Global Economic Snapshot

United States

• • S&P Global services PMI at 53.9 vs 54.0 expected.
• • New home sales surged to 800K vs 650K forecast.
• • Weekly crude oil inventories -607K vs +235K expected.
• • Initial jobless claims 218K vs 235K expected.
• • Q2 GDP +3.8% vs +3.3%.
• • Durable goods orders rose +2.9% vs -0.5% anticipated

Eurozone

• • Services PMI 51.4 vs 50.5 expected
• • Germany Manufacturing PMI 48.5 vs 50.0 expected
• • France Services PMI 48.9 vs 49.6 expected

United Kingdom

Services PMI 51.9 vs 53.5 expected

Japan

Manufacturing PMI 47.4 (prior 49.7)

Fed Signals Caution amid Inflation and Labor Market Risks

Federal Reserve officials remain divided on the path forward, reflecting a balance between inflation risks and labor market fragility. Hawks, including Musalem, Hammack, and Bowman cautioned against aggressive easing, noting that inflation remains above target and tariffs continue to add pressure. They emphasized that while recent rate cuts provide precautionary support, overly loose policy could exacerbate risks, particularly in housing and employment, and warned that the labor market, though showing signs of softening, remains near full employment.

Doves such as Miran, Schmid, Daly, and Goolsbee highlighted downside risks to growth and employment. They pointed to moderating consumer spending, housing weakness, and softer hiring trends as reasons for measured easing. Miran emphasized the long-term effects of immigration shifts and AI on growth, while Daly noted that tariff-driven inflation has been less severe than expected.

Fed Chair Powell positioned the latest quarter-point cut as a step toward neutral, describing policy as modestly restrictive and flexible to respond to evolving risks. He underscored that elevated goods price inflation largely reflects tariffs, while services disinflation continues and long-term expectations remain anchored near 2%.

Macro Updates & International Developments

• • OECD Upgrade: The OECD lifted its global growth call for 2025 to 3.2% (from 2.9%), citing resilience in EM, AI investment in the US, and Chinese fiscal support. US 2025 growth is now seen at 1.8%, still well below 2024’s 2.8%.
• • Manufacturing Shifts: Around 20% of international manufacturers have exited the US over the past year amid tariff and compliance, while 54% of US firms report steep revenue declines linked to these disruptions. Global supply chains are being repositioned away from high-tariff zones.

US and EU Tariff Announcements

• • US: President Trump confirmed new tariffs effective October 1, covering kitchen cabinets, bathroom vanities, trucks (25%), and certain pharmaceuticals (100% unless new facilities are being built stateside). Furniture imports face 30%–50% duties as the administration’s push to bolster domestic production intensifies.
• • EU: The European Commission is expected to impose 25–50% tariffs on Chinese steel and related products, aiming to curb overcapacity and aggressively defend local manufacturers.

Markets

•  Silver surged above $45/oz, highest since 2011
•  S&P 500 headed for a weekly loss after three straight weekly gains; VIX spiked as bond yields climbed.
•  Google facing second EU antitrust fine (Reuters)
•  Amazon to pay $2.5B to settle FTC’s Prime case.
•  Intel reportedly asked Apple to invest as part of a turnaround strategy.
•  Alibaba rallied on CEO’s pledge to boost AI investment.

All eyes now turn to the US PCE price inflation to wrap up the week.

Disclaimer

The information in this article is for general information only and does not represent financial or investment advice. Markets are unpredictable, and past performance does not guarantee future results. Before making any financial decisions, please do your own research or consult a licensed financial advisor. We are not responsible for any loss or damage caused by reliance on this content.