Europe Market Brief — Monday, September 29, 2025

Today’s European data leaned mildly disinflationary in the euro area, mixed in Spain, and a touch firmer on UK credit aggregates.

Confidence indicators were slightly better at the headline level but still weak in industry. Front-end French bill yields were broadly steady to a shade higher, and several central bank speeches dotted the calendar.

Euro area inflation pulse

Core CPI (YoY, Sep) eased to 2.3% from 2.4%. This incremental cooling supports the narrative of gradual disinflation, though services stickiness remains a watchpoint.

With core drifting lower, markets may nudge down the probability of prolonged restrictive rates, while staying alert to energy base effects into Q4.

Spain

CPI YoY (Sep) rose to 2.9% versus 2.7% prior, but the MoM print fell −0.4% (consensus −0.2%), signaling softer sequential pressure. HICP YoY held at 3.0% (in line), with HICP MoM at 0.1% (below 0.3% consensus).

Retail sales YoY (Aug) slowed slightly to 4.5% from 4.7%. Net read: headline accelerated on base effects, but monthly dynamics softened; consumption momentum cooled modestly.

Italy

Non-EU trade surplus narrowed to 1.78B in Aug from 5.99B, hinting at a weaker external tailwind, possibly from softer extra-EU demand or less favorable energy/commodity arithmetic.

European Commission surveys (Sep)

Economic Sentiment Index edged up to 95.5 (95.2 prior), but the Business Climate indicator dipped to −0.76 (−0.72). Consumer confidence was unchanged at −14.9; inflation expectations fell to 24.0 from 25.8.

Industrial sentiment weakened to −10.3 (from −10.2), while services sentiment eased to 3.6 (3.8 prior). Signal: small improvement in overall sentiment, but factories remain under pressure and services cooled.

United Kingdom

Consumer Credit printed 1.692B (1.600B consensus). Broad money M4 rose 0.4% m/m (0.2% consensus). Mortgage approvals were 64.68k (65k consensus), mortgage lending slowed to 4.31B (4.80B).

Net lending to individuals was 6.0B (6.3B). Takeaway: household credit remains resilient, but housing-related flows softened at the margin.

France bills (BTF) auctions

3-month 1.979% (from 2.007%), 6-month 2.042% (from 2.027%), 12-month 2.058% (from 2.048%). Overall picture: very slight upward drift at 6–12 months, small dip at 3 months; front-end funding costs essentially stable.

Norway

M3 money supply rose to NOK 3,444.5B (from 3,422.2B). Credit growth eased to 4.0% YoY (from 4.1%). Core retail sales ticked up 0.2% m/m (from 0.7%). Mixed: liquidity up, but spending momentum moderated.

Policy and speakers

Scheduled remarks included Bundesbank President Nagel, the ECB’s Schnabel and Lane, and BoE MPC’s Ramsden. Markets focused on any signals about the timing and extent of further policy normalization; no material surprises are reflected in today’s price action from the data alone.

Market implications

Rates: Euro front-end may bull-steepen modestly on softer core CPI and weaker industry; UK front-end could stay supported by resilient credit but soft housing.

FX: EUR bias modestly softer on disinflation and weak factory sentiment; GBP mixed—credit firm but mortgages softer. NOK steady with mixed domestic prints.

Equities: Defensives favored over cyclicals tied to manufacturing; Spanish retailers may digest softer MoM prices but slower sales; UK domestics sensitive to mortgage flow trends.

What to watch next

1. Eurozone country-level September CPI details (services, core goods) to validate broadening disinflation.
2. October PMIs for confirmation of industrial weakness versus any services stabilization.
3. Energy price path and base effects into Q4 that could skew headline CPI.
4. UK mortgage rate pass-through across Q4 to gauge consumption resilience.
5. Italy trade dynamics with extra-EU partners for clues on external demand and inventory cycles.

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