Ian Reynolds
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EU CPI August 2025
EU CPI coming in higher than expected, as Ms Lagarde warned us it would a few months ago. Was enough to break G7 bond markets, spike the USD and send Gold parabolic.
Of course it was a confluence of events
- US courts ruling some tariffs may be illegal
- EU and UK bonds selling off into EU CPI
- Weak equities from Friday's poor close.
Eurostat reported the Euro area annual inflation rate, based on the Harmonised Index of Consumer Prices (HICP), at 2.1% for August 2025, up from 2.0% in July 2025. Key components contributing to this rate included:
- Food, Alcohol & Tobacco: Highest annual rate at 3.2% (down from 3.3% in July).
- Services: 3.1% (down from 3.2% in July).
- Non-Energy Industrial Goods: Stable at 0.8%.
- Energy: Negative at -1.9% (improved from -2.4% in July).
The slight increase in headline inflation reflects slower declines in energy prices, partially offset by decelerating service prices. Core inflation (excluding energy and unprocessed food) was not detailed but showed a downward trend in prior months (e.g., 2.6% in July in Belgium). The European Central Bank continues to monitor these trends, targeting a 2% medium-term inflation rate.
Eurozone inflation rises to 2.1% in August
US Manufacturing PMIs August 2025
Mixed US PMIs etc didn't help, neither did Trump's speech, as no progress on wars, debt etc
- Health Rumours: He dismissed social media speculation about his declining health or death, calling it “fake news” and noting his activity on Truth Social over the Labor Day weekend. Visible bruising on his hand fuelled ongoing health concerns, though his press secretary attributed it to frequent handshaking.
- Chicago Crime and Immigration: Trump promised a federal crackdown on crime in Chicago, stating, “We’re going in,” and confirmed plans to deploy federal agents for immigration enforcement, despite local opposition from Illinois Governor JB Pritzker. This followed a federal judge’s ruling that Trump’s earlier deployment of military forces in Los Angeles for law enforcement violated federal law.
- Tariffs: He announced plans to appeal to the Supreme Court as early as September 3 to overturn a ruling against his global tariffs, arguing they were essential to prevent the U.S. from becoming a “third-world country.”
- Drug Interdiction: Trump revealed a U.S. military strike on a drug vessel from Venezuela in the southern Caribbean, aimed at disrupting narco-terrorist operations, as confirmed by Secretary of State Marco Rubio.
- Russia-Ukraine Conflict: When asked about Russia-Ukraine talks, Trump reported 7,313 soldiers from both sides were killed the previous week, describing the losses as senseless, but provided no details on potential meetings between leaders.
Breaking
Bitcoin
BTC breaks the downtrend but needs to get back above the neckline of the inverse head and shoulders at $114,500.
Commodities
Gold going parabolic so no real sense in how high it can get in this move but a proper pullback will have to happen at some stage. Gold up and USD up simultaneously is flows related.
Foreign Exchange
USD, via DXY, jumps to regain short-term trend. Interesting reaction as USD not the safe haven for the last year. Buying of physical Gold flows? Let's see if it can close above 97.80 to maintain the trend.
Bonds
US yields break higher. Following EU and UK yields higher. 5%+ and we'll be seeing some vocal or program intervention.
US 30 Year Government Bond Yield Daily
Equities
NASDAQ back to the support (was resistance) from COVID. A confirmed close below 21,100 and there could be a big drop. Equities were lower on the open and have rallied back.
Economic Indicators Today
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