Last week, the US government shutdown extended into its sixth week, delaying key economic data releases and complicating Fed policy decisions. Global markets navigated persistent uncertainties, with Fed officials debating the pace of rate cuts amid inflation concerns. Locally, South Africa’s PMI signalled contraction, while experts anticipated a cautiously optimistic Medium-Term Budget Policy Statement (MTBPS) amid brighter fiscal prospects.
International Market Developments
The US government shutdown, now in its sixth week, has severely disrupted the economic data calendar, delaying October CPI, PPI, retail sales, business inventories, and non-farm payrolls. With no surveys conducted during the shutdown, the Bureau of Labor Statistics may skip some October reports entirely or release less reliable retroactive figures. This data vacuum complicates the Fed’s December FOMC decision, as policymakers lack fresh insights into inflation and labour trends.
In response, Fed speakers have struck a cautious tone. Vice Chair Philip Jefferson endorsed the recent 25 bps cut but urged gradualism, noting rates are nearing neutral and labour risks are rising. Cleveland’s Beth Hammack argued inflation remains too high, forecasting a return to 2% only after 2026 and favouring mildly restrictive policy. Chicago’s Austan Goolsbee highlighted the absence of private-sector inflation gauges, making him warier of further easing amid sticky core services prices. San Francisco’s Mary Daly kept December “live,” stressing the need to balance between cooling inflation and supporting households. Governor Lisa Cook viewed labour weakness as the greater risk, while dovish Governor Stephen Miran—dissenting last meeting for a larger cut—reiterated that policy remains overly tight.
World Economic Forum President Børge Brende has cautioned investors about three emerging market bubbles: cryptocurrencies, artificial intelligence, and sovereign debt. Speaking in São Paulo on 5 November 2025, he noted that global public debt has reached its highest level since 1945, while AI investment exceeded $500 billion this year amid overstretched valuations. Brende warned that speculative excesses in crypto and AI echo past bubbles, with sharp recent tech stock corrections signalling heightened risk. He emphasised the need for regulatory oversight to mitigate systemic vulnerabilities, particularly as rising debt servicing costs coincide with elevated interest rates.
Local Market Developments
South Africa’s S&P Global PMI fell to 48.8 in October from 50.2, indicating contraction driven by weaker sales and exports, with the slowest price increases in over five years.
As South Africa’s Medium-Term Budget Policy Statement (MTBPS) approaches on November 12, 2025, markets are attuned to several pivotal elements. Key among them are potential policy shifts, including a refined inflation target and the establishment of a fiscal anchor to cap expenditure relative to revenue, enhancing long-term stability. Updates on structural reforms under Operation Vulindlela—focusing on energy, logistics, and infrastructure—will be scrutinized for concrete timelines and funding to spur private investment and growth beyond 1.2-1.6% through 2027.
Fiscal consolidation remains central, with robust revenue growth (overshooting by R60bn+ in FY25/26 from taxes and commodities) expected to narrow the deficit to 4.4% of GDP, supported by contained 6.5% expenditure growth and a primary surplus. Breakdowns of tax revenues versus GDP composition will highlight sustainability.