The Davy Digest - 3rd November 2025

Global equities finished the week higher, despite a more hawkish Federal Reserve, and mixed earnings from a number of the big US tech companies. Central bank meetings dominated the week. The Federal Reserve (Fed) cut interest rates by 0.25% to 4.0% on Wednesday as anticipated, however Fed chair Jerome Powell warned that a rate cut their December meeting was not “a foregone conclusion”. The European Central Bank (ECB) and the Bank of Japan (BoJ) both left their benchmark interest rate unchanged at 2.0% and 0.5%, with the BoJ offering no indication on timing for their next interest rate hike.

US and China agreed a one-year trade truce when Donald Trump and Xi Jinping agreeing to postpone export controls on rare earths and chips. Eurozone Q3 GDP (flash estimate) rose by 0.2% quarter-on-quarter, slightly above consensus expectations, supported by strong growth in Portugal and Spain while the German economy stagnated. On inflation, Tokyo core CPI rose to 2.8%, Eurozone headline inflation eased slightly to 2.1% in October, both on a year-on-year basis.

Last week's highlights

	Federal Reserve Meeting (29/10) -  Cut rates by 25bps, quantitative tightening will end on December 1st.
	European Central Bank Meeting (30/10) – Left rates unchanged. Eurozone Q3 GDP (30/10) – Came in at 0.2%, German economy stagnated at 0.0%. Eurozone Inflation (31/10) – Headline inflation eased to 2.1% YoY.
	UK Nationwide House Price Index (31/10) – Came in higher than forecasted at 2.4% YoY.
	Bank of Japan Meeting (29/10) – Left rates unchanged as expected.  Bank of Canada Meeting (29/10) -  Cut rates by 25bps but signalled an end to its cutting cycle.  China Manufacturing PMI (30/10) – Slowed to 49.0 in October, down from 49.8.

This week we will get an update on the health of the US labour market as the JOLTS Job Openings and ADP Nonfarm Employment Change reports are released. Additionally, Purchasing Managers’ Index (PMI) surveys are due out in US, UK and Eurozone, along with ISM manufacturing and services PMIs in the US. Another busy week for central banks, with the Bank of England and the central bank of Brazil meeting. Elsewhere, German industrial production data will be released. On Wednesday, the Supreme Court of the United States is scheduled to hear oral arguments on the legality of tariffs imposed by President Trump under the International Emergency Economic Powers Act (IEEPA).

What's on the radar

	ISM Manufacturing & Services PMI (03/11 & 04/11) JOLTS Job Openings (04/11) ADP Nonfarm Employment Change (05/11)
	HCOB Eurozone Composite PMI (05/11) Germany Industrial Production (06/11)
	S&P Global Manufacturing PMI (03/11) Bank of England Meeting (06/11)
	Reserve Bank of Australia Meeting (03/11) China Caixin Services PMI (04/11) Brazilian Central Bank Meeting (05/11)

Chart of the moment - Put me in coach

Source: Board of Governors of Federal Reserve System (US) via FRED, 11th September 2025. 

• The US Federal Reserve target interest rate has been 4.0% or above since Q4 2022.
• During this time, total assets invested in US money market funds have surged to a record level of over $7 trillion.
• The Federal Reserve is expected to continue its rate cutting cycle in 2026, which means lower returns on US money market funds, as their yields historically track the Fed’s rate path. 
• It remains to be seen if the “dry powder” on the sidelines, invested in money market funds, will be rotated into riskier assets such as equities and corporate bonds as interest rates move lower.

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