The State of Markets: "Soft Macro Data, But Strong Markets? Bad News is Good News!"
US macro data out this week continued to deteriorate. Most notably, the number of jobs created in the 12 months to March was revised down by 911k on Tuesday (in the preliminary QCEW update). According to that survey, jobs growth is now running +0.44% Y-o-Y (a level typically only seen when the US economy is rolling over into recession). Elsewhere this week’s initial jobless claims rose to their highest level since the pandemic. As such, and with yesterday’s CPI report broadly as expected, US Treasury yields moved lower across the curve and markets priced in more Fed easing.
Equities, though, continued to look through the softness. According to the bulls, the weak data is now ‘in the rear view mirror’, and is nothing more than ‘new information about old news’. Having pushed out to new highs yesterday (e.g. see chart below), many are calling for more upside over coming weeks and into year end. The key question is: Are they right? Will slowing growth impact earnings? And, if so, does that matter if the Fed is cutting rates?
Central banks will be the key focus next week, with policy decisions from the Fed and the Bank of Canada (both on Wednesday), the Bank of England (Thursday), and the Bank of Japan (Friday). The Fed is expected to cut rates by 25bps (with over 90% probability). Most important will be the tone of Powell’s press conference (and any changes in the quarterly SEP/dot plots). Key US macro data includes retail sales and the NAHB home builders’ index (Tuesday) along with US housing starts and building permits (Wednesday). In the UK, CPI is the focus (Wednesday), while key Eurozone data and events include the ZEW survey (Tuesday) and speeches by Lagarde (Wednesday & Thursday). Please see below for a full list of next week’s key macro data and events.
Key chart: S&P500 Sept ‘25 futures candlestick, with 50 & 200 day moving averages
Upcoming Important Data/Events This Week:
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Events: |
Fed policy decision (Wed, 7pm); Bank of Canada Policy Decision (Wed, 2:45pm); Bank of England policy decision (Thurs, 12pm); BOJ policy decision (Fri, 3:30am). |
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Monday: |
Chinese activity data (industrial production, retail sales, fixed asset investment & unemployment rate – Aug, 3am). |
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Tuesday: |
US retail sales (Aug, 1:30pm); NAHB homebuilders index (Sep, 3pm); Eurozone industrial production (July, 10am). |
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Wednesday: |
US housing starts & building permits (Aug, 1:30pm); UK Headline & core CPI & RPI (Aug, 7am). |
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Thursday: |
N/A |
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Friday: |
Japanese headline & core CPI (Aug, 12:30am). |
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Key earnings: |
N/A |
Key Research
Global Valuation Chartbook No. 63, 11th September 2025:
“US Valuations: Testing the Limits”
The US (large cap) equity market is ‘expensive’. That view is widely shared and well known amongst market participants.
On a Shiller PE ratio, for example, the US market is trading at 38x cyclically adjusted earnings – a level only meaningfully surpassed in the ‘Dotcom’ era (FIG 9li in appendix). Using a straightforward PE ratio (based on 12m forward consensus EPS), the index is trading at 22.5x – again a level rarely surpassed in the last 50 years (i.e. briefly in 2020/21 and then during the TMT phase, FIG 9). Pitting equities against fixed income (bonds/cash), generates a similar result.
Key North American Macro Data & Events:
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Events: |
Fed policy decision (Wed, 7pm) followed by press conference (7:30pm); Bank of Canada Policy Decision (Wed, 2:45pm). |
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Monday: |
Canadian manufacturing & wholesale sales (July, 1:30pm); Canadian existing home sales (Aug, 2pm). |
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Tuesday: |
Canadian housing starts (Aug, 1:15pm); New York Fed service sector business activity (Sep, 1:30pm); US retail sales (Aug, 1:30pm); US imports and exports price index (Aug, 1:30pm); Canadian headline & core CPI (Aug, 1:30pm); US industrial & manufacturing production & capacity utilisation (Aug, 2:15pm); US business inventories (July, 3pm); NAHB homebuilders index (Sep, 3pm). |
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Wednesday: |
US housing starts & building permits (Aug, 1:30pm). |
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Thursday: |
Canadian CFIB business barometer (Sep, 12pm); US weekly jobless claims (1:30pm); US Philadelphia Fed business outlook (Sep, 1:30pm); US total TIC flows (July, 9pm). |
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Friday: |
Canadian retail sales (July, 1:30pm). |
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Key earnings: |
FedEx (Thurs). |
