The Davy Digest - 1st September 2025

Europe briefly stepped into the political spotlight this week, as governments in both France and the Netherlands confronted unexpected no-confidence votes. Dutch Prime Minster Dick Schoof survived his challenge, while in France, the current centrist government is expected to fall in the coming weeks amid mounting pressure from both left- and right-wing opposition parties. Meanwhile, in the United States, Donald Trump continued his efforts to assert influence over the Federal Reserve. The court case over the firing of Fed Governor Lisa Cook began on Friday, as Trump petitioned to fire her immediately following allegations which her lawyers have labelled a “clerical error”.

Markets remained resilient, with the S&P 500 reaching a new all-time high on Thursday. This came despite Nvidia – which makes up nearly 8% of the index – releasing a lacklustre growth forecast on Wednesday night. Inflation remained in focus on the data front, as the core personal consumption expenditures index accelerated at its fastest rate since February. In Japan, economic indicators were mixed: inflation and output slowed, while unemployment fell.

Last week's highlights

	Conference Board Consumer Confidence (26/08) – Above expectations at 97.4  US Core PCE (29/08) – Increased to 2.9% YoY, in line with expectations
	Germany Ifo Business Climate Index (25/08) – Improved to 89 (vs 88.6 expected)
	UK Nationwide House Prices (29/08) – Fell month-on-month, below expectations
	India GDP growth (29/08) – Increased to 7.8% year-on-year, ahead of expectations Japan Unemployment (29/08) – Eased from 2.5% to 2.3%

This week, a slew of labour market data will be in focus in the US ahead of the Federal Reserve’s next meeting on September 17th. Figures relating to job openings and layoffs are due to be released on Wednesday, followed by unemployment and non-farm payrolls prints on Friday. Eurozone inflation and unemployment data will also be published during the week, along with Purchasing Managers’ Index surveys in the US, Europe, and China.

What's on the radar

	ISM Manufacturing and Services PMI (02/09 & 04/09) Job Openings and Layoffs (03/09) Unemployment and Non-farm Payrolls (05/09)
	Eurozone Unemployment (01/09) Eurozone HCOB Manufacturing PMI (01/09 & 03/09) Eurozone Inflation (02/09)
	UK Retail Sales (05/09)
	Caixin Manufacturing PMI (01/09)

Chart of the moment - Get him to the Greek

Source: Bloomberg as of 29/08/2025

• Last week, French Prime Minister François Bayrou was forced to call a confidence vote in his government amid a dispute over his cost-cutting budget measures.
• Bayrou is widely expected to resign following next week’s vote, leaving France searching for its third Prime Minister in less than twelve months.
• This heightened political uncertainty, along with the risk of further fiscal slippage, has contributed to the rise in French bond yields – causing them to converge with those of Greece and Italy.
• Over the past decade, Greece and Italy have transitioned from fiscal crisis to stability, while France now instead faces scrutiny over its rising debt and political gridlock – highlighting a reversal in perceived fiscal credibility across the Eurozone.

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