Economic Weekly Wrap
03 Nov 2025 - 07 Nov 2025

Debate surrounding the direction of US monetary policy intensified as several Fed officials discussed the need for future rate cuts. On the other hand, Fed’s Christopher Waller supported further reduction in policy rates citing the weakness in labour market. As per the CME FedWatch Tool, the probability of a rate cut in Dec’25 has declined to 63%, compared with 92% last week. In Japan, core CPI for Tokyo rose by 2.8% in Oct’25 (est. 2.6%). At the same time, industrial production and retail sales accelerated, while jobless rate was steady. Separately in India, fiscal deficit stood at 36.5% in BE in H1FY26 (29.4% in H1FY25) as government capex spending picked up. Separate data also showed that GST collections continued to increase at a steady pace in Oct’25, despite rate rationalisation.

Nikkei rose the most despite a sticky inflation data which hinted at tightening of policy by BoJ. Other Asian indices such as Hang Seng and Shanghai Comp lost momentum, as China announced scrapping of a long-standing gold tax incentive. Sensex slipped, led by metal and power stocks. It is trading further weaker today, while other Asian stocks are trading mixed.

Table 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research

Global currencies ended mixed. DXY rallied for the 3rd straight session as investors scaled back expectations of a Dec’25 rate cut. JPY found support from comments by the Japanese FM on currency movement. INR depreciated further. It is trading further weaker today, in line with other Asian currencies.

Table 2 – Currencies

Source: Bloomberg, Bank of Baroda Research

Except Japan, global 10Y yields moderated. US and UK’s 10Y yield softened by 2bps each. Major trading centred around faster pace of frontloading of rates by the Fed, and whether the pace is likely to continue in the near term. Japan’s 10Y yield inched up a tad tracking higher inflation. India’s 10Y yield fell by 4bps as RBI rejected bids for 7Y G-sec (6.28GS2032). It is trading at 6.54% today.

Table 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research

Table 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research

Table 5 – Liquidity

Source: RBI, Bank of Baroda Research

Table 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research| Note: Mutual Fund data as of 24 Oct and 27 Oct 2025

Oil prices rose marginally despite concerns of oversupply and muted demand.

Table 7 – Commodities

Source: Bloomberg, Bank of Baroda Research

In the US, ISM manufacturing PMI remained in the contraction zone for the 8 th straight month down to 48.7 in Oct’25 from 49.1 in Sep’25. This was on the back of the subdued demand for new orders at 49.4 while production slipped down to 48.2 amidst overhang of tariff news. In Eurozone, factory orders stagnated with the PMI reading of 50 for Oct’25 from 49.8 in Sep’25, in line with expectation. The exports orders took a back seat as they declined for 4th consecutive month, with poor demand for new orders. The sector remained weak in France, while it remained steady in Italy. In Japan, the manufacturing activity dropped at its fastest pace down to 48.2 in Oct’25 (from 48.5 in Sep’25) led by demand weakness in automotive and semiconductor sectors. Separately, investors will look for cues on rates ahead of the US private payroll. The likelihood of rate cut in Dec’25 is lower than initially priced

Barring FTSE and Dow Jones, other global indices closed higher. US indices closed mixed. S&P edged up with gains in tech stocks. Amongst other indices, Hang Seng advanced the most. Sensex closed steady with gains in real estate stocks. However, it is trading weaker today; Asian stocks are trading mixed.

Table 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research| Note: Markets in Japan were shut on 3.11.2025

DXY rally continued as investors pared back expectations of a Dec’25 rate cut. This is on the wake of a divided response of Fed officials on trajectory of policy rate. EUR, GBP and JPY depreciated. INR softened led by FII outflows. It is trading higher today, while Asian currencies are trading weaker.

Table 2 – Currencies

Source: Bloomberg, Bank of Baroda Research

Global 10Y yields inched up. US, UK and Germany’s 10Y yield rose at the similar pace as risk on sentiments gathered momentum. China’s 10Y yield closed stable tracking commentary of the ambassador to the US. India’s 10Y field also traded flat and is currently at 6.52% today.

Table 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research| Note: Markets in Japan were shut on 3.11.2025

Table 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research| Note: India’s T-bill markets were shut on 3.11.2025

Table 5 – Liquidity

Source: RBI, Bank of Baroda Research

Table 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research

Oil prices softened albeit reports suggesting halt of output increase by OPEC+.

