Yuri Zemtsov
Estonia
4m
Bureau of Economic Analysis has finally released U.S. GDP data for Q3. The economy grew by 1.1% q/q, while the annual growth rate edged up to 2.3% y/y. Current GDP estimates point to fairly resilient domestic demand: investment activity remains weak, the contribution of government spending has increased, imports declined, and inventories accumulated earlier in the year were actively drawn down. With this setup — especially given the strength of demand — there is little justification for talking about aggressive monetary easing. These data rather add ammunition to the Fed hawks, albeit with a noticeable lag. Market reaction was predictable: U.S. Treasuries came under pressure, yields moved higher, and the probability of another rate cut continued to shrink. That said, the key variable remains political — namely, who Donald Trump nominates in January to lead the Federal Reserve. The latest labor market data point to gradual cooling: unemployment is rising, but not yet to levels that would signal recession risk. Inflation has slowed materially and, given the high base effects from December–January last year, is likely to keep easing in year-over-year terms. Even if GDP growth is to a large extent still “paper growth,” current readings look reasonably stable. Taken together, this suggests a continuation of Fed easing, with a high likelihood of a technical pause in January — a fairly typical pattern for the start of the year. This combination of macro factors supports maintaining a base bullish scenario and expecting continued support for risk assets in 2026.
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