GGMA Morning Brief: Wages in Japan fell sharply, Trump wants to lower oil prices to $50; calls for a 50% increase in US defence spending, RBA’s Hauser: Current cutting cycle likely over, inflation still high, Markets: Signs of risk-aversion emerging, Today’s Macro Roadmap: Swiss CPI, SNB minutes, US Jobless claims & productivity in focus
Good morning,
I hope all is well.
Here are the main overnight news and market movers.
BOJ maintains economic assessment for all 9 regions; wages fell sharply in November
The Bank of Japan on Thursday maintained its economic assessment for all nine regions compared with three months ago, saying they were picking up or recovering gradually. In a summary of surveys by its regional branches, the central bank also said many firms saw the need to raise wages in fiscal 2026 at around the same pace of 2025. (RTRS)
Japan’s nominal wages rose just 0.5% YoY in November 2025, a sharp slowdown from October’s 2.5% increase and well below market expectations of 2.3%. The reading marked the weakest pace of wage growth in nearly four years, largely driven by a steep 17% yearly drop in one-off bonus payments. Such bonuses are typically volatile outside peak payout periods, and government officials cautioned that November data often understates actual earnings at the preliminary stage because many winter bonuses have not yet been recorded. Meanwhile, inflation-adjusted real wages, a key measure of household purchasing power, declined 2.8% from a year earlier, the steepest contraction since January. (TE) The series is quite volatile, so one shouldn’t read too much into it, but from the BOJ’s perspective, this is a rather dovish signal. Yields on Japanese fell overnight across the curve, but USDJPY has hardly changed.
Trump wants to lower oil prices to $50 a barrel, sources say
President Trump and his advisers are planning a sweeping initiative to dominate the Venezuelan oil industry for years to come, and the president has told aides he believes his efforts could help lower oil prices to his favoured level of $50 a barrel, according to people familiar with the matter. A plan under consideration envisions the U.S. exerting some control over Venezuela’s state-run oil company Petróleos de Venezuela SA, or PdVSA, including acquiring and marketing the bulk of the company’s oil production, people familiar with the matter said. (WSJ – Continue Reading) Meanwhile, Senator Lindsey Graham said President Donald Trump had “greenlit” a bipartisan Russia sanctions bill. Graham expressed hope for a vote on the measure as soon as next week, saying it will allow President Trump to punish those countries that buy cheap Russian oil, fuelling Putin’s war machine. A White House official confirmed that Trump supports the legislation, which enjoys broad bipartisan support and would likely pass the Senate if brought to a vote. (BBG) Oil prices began to decline yesterday afternoon, but have since recovered some of those losses.
Trump’s bid to block corporate homebuying blindsides Wall Street
President Donald Trump pledged to stop institutional investors from buying more homes, prompting traders to dump shares of affected companies, according to Bloomberg. Trump said he will "immediately" take action to ban large institutional investors from buying more single-family homes and ask Congress to codify it. Analysts say the plan may not make homes more affordable because the top owners of single-family rentals hold a relatively small share of the total single-family housing stock.
Donald Trump calls for a 50% increase in US defence spending by 2027
Donald Trump is set to ask US lawmakers for $1.5 trillion in defence spending, an increase of more than 50 per cent on the current year’s record budget of $901bn. Trump announced the proposal on Truth Social, claiming tariff revenues would fund the expansion to build a "dream military" while paying down national debt. However, tariffs generated only $236 billion through November—less than half the proposed spending increase—while the national debt surged by $2.2 trillion (6%) during Trump's first year. (FT, BBG) A substantial rise in defence expenditure may raise questions regarding the long-term viability of government finances, which are currently facing significant challenges.
