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The Davy Digest

US services activity remains resilient

12 October, 2026

Beyond words goes here

Portrait of Paul Nicholson, smiling

Paul Nicholson

Head of Investment Strategy

Portrait of Stephen Grissing, smiling

Stephen Grissing

Investment Strategist

Portrait of Scott McElhinney, smiling

Scott McElhinney

Investment Strategist

US services activity continued to expand, although the main surveys gave differing signals on momentum. The S&P Global Services PMI rose to 58.8 from 56.5, its strongest reading since July 2021, while the ISM measure eased to 54.9 from 55.4. Fed minutes indicated that most officials still saw another rate hike as likely appropriate by year-end. 

Elsewhere, services activity strengthened across Europe, with Eurozone private-sector growth reaching its strongest pace in nearly three and a half years. UK activity also improved, with the Composite PMI rising to 54.4, signalling the fastest growth in six months. The Reserve Bank of India raised rates by 25bps to 5.50% and adopted a “calibrated tightening” stance, signalling a greater focus on containing rising inflation pressures.

Looking ahead, US CPI will be a key focus, as investors assess the outlook for inflation and Fed policy, alongside retail sales and producer prices. European inflation and industrial production data, UK growth figures and the start of US earnings season will also be in focus. 

Chart of the moment - Lula da Lusa

Dashed line represents the market's expected interest rate path on 1st September while solid line represents current expected interest rate path.

  • There was a surprise result in the first round of Brazil’s election, with Flavio Bolsonaro beating President Lula da Silva and becoming the favourite for the second-round runoff. 
  • Flavio plans significant fiscal reforms to tackle Brazil's fiscal deficit and reduce state involvement in the economy. 
  • Due to this result, markets have materially revised down their interest rate expectations, with a significant easing cycle now priced in.
  • Lower rates should provide tailwinds for domestic demand, credit growth and corporate earnings after several years of restrictive policy.
  • Brazil's combination of moderating inflation and still-high nominal rates gives policymakers scope to support growth if economic momentum weakens.

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Warning: The information in this article is not a recommendation or investment research. It does not purport to be financial advice and does not take into account the investment objectives, knowledge and experience or financial situation of any particular person. There is no guarantee that by putting a financial or investment plan in place, you will meet your objectives. You should speak to your advisor, in the context of your own personal circumstances, prior to making any financial or investment decision. 

Warning: Forecasts are not a reliable indicator of future performance.

Warning: Past performance is not a reliable guide to future performance. The value of your investment may go down as well as up.