WeeklyWatch – Reality check for US jobs data
16th September 2025
Stock Take
Payroll plot twist in the US
The statistics show a slowdown in US hiring – but is it all bad news?
Last week, the US Bureau of Labor Statistics revealed it overstated job creation by 911,000 in the 12 months to March 2025. Weekly payroll growth during that period was therefore less than half the original report.
Although these revised figures were from earlier this year, they were echoed by early September data showing jobless claims jumped to their highest weekly level since October 2021. While, overall, unemployment remains low, these signs point to US hiring losing momentum. Investors, however, appeared to shrug off the news, viewing it as ‘bad news is good news’ – helping to cement expectations of an imminent US rate cut this week, with more possibly to follow.
Rate-cut rally
Indeed, stock markets in the US had a good week ahead of the Federal Reserve’s September meeting today and tomorrow (16th and 17th), where a 0.25% rate cut is widely expected. Strong Q1 order growth at software company Oracle, driven by demand for cloud-computing services, boosted investor sentiment around the AI boom.
Back across the pond, European stock markets also rose, buoyed by hopes for the potential US rate cut. The ECB, as anticipated, held interest rates steady at its recent meeting. In Asia, both Chinese and Japanese markets rose. Gold glimmered – finishing the week just shy of an all-time high, while the US dollar index eased.
Debt déjà vu for France
On Friday, credit rating agency Fitch downgraded France’s government debt, effectively signalling the country is becoming less creditworthy. Domestic fixed income (known as OATS) now carry an A+ rating, with a stable outlook. This decision was partly a response to a deteriorating political backdrop, with the minority government struggling to implement spending cuts and rein in the deficit.
Earlier in the week, President Emmanuel Macron appointed Sébastien Lecornu as prime minister – the fifth in less than two years. To govern effectively, Lecornu will need backing from the socialists and other groups in the National Assembly. His predecessor, François Bayrou, lost a no-confidence vote after lawmakers rejected his proposals to reduce public spending.
Occurring soon after UK 30-year bond yields rose to near three-decade highs, last week’s developments may be a sign the market’s patience is weakening towards indebted developed economies such as France and the UK. Both are trying to maintain generous welfare and pension systems while also funding energy transition efforts and higher defence spending, all against a backdrop of a weak economic growth outlook, according to Hetal Mehta, Chief Economist at SJP. She observed:
“One of the key underlying problems is the weakness of productivity. France didn’t undergo the turmoil and painful reforms the periphery went through back in 2011–13. This is now becoming a much bigger problem as debt continues to accumulate.
“It is not unusual for many economies to be faced with high debt levels, but it is the pace of that debt accumulation that matters. The deficit in France is set to remain among the largest in the G7. The only exception is the US.”
As the eurozone’s second-largest economy, any sustained loss of investor confidence in France could push domestic bond yields higher and have the same effect elsewhere in the bloc. Persistently rising yields could set up a standoff between investors – convinced an eventual correction is inevitable – and a government determined to avoid a default as well as the humiliation of a bailout and severe repayment conditions by the European Central Bank (ECB).
Lecornu doesn’t have much time to find a solution. A critical hurdle is the 2026 budget, with a draft due on 13th October. Mehta noted that the short-lived Bayrou government had targeted ambitious reductions in spending. Commenting on what happens now, she says:
“The new Lecornu government will need to have discussions with opposition parties to get a budget passed. It seems more likely the adjustment will be dialled down to be consistent with EU fiscal rules.”
In the absence of progress on cuts, France’s Ministry of Finance is projecting a 2026 budget deficit of 6.1% of GDP, way above the EU’s 3% limit. Bond markets are not yet pricing in a repeat of the sovereign debt crisis. Although 10-year OAT yields rose after Bayrou’s resignation, they remain below levels seen earlier this month and under their 12-month peak.
A useful gauge of relative risks is the difference between French 10-year yields, and the equivalent 10-year yields for German Bunds. Greg Venizelos, SJP’s Fixed Income Strategist, noted that:
“Fixed income markets do not appear unduly concerned about French debt because of the domestic political backdrop.”
He also reminded investors the ECB has an extensive toolkit to counter any potential runaway in French yields.
“The back-up facilities put in place after both the European sovereign debt crisis, which began in September 2009, as well as Italian fiscal stress provide ample room to cushion solvency concerns. This would of course come with conditions of fiscal discipline, but probably not much harsher than what the French parliament might be able to agree to.”
Wealth Check
Five pension myths: busted
As Pension Awareness Week returns for its 11th year, attention is once again on the vital role pensions play in ensuring well-being in retirement. Yet many people are unaware of how to make the most of the pension savings options available to them.
Here are some of the most common misconceptions…
“I’ve already paid £60,000 into my pensions, so I can’t pay in more.”
The £60,000 annual allowance applies to most people for tax-relieved pension contributions. However, the ‘carry forward’ rules let you use unused allowances from the previous three tax years, meaning you may be able to pay in more.
“I’m not working, so I can’t get pension tax relief.”
Not true. Even non-earners, including children, can benefit from some pension tax relief. Anyone earning under £3,600 a year can contribute up to £2,880 annually, with 20% tax relief topping this up to £3,600.
“Pensions are subject to Inheritance Tax (IHT).”
For now, most pensions can still be passed on free of IHT. Although the government does intend to make pensions liable for this tax, it hasn’t happened yet; pensions will fall within the value of a person’s estate for IHT purposes from 6 April 2027.
“My State Pension and auto-enrolment pension are enough for retirement.”
Assuming you qualify for the full State Pension, a single person will still need to build up a pension pot worth £540,000 to £800,000 to achieve a comfortable retirement, according to Pensions UK.1 It’s therefore unlikely the State Pension plus a workplace pension where you’re saving the minimum will be enough.
“It’s too late to boost my pension now.”
It’s a myth! It’s never too late to give your pension a boost and enjoy a bigger nest egg in later life. For example, contributing an extra £200 a month from age 50 until retiring at 65 could add around £48,200 to your pension pot, assuming 4.5% annual growth after charges.
Source:
1How to estimate likely retirement living standards – 2025 Pensions UK
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