• Disappointing job creations in the US convinced markets that the Fed had to revive the rate-cutting cycle.
• The ECB, meanwhile, left its rates unchanged. The bank thinks risks to economic growth are now more finely balanced and is more confident on the eurozone's economic outlook.
• Markets generally shrugged off a number of political and geopolitical tensions.
Disappointing job creations in the US convinced markets that the Fed had to revive the rate-cutting cycle. Risk assets rose, especially as the data showed that job creations between April 2024 and March 2025 had been revised down by a massive 911.000. Analysts had been expecting a drop of 682.000, but nothing like this. This means the US is creating 70.000 jobs a month rather than 146.000. In addition, weekly jobless claims were higher than expected, hitting levels not seen since 2017, although it appears the main reason was a rise in fraudulent claims in Texas. And producer prices fell 0.1% in August, or more than expected, as services dragged the figures down. Inflation nevertheless rose by an annualised 2.9% in August, up from 2.7% in July, but the figures were expected so markets were reassured. Expectations of a resumption in the rate-cutting cycle combined with a US economy that is slowing but still holding up helped risk assets gain ground. So next week’s Fed meeting is highly anticipated.
The ECB, meanwhile, left its rates unchanged. The bank thinks risks to economic growth are now more finely balanced and is more confident on the eurozone's economic outlook. Its views on inflation were only slightly changed and chair Christine Lagarde reaffirmed her opinion that current monetary policy was in the right place. Investors now see little chance of significant ECB rate cuts in the future.
Markets generally shrugged off a number of political and geopolitical tensions. In France, the Bayrou government fell on Monday and Emmanuel Macron appointed a close ally Sébastien Lecornu to replace him. In Japan, PM Shigeru Ishiba resigned over the weekend and his LPD party will hold elections to find his successor. Japanese equities rose on the news in expectation of increased budget spending. Elsewhere, Israel bombed a building in Doha (Qatar) in a targeted attack on Hamas leaders. Russia hit government buildings in Kiev and Russian drones were shot down in Poland's airspace. These events meant that the OPEC+ decision to increase production quotas, albeit less than expected, had little impact on the oil price.
We remain cautious on risk assets and especially US equities. In our view, the US market is expensive, investor positions are stretched and geopolitical risk could resurface. In fixed income, we are still neutral on duration and continue to prefer carry strategies.
EUROPEAN EQUITIES
Unsurprisingly, the ECB left its rates unchanged. The bank thinks current levels are right and chair Christine Lagarde said she was satisfied now that growth had turned out to be more resilient than expected and inflation practically down to the bank’s targets. In the US, August CPI provided confirmation that inflation was slowly spreading through the economy. Even so, investors chose to focus on the worsening jobs market, a deterioration that is reinforcing rate cut chances and underpinning markets. In France, the appointment of centrist Sébastien Lecornu as prime minister had no real effect on markets. But French companies that had previously suffered from political risk rebounded on assumptions a dissolution was less likely in the short term. Market trends suggested investors were still relatively keen on European cyclicals.
In specialist retail, Inditex, the parent company of ready-to-wear chain Zara, said trading had been upbeat in the last five weeks. In contrast, AB Foods, which owns Primark, said it expected the second half of this year to be more difficult in Europe. Technip Energies (energy projects and technologies) is to buy US-based Ecovyst's Advanced Materials & Catalysts business. The acquisition will reinforce Technip’s catalyst, carbon capture and sustainable fuel capabilities. Anglo American is to merge with Tech Resources to form the world’s 5th largest copper producer. Kering has put back exercising its call options on the 70% of Valentino it does not own until 2028-29. Management wants to concentrate on its recovery plan and on reducing its high debt levels.
US EQUITIES
In a buoyant week on Wall Street, the S&P 500 gained 1.63% in USD and the Nasdaq 100 1.44%, with both hitting new all-time highs. Momentum was driven by the likelihood of a Fed rate cut, tame inflation and fresh signs of labour market weakness. Weekly jobless claims, for example, reached highs not seen since 2021. Elsewhere, latent tensions were rekindled after conservative influencer Charlie Kirk was shot dead by a sniper during a meeting in Utah; the murder is a potent token of the increasing polarisation of US politics. Trade tensions continued to simmer in the background. Mexico, bowing to pressure from Washington, is planning to introduce a 50% tax on Chinese cars and the Trump administration is thinking about extending tariffs on steel and aluminium, a move that could upset the trade truce with the European Union.
