The Davy Digest - 13th October 2025

Equities suffered a dramatic pullback on Friday trade tensions were reignited between the US and China. President Trump threatened a “massive increase” in tariffs on China as negotiations continued over items such as rare earth metals. The S&P 500 ended the week nearly 3% lower, while equities in Asia also declined. The US government shutdown continued, with both sides still unable to reach an agreement on a funding deal. Minutes from the latest Federal Reserve meeting were also released, showing a modestly hawkish tone, with most participants emphasising upside risks to their inflation outlooks.

European equities moved higher despite fresh political turmoil in France where President Macron reappointed Sebastien Lecornu as Prime Minister following his resignation earlier in the week. Elsewhere, the Reserve Bank of New Zealand cut rates by 50 bps and signalled more rate cuts to come.

Last week's highlights

	10 Year Note Auction (08/10) – Weak demand & thin foreign buying.  FOMC Meeting Minutes (08/10) – Modestly hawkish, majority emphasized upside risks to their inflation outlooks. 2 factions emerging.
	German Industrial Orders (07/10) - Fell for a fourth straight month in August, dragged lower by a weak car industry.  Germany Balance of Trade (09/10) – Trade surplus expanded, exports to the US fell to lowest since November 2021.
	S&P Global Construction PMI (06/10) – Came in at 46.2, slightly above 46.1 forecast.  UK Halifax House Price Index (07/10) – Average UK house price fell 0.3% MoM in September.
	Japan Household Spending (06/10) - rose at faster pace than expected in August, a positive sign for consumption. Reserve Bank of New Zealand Meeting (07/10) – Cut rates by 50 bps and signalled more rate cuts to come.  Brazil CPI (09/10) – Inflation rose 0.48% in September vs 0.52% forecast.

Looking ahead to this week, investors will be hoping that the US government shutdown can be resolved. If the impasse continues, the release of key US economic data – including CPI, PPI, and retail sales – will once again be delayed. The Fed’s Beige Book, a qualitative report on US economic conditions, is due out on Wednesday. In Europe, the European Central Bank will be watching closely as inflation figures for September are released. In the UK, investors will receive unemployment data and GDP figures for August. Finally, inflation numbers are due out in India and China.

What's on the radar

	US CPI (15/10) Fed Beige Book (15/10) US PPI (16/10) US Retail Sales (16/10)
	German CPI (14/10) Eurozone CPI September (17/10)
	UK Unemployment Rate (14/10) UK GDP MoM August (16/10)
	India CPI (13/10) China CPI (14/10)

Chart of the moment - All that glitters... 

Source: Bloomberg as of 09/10/2025. Price returns in USD. Chart shows gold % price change for each calendar year from 1979 – 2025.

• Gold has rallied strongly this year, driven by several factors – a weaker US dollar, central bank buying, Fed independence concerns and economic policy uncertainty.
• 1979 was the last comparable rally, when gold was driven higher by surging US inflation and geopolitical tensions related to the Soviet invasion of Afghanistan and the Iran-US hostage crisis. 
• Davy multi-asset portfolios have a strategic allocation to gold and have benefitted from the rally. 

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