Fig B: US Philadelphia Fed capex plans, shown with long term average
Key European Macro Data & Events
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Events: |
ECB publishes survey of Monetary Analysts (Mon, 9am); Bank of Spain releases new economics forecast (Tues, 12pm); speeches by the ECB’s Kocher (Mon, 8am), Lagarde in Frankfurt (Wed, 8:30am), Muller in Tallinn (Wed, 8:45am), Nagel on German economy (Wed, 6pm), Lagarde at women’s leadership event (Thurs, 8:10am), Guindos at MNI Event (Thurs, 9am); ECB’s Schnabel & Nagel appear on panels in Frankfurt (Thurs, 10:45am & 3pm); ECB Wage Tracker (Wed, 9am). |
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Monday: |
German wholesale price index (Aug, 7am); Italian trade balance (July, 10am); Eurozone trade balance (July, 10am). |
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Tuesday: |
Italian headline & core CPI (August final estimate, 9am); German & Eurozone ZEW survey – expectations & current situation (Sept, 10am); Eurozone industrial production (July, 10am); Eurozone labour cost index (Q2, 10am). |
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Wednesday: |
Italian current account balance (July, 9:30am); Eurozone headline & core CPI (Aug final estimate, 10am). |
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Thursday: |
Eurozone current account balance (July, 9am); Eurozone construction output (July, 10am). |
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Friday: |
German PPI (Aug, 7am); French wages (Q2 final estimate, 7:45am); French business confidence (Sep, 7:45am); French retail sales (Aug). |
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Key earnings: |
N/A |
Fig C: Eurozone ZEW index, Economic Expectations
Key UK Macro Data & Events
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Events: |
Bank of England policy decision (Thurs, 12pm) followed by press conference (12:30pm). |
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Monday: |
UK Rightmove house prices (Sep, 12:01am). |
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Tuesday: |
Employment, jobless claims & average weekly earnings (Aug/July, 7am). |
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Wednesday: |
Headline & core CPI & RPI (Aug, 7am); Land Registry house price index (July, 9:30am). |
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Thursday: |
N/A |
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Friday: |
Gfk consumer confidence (Sep, 12:01am); ONS retail sales (Aug, 7am); public sector finances (Aug, 7am). |
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Key earnings: |
N/A |
Fig D: UK headline & core CPI (Y-o-Y %), shown with recession bands
Key Asia-Pacific Macro Data & Events
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Events: |
RBA fireside chats by Hunter (Tues, 12:50am) & Jones (Wed, 2:30am); BOJ policy decision (Fri, 3:30am) followed by Governor Ueda press conference (7:30am).
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Monday: |
Chinese new & used home prices (Aug, 2:30am); Chinese activity (industrial production, retail sales, fixed asset investment & unemployment rate – Aug, 3am). |
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Tuesday: |
N/A |
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Wednesday: |
Japanese imports/exports, & trade balance (Aug, 12:50am); Japanese machinery orders (July, 12:50am). |
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Thursday: |
Australian employment data (Aug, 2:30am). |
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Friday: |
Japanese headline & core CPI (Aug, 12:30am). |
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Key earnings: |
N/A |
Fig E: Japanese Headline CPI (shown with pp. contributions from key categories)
This Week:
Longview on Friday, 12th September 2025:
“US Bond Breakout -> Soft Landing or Recession Signal?”
Global Valuation Chartbook No. 63, 11th September 2025:
“US Valuations: Testing The Limits”
Monthly Global Asset Allocation No. 70, 9th September 2025:
“US Treasuries: Increase OW in Strategic Portfolio A.k.a Judging the Yield Lows”
Daily Dose of Macro & Markets This week:
Daily Dose of Macro & Markets 11th September 2025:
Daily Dose of Macro & Markets 10th September 2025:
Daily Dose of Macro & Markets 9th September 2025:
“All Eyes on QCEW (i.e. US Payroll Revisions)”
Weekly Risk Appetite Gauge:
'Weekly Risk Appetite Gauge', 8th September 2025:
“Consolidating or Rolling Over?”
Last Week:
Longview on Friday, 5th September 2025:
“UK Debt Dynamics: Vicious Circle?”
Tactical Equity Asset Allocation No. 260, 4th September 2025
“Stay Cautious US Equities in ‘Tactical’ Portfolios A.k.a. Froth, Complacency, and SELL Signals”
Daily Dose of Macro & Markets This week:
Daily Dose of Macro & Markets 4th September 2025:
“Tight Money & Rising US Labour Market Slack”
Daily Dose of Macro & Markets 3rd September 2025:
Daily Dose of Macro & Markets 2nd September 2025:
“OIL Pain Trade: Higher Before Lower”
Weekly Risk Appetite Gauge:
'Weekly Risk Appetite Gauge', 1st September 2025:
“Fraying at the Edges”