- US/Eurozone: August’s labour report is in the spotlight as a key determinant for the Fed’s September rate cut; Bayou's confidence vote on austerity has ignited political uncertainty in France
- India: A steep US 50% tariff imposition on Indian goods is forcing immediate, broad-based mitigation from authorities as future tariff evolution remains highly opaque
- South Korea: BOK maintained its 2.50% base rate as expected, signalling caution over the buoyant property market's exacerbation of high household debt
Related insights
US/Eurozone: August’s US labour data in focus, France’s political uncertainty deepens. August’s labour report, due on 5 Sep, became a focal point for the market as Powell’s Jackson Hole speech last week opened the door for the FOMC’s September rate cut thanks to a softening labour market. The consensus anticipates August’s nonfarm payroll to stay below 100k for a fourth straight month and the unemployment rate to rise to 4.3% from July’s 4.2%.
Recent Conference Board reports showed that the share of consumers that feel jobs were hard to get reached 20% in August—its highest since Feb 2021. The share of jobs considered plentiful slipped to 29.7% in August from 29.9% in July. The labour differential (i.e. the difference between the two and a good predictor for unemployment rate) fell to 9.7% in August from July’s 11%.
While inflation remains another concern for the US market, PCE inflation due on 29 Sep is expected to show headline inflation slowing to 0.2% m/m in July from 0.3% in June, while core holds steady at 0.3%. Even if PCE inflation numbers turn out hot, we doubt the market would be dissuaded from pricing in a September cut.
Trump faces challenges surrounding his legal capacity to fire Fed Governor Lisa Cook. Former Fed Vice Chair Lael Brainard warned that Trump’s political manoeuvrings to gain the majority in the seven-member Board of Governors could lead to the removal of 12 Fed district presidents whose terms are up for renewal in Feb 2026. US Treasury Secretary Scott Bessent plans to start interviewing candidates for Powell’s successor in September, well before his term ends in May 2026, which is viewed as another escalated effort to remove Powell early or force his resignation.
Shifting to Europe, French political uncertainty rose after Prime Minister Francois Bayou’s call for a confidence vote on 8 Sep for his unpopular austerity package for 2026. The far-right and left-wing oppositions are united in their dissent with protests and strikes planned soon after the vote. Suppose the vote fails and government falls, President Emmanuel Macron will likely resist calling another snap election, following the poor outcome at the last one in Jun-Jul 2024, opting instead for a new prime minister. While this does not alleviate the political deadlock in France, the Eurozone economic outlook for 2025-2026 has become more positive compared to 2024, notwithstanding Trump’s tariffs.
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