In the tech sector, Oracle rocketed 32% after its order book ballooned to an extraordinary $455bn. The news bolstered the impression that structural demand for AI and cloud businesses is extremely strong. Adobe raised annual guidance, citing strong demand for its AI software while Apple fell 4% after its new iPhone 17 was considered to be lacking in truly innovative features. In retail, Kroger raised guidance thanks to robust like-for-like growth. In healthcare, AbbVie (+3.6%) settled its legal dispute over Rinvoq so generic versions will not appear before 2037. Industrials were more vulnerable. Boeing (-4.21%) said 777X certification would once again be delayed and is now expected after 2026. Delta Air Lines (-1.61%) raised guidance for the third quarter but its transatlantic performance disappointed investors. The gold ounce broke above $3,600 and is now up 37% YTD due to central banks buying gold and prevailing geopolitical tensions.
EMERGING MARKETS
The MSCI EM index was up 2.74% in USD this week as of Thursday. All major emerging markets trended higher. Korea, Taiwan, China, Mexico, Brazil and India were up by 4.80%, 4.79%, 2.92%, 2.76%, 1.48% and 1.00% respectively.
In China, August imports rose 1.3% YoY, or below the 3.4% rise expected, while exports were up 4.4%, or lower than the 5.5% expected. The trade balance with the US rose to $102.3bn from $98.2bn. August CPI was down 0.4% YoY against expectations of -0.2%, the lowest reading since February 2025, while PPI was down 2.9% YoY, in line with expectations, and in negative territory for the 35th straight month. Shenzhen city joined other major cities such as Shanghai and Beijing in further easing home-buying rules, allowing eligible families to buy unlimited properties in several districts.
In Taiwan, August CPI was 1.6% YoY, or in line with expectations. August imports jumped 29.7% YoY, or ahead of the 26.1% expected. August exports were up 34.1% YoY, or better than the 25% expected. TSCM reported strong operating data for the first two months of the quarter with the revenue run rate ahead of guidance.
In Korea, exports for the first 10 days of September rose 2.8% YoY, while imports were up 11.1%. The government eased a seven-year restriction that excluded crypto companies from venture status, opening the door to tax incentives and better financing options.
In India, net inflows into equities in August fell 23% from July’s all-time high to Rs 487bn MoM. It was, however, still the second highest amount in 2025. Infosys announced a RS 180bn buyback programme. The government signed an MoU with Macrotech Developers to develop a Rs 300bn green integrated data centre park, with a planned capacity of 2GWs. Varun Beverages entered a joint venture with Everest International Holdings to focus on manufacturing visi coolers and other refrigeration equipment.
In Brazil, August inflation rose 5.13% YoY as expected. July retail sales rose 1% YoY, or ahead of expectations of a 0.8% rise. The Supreme Court found former president Jair Bolsonaro guilty of attempting a military coup to stay in power after his 2022 election loss.
In Mexico, August CPI was up 3.57% YoY as expected. Industrial production fell 2.7% YoY, or more than the 0.9% rise expected. The government is planning to impose tariffs of as much as 50% on cars and other products made by China.
In Indonesia, long serving finance minister Sri Mulyani was replaced in the wake of political unrest in the country.
In Argentina, PM Milei’s party lost the provincial election in Buenos Aires ahead of the congressional polls next month.
CORPORATE DEBT
Monday's strong downward revision in US employment added further impetus to the chances of Fed rate cuts this year. The ECB, in contrast, left its rates unchanged as expected and said disinflation had no doubt come to an end. Markets now see little chance of any further significant cuts this year. Yields on the 2-year Bund rose from 1.92% to 2% but the 10-year Bund was unchanged. France’s political situation also dominated this week’s news. PM François Bayrou lost his confidence vote but France’s bonds, both government and corporate, continued to regain the ground lost when he first announced the vote. The rapid appointment of Sébastien Lecornu to replace him has so far maintained stability.
Over the week, investment grade returned 0.10% and high yield 0.18%. The Xover had tightened by 10bp to 253 as of Thursday’s close.
