Morning Macro 29th August 2025
US Q2 2025 GDP figures were revised higher from the first estimate of +3% to +3.3% on Thursday, marking a sharp rebound from Q1 2025’s -0.5% contraction.
– This change was driven by upward revisions to business investment (+5.7% vs +1.9% in the first estimate), although this remains lower than the +10.3% seen in Q1 2025.
– Growth was also driven by a decline in imports (-29.8% vs Q1 2025’s +37.9%), which offset a 1.3% decline in exports (vs +0.4% in Q1).
In other news, Federal Reserve Governor Christopher Waller reiterated on Thursday that the central bank should begin cutting rates in the FOMC in September.
– “Based on what I know today, I would support a [quarter percentage point] cut at the Committee’s meeting on Sept. 16 and 17,” Waller said in prepared remarks at the Economic Club of Miami. “As I stand here today, I expect additional cuts over the next three to six months.”
– Further directional clarity and insight into the market’s pricing of interest rate trajectory will come after Friday’s July PCE data, out at 13:30 BST today. Currently, the market is pricing in 21 bps of cuts in the September meeting.
In Europe, inflation printed lower than expected:
*SPAIN PRELIM AUG. HARMONIZED CPI RISES 2.7% Y/Y; EST. +2.8%
*FRANCE PRELIM AUG. CONSUMER PRICES RISE 0.9% Y/Y; EST. +1.0%
The market is no longer fully pricing further ECB rate cuts this year. But Italian and German inflation numbers out today (expectations sit around 2%)
Japan Data:
– Japan’s core inflation slowed to 2.5% y/y in August (Jul: +2.9%), remaining above the BOJ’s 2% target for the 10th straight month.
– Japan’s industrial production fell 1.6% m/m and 0.9% y/y in July, the first drop in 2 months, due to weaker auto production
The PBOC net injected CNY421.7 billion into the economy via an OMO (open market operation) of CNY782.9 billion via 7-day reverse repos, with the rate unchanged at 1.40%
– The CFETS-NEX money-market sentiment index, which gauges liquidity in the interbank market, fell to 47 on Thursday from 50 on Wednesday. Readings above 50 indicate tighter liquidity, while 50 signals a balanced level.
- Sharp decline in Bitcoin/USD this morning
Data Today:
– Italy: Harmonised Inflation Rate (10:00 BST)
– Germany: Harmonised Inflation Rate (13:00 BST)
– US PCE Price Index (13:30 BST)
– University of Michigan Consumer Sentiment for August (15:00 BST)
Data Out This Weekend:
– China NBS Manufacturing PMI: Sunday, 14:30 BST
