Weekly house view | Ishiba out, Bayrou next?
The week in review
Last week ended with Japanese Prime Minister Shigeru Ishiba saying he would resign, a fate widely expected to befall French Prime Minister François Bayrou who faces a confidence vote on Monday that he is likely to lose. The political drama in Tokyo and Paris means two G7 economies could soon face periods of political instability. Britain, also a G7 member, saw its deputy prime minister quit last week, and UK 30-year borrowing costs hit their highest since 1998 on investor concerns about the country’s ability to keep its public finances under control. The US added just 22,000 jobs in August and June’s figure was revised down to show job losses of 13,000, the first time the economy has shed positions since the Covid-19 pandemic in 2020. The payrolls data usually turns negative 4-10 months before a recession. This time may be different as tariff uncertainty weighed on sentiment over the summer. However, the Federal Reserve’s “Beige Book” report, a snapshot of the economy’s health, pointed to rising consumer pressure and more job seekers. In China, financial regulators are reportedly exploring steps to temper the surging stock market. The S&P 500i rose 0.3% last week (in USD).
Quote of the week
“I think they’ll get better,” US Commerce Secretary Howard Lutnick said in a television interview, when asked about the reliability of US jobs data published by the Bureau of Labor Statistics.
Key data
US nonfarm payrolls rose by 22,000 jobs in August, less than expected. The unemployment rate rose to 4.3% in August from 4.2% in the previous month. China’s services activity PMI rose to 53 in August, expanding at the quickest pace in 15 months, buoyed by firmer demand at home and a rebound in foreign orders, a private-sector survey showed. Swiss CPI inflation remained stable at 0.2% year-on-year in August. In the Euro area, headline inflation rose to 2.1% year-on-year in August, primarily driven by energy prices, while core inflation remained unchanged.