The new issues market remained busy across all segments. New AT1 deals included Société Générale (€1bn at 6.125% and a 2032 call), Raiffeisen (€500m at 6.375% and a 2031 call ) and Abanca (€500m at 6.125% and a 2031 call). Demand was strong for all three deals. Bank of Cyprus jumped on market conditions to recall its Tier 2 bond and raise €300m at swap+195bp. In corporate hybrids, Vodafone sold two €700m bonds at 4.125% and 4.625% with first calls in 2032 and 2035. Euro-denominated high yield deals revived with Iron Mountain (€1.2bn, Ba3/BB-, at 4.75% 8nc3), Ziggo (€650m, B1, at 5.25% 7nc3) and Evoke (€600m, B2/B-, at 8% 6n2) and Inpost (€850m, Ba1/BB+ at 4% 6nc2). CEME Spa had a small tap on its floating rate notes.
GLOSSARY
• Investment Grade: bonds rated as high quality by rating agencies.
• High Yield: corporate bonds with a higher default risk than investment grade bonds but which pay out higher coupons.
• Senior debt benefits from specific guarantees. Its repayment takes priority over other debts, known as subordinated debt.
• Debt is considered to be subordinated when its redemption depends on the earlier payment of other creditors. To offset the higher risk, subordinated Senior debt has priority over other debt instruments.
• Tier 2 / Tier 3 : subordinated debt segment.
• Duration: the average life of a bond discounted for all interest and capital flows.
• The spread is the difference between the actuarial rate of return on a bond and the rate of return on a risk-free loan with the same maturity.
• The so-called "Value" stocks are considered to be undervalued.
• EBITDA: Earnings before Interest, Taxes, Depreciation, and Amortization.
• CTA: quantitative strategy which uses futures to invest in a wide range of financial assets, including equity indices, short-term and long-term interest rates, currencies, and commodities.
• The PMI, for "Purchasing Manager's Index", is an indicator of the economic state of a sector.
• AT1s belong to a family of bank capital securities known as contingent convertibles or “Cocos”. Convertible because they can be converted from bonds to shares (or depreciated entirely) and contingent because this conversion only occurs if certain conditions are met, such as the issuing bank's capital strength falling below a predetermined trigger level.
DISCLAIMER
This is a marketing communication.
12/09/2025
This document is issued by the Edmond de Rothschild Group. It is not legally binding and is intended solely for information purposes. This document may not be communicated to persons located in jurisdictions in which it would be considered as a recommendation, an offer of products or services or a solicitation, and in which case its communication could be in breach of applicable laws and regulations. This document has not been reviewed or approved by a regulator of any jurisdiction. The figures, comments, opinions and/or analyses contained herein reflect the sentiment of the Edmond de Rothschild Group with respect to market trends based on its expertise, economic analyses and the information in its possession at the date on which this document was drawn up and may change at any time without notice. They may no longer be accurate or relevant at the time of reading, owing notably to the publication date of the document or to changes on the market. This document is intended solely to provide general and introductory information to the readers, and notably should not be used as a basis for any decision to buy, sell or hold an investment. Under no circumstances may the Edmond de Rothschild Group be held liable for any decision to invest, divest or hold an investment taken on the basis of these comments and analyses. The Edmond de Rothschild Group therefore recommends that investors obtain the various regulatory descriptions of each financial product before investing, to analyse the risks involved and form their own opinion independently of the Edmond de Rothschild Group. Investors are advised to seek independent advice from specialist advisors before concluding any transactions based on the information contained in this document, notably in order to ensure the suitability of the investment with their financial and tax situation.
Past performance and volatility are not a reliable indicator of future performance and volatility and may vary over time, and may be independently affected by exchange rate fluctuations.
Source of the information: unless otherwise stated, the sources used in the present document are those of the Edmond de Rothschild Group. This document and its content may not be reproduced or used in whole or in part without the permission of the Edmond de Rothschild Group.
Copyright © Edmond de Rothschild Group – All rights reserved
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE)
47, rue du Faubourg Saint-Honoré 75401 Paris Cedex 08
Société anonyme governed by an executive board and a supervisory board with capital of 11.033.769 euros
AMF Registration number GP 04000015
332.652.536 R.C.S. Paris
