Political Changes, U.S. Benchmark Revisions of Employment, and Various Inflation Data Releases – Currency Thoughts
Political Changes, U.S. Benchmark Revisions of Employment, and Various Inflation Data Releases
September 9, 2025
French Prime Minister Bayrou lost yesterday’s parliamentary vote of confidence, and President Macron must now appoint another politician to head a parliament in which no party holds a majority of seats. The outcome had been widely anticipated given the sharp split in support for the government’s fiscal plans and over immigration, and the no-confidence voting margin of 364 to 194 decisively underscores the government’s fragility.
Indonesian Finance Minister Mulyani has been replaced by Sadewa. Budget-related controversy is rampant there, too.
Today’s big market event will be the preliminary release at 10:00 EDT (14:00 GMT) of benchmark revisions of U.S. non-farm payroll employment covering the period of March 2024 to March of this year. The worry is that the changes could reduce the level of employment by as much as 700k. Such news would play into Trump’s criticism that the data are fraught with erroneous measurement and wild revision that he believes to have been politically intentional. Moreover, a big downward revision would support his contention that the Fed should not have stopped lowering interest rates at the start of this year. Without any legal change by Congress of the Fed’s responsibility for monetary policy, the relentless public criticism of the institution by the president has already undermined the credibility of U.S. monetary policy to an extensive degree.
The Fed’s upcoming monetary policy review with a planned quarterly update of its forecasts begins a week from today. Markets are pricing in about a 90% likelihood that the federal funds target will be reduced, but opinions are divided over the size of any move. In addition to the abrupt slowdown of U.S. employment growth in the middle third of 2025, U.S. inflation data in general and the impact of the higher import tariffs, now averaging 18%, in particular have attracted considerable interest. U.S. producer price figures get released tomorrow. and the CPI data arrive on Thursday. A bunch of price data releases by other countries dominated the overnight economic data menu.
The dollar exhibited a soft undertone overnight, with a weighted intra-day DXY index low of 97.25 that was less than one index point above its 52-week low of 96.38. The dollar fell as much as 0.5% against the yen and 0.3% versus the Aussie dollar but is little changed relative to the euro.
Ten-year sovereign debt yields climbed overnight by 8 basis points in France following the parliamentary vote of no confidence there and by three basis points in the U.S., Spain, and Germany, and by two bps in the U.K. and Italy. Japan’s 10-year JGB yield held steady, by contrast.
Prices of oil, bitcoin and gold are up 0.9%, 0.6% and 0.3%, respectively.
Pac Rim stock markets closed mixed, with hains of 1.3% in Taiwan and South Korea, 1.4% in India and 1.2% in Hong Kong but drops of 0.5% in Australia, 0.4% in Japan and New Zealand and 1.8% in Indonesia where a fiscally conservative finance minister was sacked.
Mexican consumer price inflation rose 0.1 percentage point to a 2-month high of 3.5% in August.
Hungarian CPI inflation last month matched July’s 3-month low of 4.3% but had been as low as 3.2% last October.
Consumer price inflation in the Netherlands last month was confirmed at the preliminary estimate of 2.8%, a 15-month low.
Albanian CPI inflation of 2.3% last month was its lowest in three months but above 1.6% last February.
Mongolian consumer price inflation jumped 0.7 percentage points to a 5-month high in August of 8.8%.
Croatian producer price inflation accelerated to a 2-month high of 1.2% in August.
In Lithuania, where producer price inflation has been subzero percent for 23 of the past 24 months, a year-on-year drop of 1.8% in August was the smallest in five months.
Norwegian PPI inflation of -3.0% in August was its most negative in ten months, reflecting a much bigger on-year drop in energy.
Ireland’s construction purchasing managers index, which touched a 3-year high last March, fell below the 50 neutral level in May and dropped an additional 1.2 points last month to a 19-month low of 45.9.
Spanish consumer confidence improved to a 6-month low in July.
After touching a 41-month high in August, the Westpac index of Australian consumer confidence dropped 3.1% this month. National Australia Bank’s monthly indices of business confidence fell from a 35-month high of +8 in July to a 3-month low of +4 in August. Business conditions, in contrast, improved two points to a 2-month high.
French industrial production (-1.1%) fell less sharply than feared in July. On average in May-July, production increased 0.6% and was 0.8% above its year-earlier level.
The NFIB index of U.S. small business sentiment rose half a point to a 7-month high of 100.8 in August.
Japanese machine tool orders rose 8.1% year-on-year in August, most in 5 months, and by 5.2% in January-August compared to a year earler.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: French industrial production, no confidence vote in France, U.S. employment benchmark revisions, U.S. small business sentiment
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