Tax Cuts and Jobs Act of 2017 kicked off the spending orgy, covid worsened it, Biden added his infrastructure act and now Trump has gone back to the deficit trough.

There is no end to it and seemingly no political appetite to deal with it. Rather, we’re more likely to get politicians who lean on central banks to monetize the deficit with artificially low rates.

What’s worse in the US situation is that it’s sitting on a time bomb around social security, medicare and healthcare in general. Congress doesn’t look like it will pass Obamacare subsidies so those rates will rise in the new year but the pressure to help people pay for healthcare isn’t going to go away, nor will the aging demographics and out-of-control costs of US treatment.

Notably, the US dollar has been in a bull market for nearly the entirety of this chart and I don’t think that’s a coincidence. If/when Congress changes its tune on deficits (or the market barks), that’s going to be a reversal in the USD excess. At the same time, I don’t think it’s a surprise that euro had a better year this year as Germany signalled a loosening of spending in order to fund military investments.

This article was written by Adam Button at investinglive.com.

President Trump is planning to issue an executive order establishing two new federal holiday, according to Axios.

The move would make Dec 24 and Dec 26 holidays, in addition to Christmas which is already a day off. It would apply to Federal workers but not state and local governments

In reality, many workers already get these days off but some are forced to use holidays. This time of year is a great time to unwind and spend time with family and anything that stretches that timeline is good news, even if it results in a slight hit to productivity.

The New York Stock Exchange currently doesn’t close for either the 24th or 26th but there is an early close at 1 pm ET on the 24th. Liquidity is low at that time of year and it might be beneficial to close the market anyway. There is no obligation for exchanges to follow the federal calendar and don’t for Columbus Day and Veterans Day.

For the bond market, SIFMA also doesn’t follow the federal calendar so ultimately this would have little direct effect on anything but could be an important signaling mechanism, or at least a way for Trump to score back some points with federal workers after the government shutdown.

Axois also notes that it’s not clear if Trump even has the authority to grant multiple days off by executive order but I would imagine Congress would find that hard to fight. The most recent Juneteenth holiday was passed by Congress.

Other orders that Trump is considering are reclassifying cannabis and tariff rebate checks.

On tariffs, the Supreme Court is likely to decide early in the year on whether tariffs are legal. If not, issuing rebates could cause a big hole in the deficit, in particularly because tariffs may have to be refunded. There is no fixed date on that decision and the Supreme Court technically has until June but important questions are usually decided early.

This article was written by Adam Button at investinglive.com.

Canada spent weeks trying to get a deal for steel and aluminum producers in the autumn. At one point a deal looked very close and Trump even hinted that it was coming.

However the deal fell apart and Trump blew up over Ontario’s tariff ads. The leaders met at the FIFA World Cup draw and the commentary was positive but it looks like no help is coming for steel and aluminum for now. That said, the help could come in 2026 as a broader trade deal is negotiated.

U.S. Trade Representative Jamieson Greer told members of U.S. Congress Wednesday that there were some things the US wanted from Canada before extending the USMCA for 16 years. Some points in a leaked document:

• Access to the dairy market
• Canada’s Online Streaming Act and Online News Act
• Provincial bans on U.S. alcohol products
• Alberta’s unfair treatment of electrical power distribution providers in Montana
• Government procurement

That seems like a reasonable starting point for negotiations. A key timeline to watch is early, which is when the US will outline its USMCA plans to Congress in more detail.

Perhaps the larger difficulty in negotiations will be the US trying to align North American policy, while also asking so much of its neighbours while continuing to restrict access to its markets. From the same document, here are some US priorities:

• Strengthening rules of origin for non-automotive industrial goods to ensure trade benefits flow to the Parties.

• Enhancing alignment on tariffs, export controls, and investment screening.

• Developing mechanisms to penalize the offshoring of U.S. production to Canada or Mexico resulting from regulatory arbitrage.

• Developing a “Critical Minerals Marketplace” to incentivize regional mining, processing, and manufacturing

Despite all the drama, the Canadian dollar has outperformed the US dollar this year and is near a three-month low.

This article was written by Adam Button at investinglive.com.

Trump Media ($DJT) — best known for Truth Social — dropped a bombshell on Thursday morning, announcing a merger with TAE Technologies—a fusion power company—in a deal valued at over $6 billion. entity.

The market reaction has been instant and violent. Shares of DJT were languishing near recent lows around $10.40 but have ripped higher in pre-market trading, currently trading up roughly 28% at $13.41.

The thinking here is that Trump’s power will lead to government contracts for fusion power or technology. It’s class crony capitalism at work.

Even by those standards, moving from “free speech social media” to “utility-scale nuclear fusion” is right at the top of the list.

The headline is an all-stock deal expected to close in mid-2026. Shareholders of each firm will own approximately half of the combined company.

As if combining Trump and unproven fusion technology wasn’t enough, the press release leans heavily on AI as well, saying it will benefit from the massive energy demand fueled by the “race against China for AI superiority.” The companies stated that fusion power will “help America win the A.I. revolution.”

Buzzwords everywhere.

Trump Media is putting up cash—$200 million at signing and another $100 million available later. Devin Nunes will stay on as co-CEO alongside TAE’s Dr. Michl Binderbauer.

This stock had been left for dead this year because Truth Social has minimal revenue and users. That changed in a heartbeat this morning.

The price action shows a massive gap up, hitting a high of $14.71 before settling back into the $13s. That $10.40 level is now major support —technicals go out the window when you have a fundamental narrative shift this large.

In reality, commercial fusion power has been “five years away” for the last thirty years and TAE has no revenue. There are currently zero commercial plants producing electricity using fusion.

Does it even matter in the golden age of fraud and meme stocks?

