BOJ Messaging Spikes Global Long-End Yields: Dec. 1, 2025

Tokyo’s influence is spreading across global markets today as rising expectations for a rate hike from the BOJ spark a jump in long-end bond yields. Comments from central bank head Kazuo Ueda signaling a potential increase in December alongside his remarks alluding to policy being accommodative and not restrictive enough to combat inflation are leading to a robust gain in the Japanese yen and losses almost everywhere else. Meanwhile, intraday economic data from the states failed to inspire confidence, as an ISM-manufacturing print reported the ninth consecutive month of contraction in the industry as order weakness hampered the headline figure. But the performance of Black Friday is offering investors a reason to remain positive on the cycle’s prospects, even though sales were propelled by ecommerce rather than traditional brick and mortar. Anecdotal evidence from retailers and from the Fed’s Beige Book points to an extension of K-shaped consumer developments, with wealthier households shouldering a greater share of overall purchases while the lower-and middle-earning cohorts are slowing discretionary expenditures.

Risk-Off Markets

Stocks, fixed income, the greenback and bitcoin are all dropping to begin what’s historically a bullish time on the calendar, as the possibility of financial tightening stemming from Asia disrupts carry trades, derails speculative enthusiasms, drives up the cost of capital and subdues risk premiums. All sectors in equities are descending minus energy, the Treasury curve is ascending violently in bear-steepening fashion led north by duration, and crypto is getting crushed. Cyclical commodity prices are also declining; however, safe-haven gold and silver are appreciating along with volatility protection instruments that reduce portfolio turbulence. Additionally, forecast contracts are catching bids.

Manufacturing Slumps on Cooler Hiring, Orders

The US manufacturing sector’s contraction deepened last month as sharp declines in orders and worker rosters weighed on results. The Institute for Supply Management (ISM) Purchasing Managers’ Index for Manufacturing slipped to 48.2 in November, beneath the 48.6 expectation and the 48.7 from October. The print marked the ninth consecutive month of the industry’s failing to reach the expansion level above 50. Production recovered but the activity is unlikely to continue against the backdrop of lighter transactions, softer exports and slimming backlogs. Despite the lack of demand, however, the prices paid component ascended to 58.5 from 58, which is indicative of margin pressure at good producers.

Lower-End Consumer Poised to Recover

The relentless US consumer drove a beat on Black Friday sales, even though many shoppers never left their homes and preferred to scroll and click rather than visit physical, brick and mortar retail locations such as shopping malls. It was ecommerce that carried the results north of expectations, but a similar dynamic of widening fortunes as it relates to personal financial situations was top of mind for businesses, according to anecdotal evidence. The development motivates the question of how much larger the expenditure differential can get between distinct income cohorts. Is a reopened government and a resulting reacceleration in growth along with several rate cuts and fiscal stimulus that is set to strengthen in 2026 likely to create a sharp recovery in lower-end and middle-class consumers in the new year? I think so, and those developments would be conducive to broadening participation in the stock market. While the mag-7 darlings are increasingly insulated to struggling spenders, the more traditional cyclical areas of the equity space, like names in the Dow and Russell, absolutely depend on consumers with modest means.

International Roundup

Manufacturing Declines in China

China’s manufacturing sector unexpected retreated last month, according to the RatingDog China General Manufacturing PMI’s 49.9 print. The gauge uses 50 as the contraction-expansion threshold. The metric slipped from 50.6 in the preceding month and missed the economist consensus estimate of 50.5. On a positive note, new export orders jumped at the fastest pace in eight months, but the strength failed to offset the impact of weak domestic demand. The RatingDog Index, formerly called the Caixin Manufacturing PMI, places a stronger emphasis on exports than the National Bureau of Statistics (NBS) official benchmark and therefore tends to show stronger results than the government data. The NBI release this weekend, however, showed manufacturing climbing 0.2 points to 49.2 while the services metric slipped six points to 49.5.

South Korea Trade Surplus Hits Eight-Year High

Demand for computer chips and a strong rebound in automobile shipments to foreign lands contributed to South Korea’s trade surplus soaring to $9.74 billion in November, the strongest result since October 2017. Economists anticipated exports to exceed imports by $8.40 billion following the preceding month’s $6 billion trade surplus.

Shipments to foreign countries were 8.4% higher than in the year-ago period, an acceleration from the 3.5% year-over-year (y/y) expansion in the preceding month and above the economist consensus estimate of 3.4%. Imports, meanwhile, grew 1.2% y/y, less than the 3.4% economist estimate and a reversal from October’s 1.5% y/y decline.

November’s exports climbed for the sixth-consecutive month despite trade uncertainty as President Donald Trump imposes import tariffs to increase onshoring of US manufacturing. However, the global growth of data centers pushed South Korea’s shipments of memory chips up 38.6% y/y while automobile exports grew 13.7% y/y after declining in October.  While steel shipments to the US sank 24%, the world’s largest economy increased its purchases of semiconductors and cars by 39% and 11%, respectively. 

Hong Kong Retail Sales Growth Accelerates

Consumer spending in Hong Kong climbed 6.9% y/y in October, exceeding September’s upwardly revised 6% pace. October marked the sixth-consecutive monthly increase and the best result since at least late 2023.