Markets are reinstating bets for a rate cut at the December 18FOMC meeting, following dovish signals from senior Fed officials. Fed Governor Christopher Waller downplayed tariff-related inflation as one-off, while San Francisco Fed President Mary Daly highlighted the sudden deterioration in the US labour market as a priority for policy action. Although Daly is not a 2025 voting member, her views matter. She is the Fed’s leading labour-market specialist and a close ally of Fed Chair Jerome Powell. Alongside New York Fed President John Williams, Daly’s willingness to contradict Powell’s earlier guidance – that a December cut was not a forgone conclusion – was notable. 
The futures market raised the probability of a December Fed cut to 77% from last Wednesday’s low of 29.3%, fuelling appetite for bonds and equities. The US Treasury 10Y yield fell for a third session by 3.85 bps to 4.025% while the S&P 500 Index rose 1.6% to 6,705 and the Nasdaq Composite Index rebounded 2.7% to 22,872 after last week’s 2.7% AI-related sell-off. The DXY Index ended the overnight session flat at 100.18, but the shift in Fed rhetoric suggests that the USD’s uptrend is losing momentum. We maintain our call for the DXY to end the year below 100 at 98.6. 
Against this softer USD backdrop, we maintain our forecast for USD/SGD to decline to below 1.30, to 1.29, by the end of the year. In contrast to the Fed, the chances of the Monetary Authority of Singapore easing its SGD NEER policy band in January 2026 have diminished. October’s CPI and core inflation surprised on the upside at 1.2% YoY, above the MAS’s 2025 forecast range of 0.5-1%, and in the upper half of the 2026 forecast range of 0.5-1.5%. The Ministry of Trade and Industry (MTI) also upgraded its 2025 GDP growth forecast to around 4% from 1.5-2.5%, following a sharp upward revision in 3Q25 GDP growth to 4.2% YoY from its preliminary estimate of 2.9%. Labour market conditions have improved: employment growth more than doubled in 3Q25 while retrenchments stabilized. MTI expects 2026 GDP growth at 1-3%, with the MAS projecting the positive output gap in 2025 to narrow to 0% in 2026, supporting a steady, rather than easier, policy stance.
Quote of the Day
“One that would have the fruit must climb the tree.”
Thomas Fuller
November 25 in history
In 2020, a new government survey showed that India had more girls than boys for the first time in its history.
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