Financial Markets and Macro Weekly
(Zero Equilibrium for the Week Ending September 6, 2025):
This week was eventful in the markets as we looked at market expectations of Central Bank policy decision in September, France's fiscal fragility, crypto and commodity market moves and market reactions to US Jobs Numbers.
1/7
(Zero Equilibrium for the Week Ending September 6, 2025):
This week was eventful in the markets as we looked at market expectations of Central Bank policy decision in September, France's fiscal fragility, crypto and commodity market moves and market reactions to US Jobs Numbers.
1/7
Central Banks: September Policy Outlook:
• ECB & BoE are expected to hold rates steady this September amid sticky inflation and slowing growth. UBS sees the ECB’s easing cycle concluded, while the BoE is seen pausing at 4% before a 25 bps cut in November.
• Fed is widely expected to cut rates at its September FOMC meeting (16–17th), reinforcing a weaker USD outlook.
• SNB likely to hold, while Riksbank could deliver a final 25 bps cut.
• CBN: Zero Equilibrium expectations for the central bank of Nigeria interest rate policy is to hold Monetary Policy Rates, but a cut will not be surprising if the federal reserve cuts.
ZE View: A Fed cut alongside steady ECB/BoE policy stances points to a weaker dollar, firmer EURUSD and GBPUSD, and bullish momentum for Treasuries, gold, and EM assets. But Eurozone tariff risks could cap EUR upside, or even create a bearish situation.
2/7
• ECB & BoE are expected to hold rates steady this September amid sticky inflation and slowing growth. UBS sees the ECB’s easing cycle concluded, while the BoE is seen pausing at 4% before a 25 bps cut in November.
• Fed is widely expected to cut rates at its September FOMC meeting (16–17th), reinforcing a weaker USD outlook.
• SNB likely to hold, while Riksbank could deliver a final 25 bps cut.
• CBN: Zero Equilibrium expectations for the central bank of Nigeria interest rate policy is to hold Monetary Policy Rates, but a cut will not be surprising if the federal reserve cuts.
ZE View: A Fed cut alongside steady ECB/BoE policy stances points to a weaker dollar, firmer EURUSD and GBPUSD, and bullish momentum for Treasuries, gold, and EM assets. But Eurozone tariff risks could cap EUR upside, or even create a bearish situation.
2/7
France Replaces Italy as Fiscal Weak Link
• France’s fiscal deficit (5.8% of GDP in 2024) is widening faster than Italy’s (3.4%), even though France's debt stands at 113% of GDP vs Italy’s 135%.
• Political gridlock around the 2026 budget (€44bn in cuts planned) has rattled markets, pushing French 30-year bond yields above a 16 year high of 4.5%.
• Both France and Italy remain under the EU’s Excessive Deficit Procedure, but Italy is projected to stabilize faster.
ZE View: Without ECB support, French yields will stay elevated, as investors will continue to favor safety and quality, leaving French bonds vulnerable to price declines. There is a level of contagion risks of a spillover into Bunds and BTPs.
3/7
• France’s fiscal deficit (5.8% of GDP in 2024) is widening faster than Italy’s (3.4%), even though France's debt stands at 113% of GDP vs Italy’s 135%.
• Political gridlock around the 2026 budget (€44bn in cuts planned) has rattled markets, pushing French 30-year bond yields above a 16 year high of 4.5%.
• Both France and Italy remain under the EU’s Excessive Deficit Procedure, but Italy is projected to stabilize faster.
ZE View: Without ECB support, French yields will stay elevated, as investors will continue to favor safety and quality, leaving French bonds vulnerable to price declines. There is a level of contagion risks of a spillover into Bunds and BTPs.
3/7
Crypto Watch: Gold-Backed Coins Surpass Highs
• Gold-backed tokens hit fresh highs, tracking gold’s surge above $3,600/oz.
• Drivers: expected Fed rate cut, mixed US/China data, ongoing property market stress in China, and consumer strain in the US.
• These assets continue to act both as a hedge against crypto volatility and as a proxy allocation to gold.
4/7
• Gold-backed tokens hit fresh highs, tracking gold’s surge above $3,600/oz.
• Drivers: expected Fed rate cut, mixed US/China data, ongoing property market stress in China, and consumer strain in the US.
• These assets continue to act both as a hedge against crypto volatility and as a proxy allocation to gold.
4/7
Commodity Watch: Precious Metals & Oil
• Gold gained +1.72% on the week, +5.67% month-on-month, while Silver outperformed, gaining +5.71% week-on-week and +10.74% month-on-month.
The gold/silver ratio remains elevated, suggesting more room for silver.
• Oil flatlined: Brent at $66.91, WTI at $63.14. Both benchmarks remain range-bound ($69–66 for Brent, $66–63 for WTI).
