Weekly house view | Holiday retail cheer
The week in review
The S&P 5001 rose 3.7% (in USD) last week on improved sentiment towards tech stocks and reinforced expectations the Federal Reserve will cut interest rates in December. US Black Friday retail sales rose 4.1% year-on-year, with new AI shopping agents facilitating purchases and pointing to some resilience in the economy. The National Retail Federation expects holiday sales to surpass USD 1 trillion. Weak employment data support the case for a cut at the Fed’s 9-10 December meeting. In Germany, lawmakers backed the 2026 budget, including EUR 98 billion in new debt. This fiscal impulse is welcome after the German economy stalled in the third quarter and business expectations dipped in November. Other governments are also pulling their fiscal levers: Japan’s cabinet approved JPY 17.7 trillion in fresh spending, and the UK autumn budget included more fiscal headroom and softer near-term tightening path. In the UK, taxes will go up for middle-income earners and short-term spending will rise. This raises concerns about the long-term credibility of the government’s plans. In China, property developer Vanke’s bonds plunged after it sought to delay an onshore bond repayment, stoking concerns about potential spillover effects to the wider property sector.
Geopolitics
President Donald Trump described ties with China as “extremely strong” after a call with Chinese leader Xi Jinping last week. This week, Trump envoy Witkoff holds talks in Moscow as the US pushes to end the war in Ukraine.
Key data
The Fed’s November Beige Book showed the K-shaped economy in the US deepening, with a deteriorating labour market in several districts and weakening low-end consumer activity. The Conference Board's measure of US consumer confidence fell to 88.7 in November from 95.5 in October. US retail sales rose a modest 0.2% in September from August. In China, the official manufacturing PMI edged up to 49.2 in November from 49.0 in October, slightly below market expectations.