Weekly round-up: 1-5 September

This week

At nearly 70 metres long and 50 centimetres tall, the delicately embroidered cloth that depicts the events leading up to the Norman conquest of England in 1066, is now widely accepted to have been made on these shores, but for centuries has been preserved in Normandy. That is until next year, when it goes on display at the British Museum in September 2026.

The French art world is fiercely opposed to the project, with experts fearing the masterpiece is in far too delicate a state to be transported across the Channel. However, it was French investors that took centre stage on Tuesday, as higher European inflation readings loomed. Data showed that core inflation on the continent edged up a touch in August to 2.3% annually, staying close to the European Central Bank's 2% target and firming up the chances that interest rates will remain unchanged in the near term, even if the rate cut debate could still simmer.

For now, markets see just a 25% chance of a rate cut by December but more than 50% by early spring next year, suggesting that a debate on more easing is far from over.

The beginning week saw a relatively tumultuous time for investors not just in Europe but also this side of the Channel, with longer dated bond yields spiking as fears that the government’s budget plans could unravel more quickly than the nearly 1000 year old tapestry if touched. Britain's 30-year borrowing costs rose to their highest levels since 1998, whilst sterling slid over 1.5% on Tuesday, highlighting growing investor anxiety about the UK's ability to keep its finances under control.

Matters were not helped the day prior as news broke that Prime Minister, Keir Starmer, reshuffled his top team of advisers, moving Chancellor Rachel Reeves's deputy Darren Jones into his Downing Street office to better coordinate policy delivery, a sign for some that Reeves’s position has been weakened.

Whilst relative calm in the bond market was restored by the end of the week, Tuesday also saw common threads in Europe, with France’s 30-year government bond yields hitting their highest levels in more than 16 years at around 4.5%, while yields on 30-year German bonds hit a fresh 14 year high at about 3.4%.

The middle of the week saw Bank of England (BoE) Governor, Andrew Bailey, weave his own narrative whilst addressing the media about the bank’s current thinking on interest rates. With investors potentially having tied themselves up in knots about when the bank will look to move on borrowing costs next, Bailey said markets now understood his message that interest rates would continue to move "downwards gradually over time" but that there was now less certainty about the speed of cuts.

"There is now considerably more doubt about exactly when and how quickly we can make those further steps... That's the message I wanted to get across. Now, I think actually, judging by what's happened, certainly to market pricing since then, I think that message has been understood.” Bailey told a hearing of the House of Commons' Treasury Committee. Markets now price in only a 33% chance of another 0.25% rate cut by the end of the year and do not fully price such a move until April 2026.

The first Friday of the month often brings with it US non-farm payrolls, with US Bureau of Labor Statistics canvassing those Americans who have been added to the labour force over the previous month. US job growth weakened sharply in August it seems, while the unemployment rate increased to 4.3%, confirming that labour market conditions were softening and sealing the case for an interest rate cut from the Federal Reserve this month. Payrolls increased by only 22,000 jobs last month, against a predicted 75,000, also following a report this week that there were more unemployed people than vacancies in July for the first time since the COVID-19 pandemic, with many economists blaming Donald Trump’s sweeping tariff for stitching-up the American workforce.

Next week

With summer now seemingly a distant memory, it’s time to get back to work as a busy week of economic data releases draws wandering thoughts of a warm European holiday to extinguish those early Autumn blues.

The beginning of the week does provide us with a trip to Europe at least, as the survey company Sentix releases its Investor Confidence figures for the continent. The results of a survey of about 6,600 investors and analysts, which asks respondents to rate the relative 6-month economic outlook, act as a leading indicator of economic health, with investors highly informed by virtue of their job and changes in their sentiment can be an early signal of future economic activity.

With one of the hottest summers in history having driven sales on the high street, as consumers rushed to update their summer wardrobe and get the BBQ out, the British Retail Consortium (BRC) releases its Sales Monitor figures this week. Although the figures lead the government released consumer inflation data by about 10 days, they can be narrower in scope as they only include goods purchased from retailers who belong to the BRC. Nonetheless the figures should give us a decent update as to how the UK high street is performing and what we should expect from both upcoming retail sales and inflation numbers. 

The numbers should dovetail nicely with the UK’s monthly Gross Domestic Product reading towards the end of the week, acting as the broadest measurement of how strongly an economy is performing. The reading should also take on added significance as one of the final readings before the Chancellor announces her Autumn Budget in late November.

Across to the US, where the real box office data this week should arrive in the form of Consumer Price Index (CPI), measuring the country’s rate of inflation. With the US Federal Reserve increasingly looking likely to cut rate in a few weeks, especially after a weak set of US employment numbers last week, the inflation reading would really have to be something to derail the central bank’s plans.

This article is designed to provide you with information only. It is not designed to provide you with financial advice. Please seek financial advice if you are still unsure about your options. There may be a charge for this. Remember, tax treatment depends on your individual circumstances and may be subject to change in the future. And the value of investments can go down as well as up, and could be worth less than what was paid in. This information is based on our understanding in September 2025. Aberdeen is not responsible for the information, accuracy and views of external sources.