- US/Japan: The probability of an October Fed rate hike eased following slightly softer-than-expected PCE inflation; markets now turn to the nonfarm payrolls report for further signals
- China: GDP growth is projected to rise at a slightly higher pace of 4.4% in 3Q26 from 4.3% in 2Q26; this is most likely to be led by exports, while domestic consumption and investments are anticipated to stay subdued
- South Korea: September exports beat expectations again, rising by 83.5% y/y, with the AI-led semiconductor boom exhibiting no signs of a slowing momentum
- India: India has been resilient despite energy, trade, weather, and capital flow volatility; strong consumption, exports, anchored inflation expectations, and fiscal discipline helped
Related Insights
- Inflation is Not Done Yet16 Oct 2026
- Fed Tightening and French Budget Woes09 Oct 2026
- Nonfarm Payroll Data in Focus02 Oct 2026
US/Japan: Softer-than-expected PCE inflation eases the risk of an October Fed rate hike. The US Conference Board’s Consumer Confidence Index plunged to 81.9 in September, the lowest since 2014, undershooting the consensus of 89. The weakness was broad-based, with assessments of both current conditions and the six-month outlook deteriorating. Labour market signals were particularly concerning. Only 14% of consumers expected more jobs ahead, compared to 28.4% who expected fewer. The share of consumers who said their finances were “bad” rose to overtake those saying “good” for the second time since the question was introduced four years ago. Yet, weaker confidence was not accompanied by lower inflation concerns. One-year inflation expectations rose to 6.1%, with 68.4% of respondents expecting interest rates to rise over the coming year.
The consumer confidence report made PCE inflation and nonfarm payrolls more consequential because it raised the prospect that the Fed is tightening into a weakening household sector. That said, August headline PCE inflation came in at 3.4% y/y (vs exp: 3.7%), while the July reading was also revised down by 1 %pt. This, along with New York Fed President John Williams hinting at his resistance to a back-to-back rate hike in October, has led to a paring of expectations for an October Fed rate hike from 70% on 28 Sep to 36% on 1 Oct. The labour market report, due on 2 Oct, will be the bigger test. Market consensus expects nonfarm payroll to register 85k gain in September, down from 162k in August, while projecting the unemployment rate to remain steady at 4.1%.
For Japan, the BOJ’s Summary of Opinions for the September policy meeting shows mixed opinions on growth and the pace of rate hikes. One opinion noted that although 2Q26 growth was positive, domestic demand growth in 2Q26 was negative, and thus the economy is not necessarily growing in a strong and sound manner. There also appears to be no uniform agreement on the pace of rate hikes, given differing opinions on the inflation outlook. Despite the uncertain monetary policy outlook, Japan should benefit from strong external demand driven by AI. Tankan manufacturing readings for 3Q26 point to improving sentiment across both large and small manufacturers, with the large manufacturing index rising to 24 (2Q26: 22), its highest level since 1Q18.
Download the PDF to read the full report which includes coverage on Credit, FX, Rates, and Thematics.
Topic
The information published by DBS Bank Ltd. (company registration no.: 196800306E) (“DBS”) is for information only. It is based on information or opinions obtained from sources believed to be reliable (but which have not been independently verified by DBS, its related companies and affiliates (“DBS Group”)) and to the maximum extent permitted by law, DBS Group does not make any representation or warranty (express or implied) as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions and estimates are subject to change without notice. The publication and distribution of the information does not constitute nor does it imply any form of endorsement by DBS Group of any person, entity, services or products described or appearing in the information. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment or securities. Foreign exchange transactions involve risks. You should note that fluctuations in foreign exchange rates may result in losses. You may wish to seek your own independent financial, tax, or legal advice or make such independent investigations as you consider necessary or appropriate.
The information published is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter into any transaction; nor is it calculated to invite, nor does it permit the making of offers to the public to subscribe to or enter into any transaction in any jurisdiction or country in which such offer, recommendation, invitation or solicitation is not authorised or to any person to whom it is unlawful to make such offer, recommendation, invitation or solicitation or where such offer, recommendation, invitation or solicitation would be contrary to law or regulation or which would subject DBS Group to any registration requirement within such jurisdiction or country, and should not be viewed as such. Without prejudice to the generality of the foregoing, the information, services or products described or appearing in the information are not specifically intended for or specifically targeted at the public in any specific jurisdiction.
The information is the property of DBS and is protected by applicable intellectual property laws. No reproduction, transmission, sale, distribution, publication, broadcast, circulation, modification, dissemination, or commercial exploitation such information in any manner (including electronic, print or other media now known or hereafter developed) is permitted.
DBS Group and its respective directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned and may also perform or seek to perform broking, investment banking and other banking or financial services to any persons or entities mentioned.
To the maximum extent permitted by law, DBS Group accepts no liability for any losses or damages (including direct, special, indirect, consequential, incidental or loss of profits) of any kind arising from or in connection with any reliance and/or use of the information (including any error, omission or misstatement, negligent or otherwise) or further communication, even if DBS Group has been advised of the possibility thereof.
The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. The information is distributed (a) in Singapore, by DBS Bank Ltd.; (b) in China, by DBS Bank (China) Ltd; (c) in Hong Kong, by DBS Bank (Hong Kong) Limited; (d) in Taiwan, by DBS Bank (Taiwan) Ltd; (e) in Indonesia, by PT DBS Indonesia; and (f) in India, by DBS Bank Ltd, Mumbai Branch.
Related Insights
- Inflation is Not Done Yet16 Oct 2026
- Fed Tightening and French Budget Woes09 Oct 2026
- Nonfarm Payroll Data in Focus02 Oct 2026
Related Insights
- Inflation is Not Done Yet16 Oct 2026
- Fed Tightening and French Budget Woes09 Oct 2026
- Nonfarm Payroll Data in Focus02 Oct 2026