“Central banks are charting their own course and reflecting this
in
their interest rate policies”
- It was another strong quarter for equities, driven mainly by robust third-quarter corporate earnings. Bonds, however, declined in value due to rising interest rates.
- In mid-November, the shutdown of the US government, the longest in US history, came to an end.
- After initial trade tensions between the United States and China at the start of the quarter, the two powers managed to achieve a one-year truce. The parties agreed on the main points of contention, such as export restrictions, shipping levies and fentanyl regulations. This established a framework for a future trade agreement.
- In France, the political situation remained volatile. Prime Minister Sébastien Lecornu, who had only recently been appointed, briefly stepped down. He returned after surviving a vote of no confidence by reversing the increase in the retirement age.
- In October, Sanae Takaichi was elected the new leader of the Liberal Democratic Party, followed by her appointment as Japan’s new prime minister. Japanese equities reacted positively to the news. Investors expect her appointment to lead to increased fiscal stimulus. In November, she unveiled a major package of incentives.
- The US central bank cut its policy rate twice by 25 basis points, bringing the target range to 3.5%-3.75%. According to the Fed, the weakening labour market at that time posed a greater risk to the US economy than persistent inflationary pressures. US inflation came in lower than expected in November. Compared to the same period last year, headline inflation fell to 2.7%, while core inflation declined to 2.6%. However, there are doubts about the reliability of these figures due to the effects of the US government shutdown. Unemployment rose to 4.6%. As of 1 December 2025, the Quantitative Tightening (QT) programme also came to an end. QT is the process by which a central bank shrinks its balance sheet by not reinvesting maturing bonds. This process withdraws liquidity from the financial system.
- The European Central Bank (ECB) left its main policy rate (the deposit facility rate) unchanged at 2% this quarter.
This quarterly report has been carefully prepared. The final figures for 2025 will be published in the anual report. You cannot derive any rights from this report.