Table 7 – Commodities

Source: Bloomberg, Bank of Baroda Research

Global economic activity picked up pace, with the global composite PMI inching up to a 17-month high of 52.9 in Oct’25 from 52.5 in Sep’25. The increase was led by continued expansion in service sector activity in the US, UK and Euro Area. In the US, ISM services PMI rose to an 8-month high of 52.4 from 50.0 in Sep’25, led by a steady inflow of new orders. Separately, private payrolls in the US (ADP) rose more than expected by 42,000 in Oct’25 (est. 30,000), after declining by 29,000 in Sep’25. This suggests continued strength in US labour market conditions and has led markets to further reprice the possibility of a rate cut in Dec’25. US employment report due this week will be key in this regard. In the Euro Zone, manufacturing activity in both France and Germany is showing signs of recovery with a pickup in industrial production and factory orders respectively

US indices showed some momentum led by positive private payroll numbers as reflected in the ADP data. Nikkei dropped the most, amidst continued concerns surrounding AI and tracking subdued corporate earnings data. Sensex inched down, led by metal and power stocks. However, it is trading higher today, in line with other Asian stocks.

Table 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Except JPY, other global currencies ended broadly stronger against the dollar. DXY was steady monitoring robust macro data. Despite hawkish minutes, JPY slipped and depreciated by 0.3%. GBP rose by 0.2% ahead of BoE meet. INR appreciated a tad. It is trading further stronger today, in line with its Asian peers.

Table 2 – Currencies

Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

US 10Y yield rose considerably tracking upbeat private payroll data which dented the possibility of a rate cut in Dec’25. Similar impact was felt on 10Y yields of UK and Germany, where risk-on sentiments dominated. Japan’s 10Y yield inched down a tad awaiting economic stimulus package from the new PM. India’s 10Y field also fell a tad, and is currently trading at 6.52%.

Table 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Table 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Table 5 – Liquidity

Source: RBI, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Table 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research | Note: Mutual funds data as of 27 Oct and 30 Oct 2025

Oil prices softened on concerns over weaker demand prospects from China.

Table 7 – Commodities

Source: Bloomberg, Bank of Baroda Research

US government shutdown continued to weigh on investor sentiments even as Fed policymakers batted for a cautious approach to further rate cuts. Fed’s Austin Goolsbee stated that policy rates should be held steady in the absence of official inflation data. Separately, Bank of England kept its policy rate steady at 4% with a narrow 5-4 vote. The central bank expects inflation to have peaked, giving it room to cut rates in a gradual manner. In China, export growth unexpectedly declined by 1.1% in Oct’25 (est. +3%), after increasing by 8.3% in Sep’25. Import growth also decelerated to 1% in Oct’25 from 7.4% in Sep’25. In India, services PMI stood at 58.9 in Oct’25, remaining firmly above the 50-mark and its long-term average. Businesses reported a healthy growth in new business and higher footfalls, even as intense competition and rainfall in some areas impacted business.

Barring China and Japan, other major indices ended in red. Markets in the US fell the most, as investors monitored concerns regarding valuations of AI companies, signs of weakening labour market, and debate in Supreme Court on legality of tariffs. Sensex too inched down, led by metal, power and real estate stocks. It is trading further lower today, in line with other Asian stocks.

Table 1 – Stock markets

Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Global currencies ended broadly stronger against the dollar. DXY fell by 0.5% as traders assessed the impact of continued US shutdown and legal disputed related to US tariffs. JPY and GBP gained the most. INR was largely steady. It is trading stronger today, while other Asian currencies are trading mixed.

Table 2 – Currencies

Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Except Japan and China, 10Y yields elsewhere declined. US 10Y yield fell sharply by 8bps, as investors tracked private survey report indicating 3x increase in layoffs in Oct’25 versus Sep’25. Impact of prolonged US government shutdown also weighed on investors’ sentiment. Following global cues and lower oil prices, India’s 10Y field also dipped. It is currently trading flat at 6.52%.

Table 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Table 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Table 5 – Liquidity

Source: RBI, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Table 3 – Bond 10Y yield

Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Table 4 – Short term rates

Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Table 5 – Liquidity

Source: RBI, Bank of Baroda Research | Note: Markets in India were closed on 5 Nov 2025

Table 6 – Capital market flows

Source: Bloomberg, Bank of Baroda Research | Note: Mutual funds data as of 29 Oct and 30 Oct 2025

Oil prices continued to decline amidst lingering demand concerns.

Table 7 – Commodities

Source: Bloomberg, Bank of Baroda Research