The Davy Digest - 28th October 2025

Global equities finished the week higher, boosted by strong earnings and confirmation that Trump’s meeting with Xi Jinping will go ahead on Thursday. Gold captured most of the headlines, selling off sharply on Tuesday as some investors booked profits after an impressive rally so far this year.

US inflation came in at 3.0%, slightly lower than the 3.1% forecast. In the Eurozone, consumer confidence came in better than expected, reflecting improving sentiment. S&P Global’s flash Eurozone composite PMI rose to 52.2 in October from 51.2 in September, suggesting the Eurozone economy gained momentum at the start of Q4. In the UK, inflation came in at 3.8%, below 4.0% forecast, prompting markets to price another interest rate cut from the Bank of England before year end. There was positive news on UK consumer spending as UK retail sales hit the highest level in more than 3 years. Elsewhere, Chinese retail sales slowed to 3.0% year-on-year, down from 3.4%, indicating a deceleration in consumer spending. Finally, in Japan, inflation increased to 2.9% in September from 2.7%.  

Last week's highlights

	S&P Preliminary October PMIs (24/10) – Composite PMI improved to 54.8, up from 53.9 in September. US Consumer Price Index (24/10) - Came in at 3.0%, slightly lower than 3.1% forecast.
	Eurozone Consumer Confidence (23/10) - Came in better than expectations, reflecting improving consumer sentiment. HCOB Flash Eurozone Composite PMI (24/10) - Rose to 52.2 in October from 51.2 in September, suggesting the Eurozone economy gained momentum at the start of Q4.
	UK Inflation (22/10) - Came in at 3.8%, below 4.0% forecast, prompting markets to price another interest rate cut in the UK before year end. UK Retail Sales (24/10) - Hit the highest level in more than 3 years. S&P Preliminary October PMIs (24/10) - Composte PMI 51.1 vs 50.1.
	China Retail Sales (20/10) - Slowed to 3.0% year-on-year, down from 3.4%, indicating a deceleration in consumer spending. Japan Inflation (24/10) - Increased to 2.9% in September from 2.7% the previous month.

This week is an important one for central banks with Fed, ECB, Bank of Japan & Bank of Canada all due to meet. The Fed is expected to cut rates by 25 basis points due to concerns about slowing job growth. The Fed’s view of the US economy has been clouded by the US government shutdown which has prevented the release of key economic data points. The ECB is expected to hold rates steady with inflation near the 2% target. The Bank of Japan is expected to leave rates unchanged as uncertainty over the impact of US tariffs clouds the outlook. The Bank of Canada is also forecast to cut due to concerns about broad economic weakness.

What's on the radar

	Federal Reserve Meeting (29/10) US Inflation (Core PCE) (31/10)
	European Central Bank Meeting (30/10) Germany Q3 GDP (30/10) Eurozone Inflation (31/10)
	UK Nationwide House Price Index (31/10)
	Bank of Japan Meeting (29/10) Bank of Canada Meeting (29/10) China Manufacturing PMI (30/10)

Chart of the moment - Crude but effective

Source: Bloomberg, as of 22^nd October 2025. 

• The US Administration is intent on lowering interest costs and energy prices. So far, they are achieving that goal.
• The 10-year Treasury yield plays a key role in determining borrowing costs for US households, businesses, and the government.
• To lower energy costs, the Administration is pushing for increased oil & gas production.
• It remains to be seen whether Trump can thread the needle by maintaining these lower yields and oil prices, while boosting economic growth.

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