ryan secker

Written by Cormac Nevin

Equity markets had a relatively quiet week, with the MSCI All Country World Index up +0.4%. Fixed Income markets rallied strongly, however, after Friday’s release of the US non-farm payrolls (NFP) report showed that, according to the Bureau of Labor Statistics (BLS), the US economy added only +22,000 jobs in the month of August (vs +75,000 anticipated).

This caused a sharp rally in Fixed Income markets as government bond yields moved lower. The Bloomberg Global Aggregate Index of global bonds finished the week up +0.5% while the ETF tracking long-dated US government bonds (which is very sensitive to interest rates) was up +2.6%, both in GBP Hedged terms.

Strong initial NFP reports in recent years have created a narrative that the US jobs market has been in surprisingly good health following the interest rate increases in 2022, which many feared might cause a recession. However, revisions to the initial prints for May and June of this year showed the largest two-month downward revision since 1968, as 258,000 jobs which were never actually created were revised away.

While Donald Trump et al have used the existence of these regular revisions as evidence of conspiracy against him at the Bureau of Labor Statistics (causing him to fire the Commissioner in August and replace them with his preferred candidate), the reason for these revisions is more nuanced. They are necessary due the fact that the initial NFP print is a survey-based measurement which is then extrapolated to the economy as a whole.

This can be skewed by low response rates, seasonal factors and late responses among other factors. Another interesting adjustment made to the numbers is drawing increasing market attention. This is called the “birth-death adjustment” which is a statistical adjustment used by the BLS to estimate how many jobs come from new businesses starting up (“births”) and how many disappear because old businesses close down (“deaths”).

The challenge with using mathematical models too extensively, or taking their estimates too literally, is that the world often evolves in ways they struggle to adapt to. This specific adjustment struggles at economic turning points; it may assume lots of new businesses are popping up when in fact many are closing, which can make job growth look stronger than it really is until revisions catch up. The rise of “businesses” created by sole traders operating in the gig economy (eg Uber), which are never going to employ more than one person, is also a challenge for this model.

On Tuesday of this week, the Quarterly Census of Employment and Wages is released for Q1 2025 with a six month lag. This is based on actual unemployment insurance records from nearly every business in America, so it’s much closer to the “truth”. This is expected to further revise the NFP numbers by 500-800,000 as jobs which only ever existed on a spreadsheet at the BLS are revised away. The cloudiness of economic data at the moment, borne out of overreliance on statistics rather than conspiracy, is a strong reason why we maintain healthy allocations to high quality Fixed Income exposures with interest rate sensitivity, as well as globally diverse exposures which likely stand to benefit from a weaker US Dollar.

All performance figures are stated in Sterling terms, unless otherwise specified.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 8^th September 2025.

© 2025 YOU Asset Management. All rights reserved.

Written by Dominic Williams

Global equity markets posted gains last week, as investors digested a slew of macroeconomic data and geopolitical developments. The standout driver came from the US, where reciprocal tariff reductions were agreed between Washington and Beijing, marking a significant de-escalation in trade tensions.

However, the agreement is only in place for the next 90 days, and a long-term settlement is still far from guaranteed. Tariffs are import taxes that can raise costs for businesses and consumers, so their removal typically supports trade and market sentiment. The move fuelled optimism around global trade and was widely welcomed by markets, with major indices responding positively. President Trump also took a diplomatic tour to the Middle East, where he secured new trade agreements in the region.

In response, the S&P 500, a widely followed index that measures the performance of 500 leading US-listed companies, rallied sharply, rising +5.7% in GBP terms. This reversed recent losses and brought the index back into positive territory for the year in local (US dollar) terms.

US inflation data released during the week added to the positive sentiment. Headline Consumer Price Index (CPI) inflation came in at 2.3% year-on-year for April, below expectations, offering hope that inflationary pressures are easing. CPI measures the average price change paid by consumers for goods and services and is closely watched by policymakers and markets alike. However, producer price data presented a more mixed picture.

These figures reflect the costs businesses incur to produce goods and services, often called input prices. While input prices fell more than expected, this was partly due to tariff-related pressures and weak demand. Falling input costs can sometimes be positive, but in this case, they may signal that companies are cutting prices to maintain sales, or that global demand is weakening, both of which raise concerns over a potential squeeze on company profit margins.

If businesses earn less per unit sold, it could weigh on corporate profitability in the coming quarters, complicating the outlook for how the Federal Reserve may approach interest rates going forward.

While the immediate market reaction was positive, the full impact of recently proposed tariffs is yet to be felt, and policymakers have cautioned that inflation could rise again later in the year.

In the UK, GDP grew 0.2% in March, bringing first-quarter growth to 0.7%. While this was ahead of expectations, underlying indicators were less encouraging. Both industrial and manufacturing production came in below consensus, raising questions about the sustainability of the recovery in the face of continued weakness in consumer demand and elevated interest rates. UK equities saw a mixed response, with the more domestically focused FTSE 250 rising +2.4%, while the broader FTSE All Share rose +1.8% over the week.

In Japan, GDP fell by 0.2% in the first quarter of 2025, reflecting weaker than expected demand from major trading partners, compounded by concerns over the impact of US trade policies. Despite the contraction, sentiment held up relatively well over the week, supported by the broader rebound in global markets and optimism following the US-China trade deal. Market performance was muted, with the MSCI Japan Index rising +0.2% in local currency terms but declining -0.2% in GBP terms.

Despite the week’s optimism, challenges remain. The looming impact of new trade tariffs, ongoing questions around the sustainability of global growth, and mixed corporate earnings all point to a still-uncertain outlook. However, the strong market rebound, particularly in the US, serves as a timely reminder of the risks of trying to time markets. Staying invested and maintaining a diversified approach remains, as ever, the most effective way to navigate an evolving global landscape.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable, but may be inaccurate or incomplete. Unless otherwise specified, all information is produced as of 19th May 2025.

© 2025 YOU Asset Management. All rights reserved.