The Davy Digest - 24th March 2025

Last week, the S&P 500 posted its first positive week since the end of February, narrowly avoiding a five-week losing streak. Positive catalysts continued in Europe, with the German fiscal package receiving legislative approval in their upper and lower parliamentary houses. There were central bank meetings in the US, UK, and Japan, with all three keeping rates steady. The Federal Reserve released their quarterly economic forecasts for the US. They continued to signal two rate cuts over the remainder of 2025, while their inflation and unemployment forecasts moved up slightly.

Last week's highlights

	Retail Sales (17/03) – Below consensus at 0.2% month-on-month for February Industrial Production (18/03) – Grew by 0.7% (vs 0.2% expected) Federal Reserve Meeting (19/03) – Held rates, as expected, slowed QT
	German fiscal package approved (21/03) -  €500bn to spend on infrastructure and eases strict borrowing rules to allow higher spending on defence Eurozone Consumer Confidence (21/03) – Fell more than expected in March, due to concerns about looming tariff threats
	Bank of England Meeting (20/03) – Held rates at 4.5%, as expected
	China Industrial Production (17/03) – Increased 5.9% year-on-year (vs 5.3% expected) China Retail Sales (17/03) – Increased to 4.0% year-on-year Bank of Japan Meeting (19/03) – Kept rates steady, as expected

This week we have preliminary purchasing managers’ index surveys for March in the US, Europe, and the UK. In the UK, we will also be getting an inflation print for February, as well as Rachel Reeve’s Spring Statement. Finally, in the US, the University of Michigan survey will provide updated data on consumer sentiment and expectations, while the third estimate of Q4 Personal Consumption Expenditure (PCE) will be released.

What's on the radar

	Flash PMIs (24/03) Consumer Confidence (25/03) Core PCE (27/03)
	Eurozone Flash PMIs (24/03) France and Spain inflation (27/03)
	Flash PMIs (24/03) Inflation (Consumer Price Index) (25/03) Spring Statement (26/03)
	Tokyo Inflation (27/03)

Chart of the moment

Loosening the Bourse Strings

Source: Davy, Bloomberg as of 20/03/2025. Post-fiscal package calculation assumes full utilisation of €1,000bn package over 10 years leading to 2pp uplift in nominal growth annually. Pre-fiscal package calculation assumes full deficit limit of 0.35% of GDP is reached. GDP stands for Gross Domestic Product.

• Germany has approved a fiscal package to boost defence spending and investment in infrastructure.
• €1 trillion spending plan marks a significant shift in their fiscal policy. Previously, their debt brake made them more frugal than other countries.
• This fiscal infusion will increase their debt pile relative to the size of their economy, however compared to many other nations, such as the US and Japan, they remain in good shape.