Near-term crude direction hinges on Fed policy (dollar weakening which is supportive) vs. US & China economic softness (a clear demand risk).
5/7
• Gold gained +1.72% on the week, +5.67% month-on-month, while Silver outperformed, gaining +5.71% week-on-week and +10.74% month-on-month.
The gold/silver ratio remains elevated, suggesting more room for silver.
• Oil flatlined: Brent at $66.91, WTI at $63.14. Both benchmarks remain range-bound ($69–66 for Brent, $66–63 for WTI).
Near-term crude direction hinges on Fed policy (dollar weakening which is supportive) vs. US & China economic softness (a clear demand risk).
5/7
Stablecoin Spotlight: Tether Bets on Gold Miners
• Tether (USDT), which posted $5.7bn H1 profit, will allocate part of its reserves to gold mining stocks, calling them “natural Bitcoin.”
• Current reserve mix (as of Dec 2024): 75.9% Treasuries, 12.1% repos, 11% MMFs, 3.8% gold, 1.9% BTC, 6.2% loans, 2.7% other.
• A shift from Treasuries to gold miners could lift its inflation hedge allocation from 5.7% to ~7.7%.
ZE View: Move reflects institutional trend away from Treasuries into gold. It provides Tether with added protection against inflation, dollar debasement, and FX risk.
Fixed Income: DM Sovereigns Rally
• 10Y USTs, Bunds, Gilts, and JGBs rallied on rising Fed cut expectations.
• Structural fiscal deficits remain, but near-term, bond traders—not long-term investors—are driving price gains.
Any sustained rally would hinge on risk-off sentiment and central bank accommodation.
6/7
• Tether (USDT), which posted $5.7bn H1 profit, will allocate part of its reserves to gold mining stocks, calling them “natural Bitcoin.”
• Current reserve mix (as of Dec 2024): 75.9% Treasuries, 12.1% repos, 11% MMFs, 3.8% gold, 1.9% BTC, 6.2% loans, 2.7% other.
• A shift from Treasuries to gold miners could lift its inflation hedge allocation from 5.7% to ~7.7%.
ZE View: Move reflects institutional trend away from Treasuries into gold. It provides Tether with added protection against inflation, dollar debasement, and FX risk.
Fixed Income: DM Sovereigns Rally
• 10Y USTs, Bunds, Gilts, and JGBs rallied on rising Fed cut expectations.
• Structural fiscal deficits remain, but near-term, bond traders—not long-term investors—are driving price gains.
Any sustained rally would hinge on risk-off sentiment and central bank accommodation.
6/7
Macro Data: PMI & Labor Market Concerns
• Manufacturing PMI ticked up to 48.7% (still contraction), new orders at 51.4% (expansion), but employment slipped to 43.8%, signaling labor weakness.
• Services PMI rose to 52%, but employment lagged at 46.5%, with backlogs falling sharply. Suggests demand pull-ahead before tariffs, not genuine recovery.
• Non-Farm Payrolls (NFP) in focus: With ADP private payrolls at +54k, a stronger NFP print would imply public sector hiring drove gains. A weak report would confirm slowing job creation and bolster Fed cut expectations.
ZE Weekly Takeaway:
• Markets are in a holding pattern ahead of September’s central bank meetings.
• The Fed’s expected cut, paired with ECB/BoE holds, suggests we could see a weaker USD and bullish bias for gold, silver, Treasuries, and EM assets.
• France’s fiscal stress, Tether’s pivot into gold miners, and continued US/China economic uncertainty signals a global shift, as investors are prioritizing safety, and inflation hedges over growth.
✍🏾 By @Muhammad_Okoye
7/7
• Manufacturing PMI ticked up to 48.7% (still contraction), new orders at 51.4% (expansion), but employment slipped to 43.8%, signaling labor weakness.
• Services PMI rose to 52%, but employment lagged at 46.5%, with backlogs falling sharply. Suggests demand pull-ahead before tariffs, not genuine recovery.
• Non-Farm Payrolls (NFP) in focus: With ADP private payrolls at +54k, a stronger NFP print would imply public sector hiring drove gains. A weak report would confirm slowing job creation and bolster Fed cut expectations.
ZE Weekly Takeaway:
• Markets are in a holding pattern ahead of September’s central bank meetings.
• The Fed’s expected cut, paired with ECB/BoE holds, suggests we could see a weaker USD and bullish bias for gold, silver, Treasuries, and EM assets.
• France’s fiscal stress, Tether’s pivot into gold miners, and continued US/China economic uncertainty signals a global shift, as investors are prioritizing safety, and inflation hedges over growth.
✍🏾 By @Muhammad_Okoye
7/7
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