Last week’s softer US inflation data and resilient services sector activity supported a cautiously bullish short-term and bullish medium-term outlook for US equity futures.
Below, I’ll outline the key market drivers, the medium-term outlook, and the key technical levels traders should watch.
Japanese Wage Growth Accelerates as BoJ Decision Looms
Japanese average cash earnings rose 2.6% year-on-year (YoY) in October, up from 2.1% in September. Additionally, overtime pay increased from 1% YoY in September to 1.5% YoY in October, supporting a hawkish BoJ policy stance.
Typically, rising wages fuel consumer spending and demand-driven inflation, key considerations for BoJ policymakers. Furthermore, an upswing in spending would bolster the Japanese economy, given that private consumption accounts for around 55% of GDP.
Traders brushed aside a downward revision to third-quarter GDP numbers, weighed down by an unexpected drop in capital expenditures. Notably, an upward revision to private consumption to 0.2% quarter-on-quarter (QoQ) from 0.1% overshadowed the fall in capital expenditures.
However, 10-year JGB yields fell short of last week’s high of 1.971% and economists have downplayed the potential for market disruption, mirroring events in mid-2024. 10-year JGB yields have been rising since August 2025, so the shock factor is reduced. Furthermore, wide rate differentials continue to make yen-funded carry trades attractive, albeit less profitable.