Japan, China, Europe, and the United States: The Fragile Balance of Global Economies
As volatility subsides and markets approach their peaks, the economic signals from major regions are mixed.
Japan is possibly on the verge of closing a monetary chapter that has lasted twenty-five years, China continues to show persistent vulnerabilities, and both Europe and the United States are navigating a still delicate balance.
Japanese government bonds were the weakest of the week: the 10-year yield surged to 1.939%, nearing the psychological barrier of 2%, a level not seen since 1998. For the Bank of Japan, which is openly discussing a rate hike at its December 19 meeting, this represents a historic turning point. However, this shift could challenge Prime Minister Takaichi's pro-growth agenda, posing a risk of conflict akin to that seen in the early Abe years.
The central bank's concern lies in the persistent failure to achieve 2% inflation, as well as indications of a [new real estate bubble](https://www.ideal-investisseur.fr/immobilier/Paris--les-prix-de-l-immobilier-ont-baisse-de-5-3--en-un-an-30118.html), with apartment prices rising at the fastest rate since the 1990s. The coordination required by Article 4 of the BoJ law may not be sufficient to prevent tensions.
A Weakened China
In China, indicators remain weak: the manufacturing PMI is at 49.2, and the non-manufacturing index is below 50 for the first time in nearly three years. The combination of real estate stress, weakened confidence, and industrial overcapacity raises questions about the trajectory for 2026. According to the commentary analysis, growth below 4.5% could lead Beijing to initiate a significant stimulus.
In Europe, overall inflation is slightly accelerating to 2.2%, but underlying components are slowing. The annualized rates for services are declining, and base effects are expected to favor a decrease in December. Switzerland provides an early indication of this trend, with inflation returning to 0%.
In the United States, resilience prevails: Black Friday sales increased by 4.1%, layoffs are slowing down, and the ISM services index is at its highest since February. Growth could reach 3.5% in the third quarter of 2025. The main risk for 2026 paradoxically lies in an economic reacceleration, fueled by deregulation and the « US Big Beautiful Bill."
The underlying question remains: Can American strength continue without triggering a new cycle of dollar appreciation and tightening global financial conditions?
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
