China-U.S. relations may leave some room, Japan's core CPI rose for the fourth consecutive month in November, and the Federal Reserve's rate cut space next year may be higher than market expectations --- 1223 Macro Dehydration
There may be room for maneuver in China-U.S. relations, as Trump has recently made frequent remarks about global threats. Japan's core CPI rose continuously in November, and the central bank is paying attention to the 2025 wage negotiations, expecting no policy changes. Considering the impact of Tariff 2.0, the Federal Reserve's space for interest rate cuts next year may be higher than market expectations, and the stance on rate cuts will remain cautious, focusing on economic downside risks
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From Trump's statements since December, China is not special in the fields of diplomacy and trade. Trump has recently voiced threats against Europe, the Americas, and other regions quite frequently. His initial policy tasks were numerous, and diplomatic affairs were pushed forward in multiple directions, leaving some room in China-U.S. relations.
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Japan's core CPI rose for the fourth consecutive month in November, and the Bank of Japan will closely monitor the progress of wage negotiations in spring 2025. This month's CPI announcement is unlikely to prompt the Bank of Japan to change its policy stance (i.e., to raise interest rates ahead of schedule).
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If considering the impact of Tariff 2.0, the Federal Reserve's room for rate cuts next year may be higher than the current market consensus expectations. Before the implementation of Tariff 2.0, the Federal Reserve may maintain a cautious stance on rate cuts. After its implementation, if economic prosperity weakens and risk assets correct, the Federal Reserve is still inclined to focus on economic downside risks and avoid "manufacturing a recession."