ECB’s Pereira says price stability in place, Urges EU reforms
The European Central Bank has no reason to adjust monetary policy at this stage as euro-area inflation remains close to its 2% target, ECB Governing Council member Álvaro Santos Pereira said. “ECB President Christine Lagarde has made clear the central bank is in a good position, with price stability in place,” Pereira said in an interview with Portuguese television RTP on Wednesday evening. “Monetary policy has done what it needed to do, which was to support the economy when it was necessary.” (BBG – Continue Reading)
RBA’s Hauser: Current cutting cycle likely over, inflation still high
A top Australian central banker said on Thursday that a slowdown in consumer price inflation for November was "helpful", but largely as expected, and inflation was still too high. In an interview with the Australian Broadcasting Corporation, Reserve Bank of Australia Deputy Governor Andrew Hauser was asked about data released on Wednesday showing annual CPI inflation slowed to 3.4% in November, from 3.8% the previous month. "Most of those numbers were broadly in line with our expectations," Hauser said, according to the ABC report. (RTRS – Continue Reading) Still, Australian bond yields declined overnight.
Australia’s goods trade unexpectedly narrows in November
Australia’s goods trade surplus narrowed to AUD 2.94 billion in November 2025, down from a downwardly revised AUD 4.35 billion in October and below market expectations of AUD 4.9 billion. It marked the smallest trade surplus since August, as exports fell while imports rose. Exports dropped 2.9% month-on-month to AUD 44.57 billion in November, following a downwardly revised 2.8% increase in October, largely weighed down by metal ores and minerals. Among trading partners, exports declined to South Korea (-9.4%), India (-41.5%), and Japan (-1.5%), while exports to the United States fell 10.5% due to newly imposed tariffs. Shipments to China, Australia’s top trading partner, also dropped by 0.5%. On the imports side, inbound shipments edged up 0.2% to a record AUD 41.64 billion, following an upwardly revised 2.4% rise in October, driven by processed industrial supplies, highlighting resilient domestic demand ahead of the year-end holidays. (TE) The Australian dollar weakened overnight across the board, which may also reflect weaker stock and commodity markets.
Markets: Signs of risk-aversion emerging
G3 bond futures are firmer today, and stock markets declined. The US Dollar is firmer against most of its G11 peers, especially cyclical currencies. Precious metals, industrial metals, and oil also trade weaker, while the VIX is edging higher.
Yesterday, major defence contractors experienced dramatic volatility after Trump signed an executive order banning stock buybacks and dividends until companies "produce a superior product. (CNN, YF) Also, shares of Blackstone Inc. and other housing-related companies tumbled on Wednesday after President Donald Trump said he would move to ban institutional investors from buying single-family homes. (BBG)
Today’s Macro Roadmap: Swiss CPI, SNB minutes, US Jobless claims & productivity in focus
The December Swiss inflation rate is expected to edge up to 0.1% year over year, in line with the SNB's current inflation forecast.
The SNB will release the minutes of its last monetary policy meeting in December last year, at which the central bank left its policy rate unchanged at 0% and said it remains willing to be active in the foreign exchange market as necessary.
The EU will publish the business and consumer surveys for December. Of particular interest will be the selling price expectations of businesses and consumers.
In the US, jobless claims, productivity, and unit labour cost data will be the main events. According to JPMorgan, residual seasonality can cause jobless claims to hit annual lows at the end of December and early January, which is why they expect another low in claims. Claims should then start to rebound later in January. Initial claims are similar to the same week in the past couple of years, which is a positive sign for the job market. Continuing claims have been trending lower recently, which is a positive sign for the labour market.
JPMorgan expects nonfarm business productivity to rise 6.1% q/q saar in 3Q, which, excluding quarters immediately after recessions, would be the best single-quarter performance in over 20 years. Productivity can be volatile, and the 2.3% over-year-ago increase should be more representative of the trend. That would be the best since 4Q23 (2.5%). With productivity growth exceeding hourly compensation, unit labour costs would fall 2.2% q/q saa, while rising 2.3% yoy. The year-over-year pace of ULC is still slightly above the Fed’s 2% inflation target.
Good luck today,
Günter