This gives DJT a brand new story to tell. It’s no longer just a proxy for political sentiment or a niche social platform; it’s now a speculative call option on unlimited clean energy and the AI boom.

Watch it at the open.

This article was written by Adam Button at investinglive.com.

• Prior was +3.0%
• Core CPI 2.6% vs 3.0% expected (prior 3.0%)

This is surprisingly soft but there were some problems collecting the data and this will be met with skepticism. The BLS was assuming that October CPI was zero because of the government shutdown. I think most economists missed this but it was highlighted by UBS, which indicated that it would put a 27 bps downward bias into the report. If you strip that out, it’s right at 3.0%

This article was written by Adam Button at investinglive.com.

• Prior week 236K revised to 237K
• The 4-week moving average was 217,500, an increase of 500 from the previous week’s revised average. The
  previous week’s average was revised up by 250 from 216,750 to 217,000
• Continuing claims 1.897M vs 1.930M set
• Prior week revised to 1.830M from 1.838M
• The 4-week moving
  average was 1,902,000, a decrease of 14,000 from the previous week’s revised average. The previous week’s average was
  revised down by 2,000 from 1,918,000 to 1,916,000.

Initial jobless claims track the weekly number of Americans filing for unemployment benefits for the first time and are one of the most timely indicators of U.S. labor-market health and overall economic momentum. Rising claims can signal increasing job losses and a slowing economy, while declining claims suggest that hiring is outpacing layoffs, pointing to underlying economic strength. Released every Thursday by the U.S. Department of Labor, the report is closely watched by economists and markets alike, with particular emphasis on the four-week moving average, which helps smooth out weekly volatility and provides a clearer view of underlying labor-market trends.

The initial claims fell sharply a few weeks ago, but has rebounded back to the trend. The decline seemed to be influenced by faulty seasonals as a result of the Thanksgiving Day holiday.

This article was written by Greg Michalowski at investinglive.com.

The November CPI report encompasses two months and also includes some unusual seasonal or data collection factors. That’s going to make the ‘cleaner’ read as the y/y numbers, which are expected at 3.0% on both the headline and core.

The BLS posted an FAQ yesterday about lack of October data collection and the trials of data collection because of the shutdown. Officials started November collection on Nov 14, compressing the window and that will create some sampling noise.

Notably, collection started much closer to Black Friday, which could bias goods inflation lower.

This article was written by Adam Button at investinglive.com.

As mentioned earlier, the inflation data later is likely to overshadow major central bank decisions for today. However, it is going to be a messy one as the report is marred by the US government shutdown in October through to November. That has resulted in the BLS skipping the October report and the focus today will be on the November numbers. But as mentioned in the linked post above, it doesn’t mean that we won’t see any October figures whatsoever.

The data collection methodology by the BLS still means that some portion of the CPI basket is taken from sources that don’t entirely
require personal collection. Instead, they rely on online prices and private data providers.

As such, the BLS could still publish some October numbers for reference should they choose to. But ultimately, it seems more discernible for them to stick with a two-month change and let market players fill in the gap themselves. So, we’ll see.

The expectation is that we will see headline annual inflation clock in at 3.1% for November, up just marginally from September at 3.0%. Meanwhile, core annual inflation is estimated to keep steady at 3.0%. When you drill into the second decimal point, perhaps there is a better clue of how the numbers might play out.

MNI estimates highlight that headline annual inflation is actually seen at 3.05%, so it is borderline rounded up to 3.1%. Meanwhile, core annual inflation is estimated at 2.98% so that is more or less 3.0% anyway.

Once again, core goods inflation is expected to increase slightly in reaffirming more impact from tariffs. However, supercore inflation i.e. core services excluding rents, is estimated to moderate further and that will support the narrative that price pressures are still keeping in check at the balance.

Here are what some analysts are saying ahead of the report later:

BofA- Core CPI to average 0.23% m/m across October to November- “Since the BLS won’t be publishing the Oct aggregates, we will be evaluating the two-month change in
inflation. For the two months ending Nov, we forecast headline and core CPI inflation of 0.46% (0.23% m/m
on average).”- “Y/y headline and core CPI inflation should edge down from 3.0% in Sep to 2.9% in Nov.”- “One reason for our somewhat soft forecast is that the CPI will reflect new health insurance information,
which we estimate to be a decent drag on headline and core. Importantly, this will not affect PCE inflation.”

Goldman Sachs- Core CPI to average 0.21% m/m across October to November- As BLS isn’t publishing October numbers, “price changes for a large share of the basket
will need to be viewed on a two-month change or year-over-year basis rather than the usual one-month
change”- “We have penciled in upward pressure from tariffs on goods categories that are particularly
exposed worth +0.08pp on core inflation on average across October and November.”- “We expect downward pressure from delayed data collection on categories that typically experience
steep holiday discounting in late November, worth -0.04pp.”- “Over the next few months, we expect tariffs to continue to boost monthly inflation and forecast monthly
core CPI inflation of around 0.2-0.3%.”

Barclays- Core CPI to average 0.29% m/m across October to November- “On balance, markets will have to rely on 2-month price changes from September to November, and the
annual rate (y/y) for November. The BLS also is not offering any guidance for handling the missing October
data.”- “This report is unlikely to be seen as a “clean” read on inflation, with October data incomplete, and
November based on a smaller pricing sample.”- “We expect the uptick to be led mainly by core goods prices, which we forecast to have sequentially
accelerated over the prior two months, led by a rebound in used cars prices and firmer inflation across the
remaining core goods basket.”- “Market participants are also concerned that this report could
be biased lower, since price collection occurred predominantly in the second-half of November, during
Black Friday promotions. We think this matters more for core goods prices, and particularly for about half of
this basket.”

This article was written by Justin Low at investinglive.com.