The ECB cut key rates by 25bps as expected. The deposit rate was lowered to 3.25%, and the main refinancing rate to 3.4%. Guidance is unchanged: ECB to follow data-dependent, meeting-by-meeting approach.

Even after this third rate cut of the year, the monetary policy remains restrictive in Europe, with the real short-term rate still at a level not seen over the past 15 years. Given the ongoing dynamics in economic activity and inflation, this implies that the ECB will have to continue to lower rates in the coming months, in order to bring its monetary policy to a neutral stance at minimum.

Rate cuts at the coming meetings are therefore to be expected, in December and in 2025. Given the worrying trend in economic activity data, an acceleration in the pace of rate cuts, with a possible 50bp cut at the December meeting, cannot be ruled out. If growth in the Eurozone stalls, a faster pace of rate cuts to remove the restrictiveness of the monetary policy, or even to move it into supportive territory, might prove to be warranted.

71% of major central banks are now easing monetary policy, the highest figure since the COVID-19 crisis in 2020. This percentage also matches those of the financial crisis and the 2001 recession.

With a market capitalisation of $3.4 trillion, Nvidia is not far from surpassing the total value of the Japanese Nikkei 225 index.

What are investors' favourite themes? According to Bank of America's survey of fund managers, the Magnificent 7 (Nvidia, Apple, Microsoft, Amazon, Alphabet, Tesla, and Meta) continue to be courted by Wall Street, even if the response rate (43%) is lower than in previous months (54% in August). Next in line are long positions in gold (17%) and China (14%).

U.S. investment bank Goldman Sachs has created baskets of stocks designed to capitalise on the win of one of the two candidates. As can be seen below, the Republican Party basket (in red) has just reached a new record high, while the Democratic Party basket is at the same level as when Joe Biden was still a candidate.

Investment bank JP Morgan also reported that hedge funds were accumulating stocks that would benefit from a Trump victory.

With the elections just weeks away, the Biden administration is spending like crazy to keep economic growth afloat. Creating millions of new government jobs requires additional debt. As the graph below shows, the pace of increase in US debt is accelerating. At this rate, we could reach $36 trillion in debt before the end of the year.

Considering all economic entities (government, companies, households), China's debt-to-GDP ratio stood at 366% in the first quarter of 2024, a record level. Since 2008, this ratio has more than doubled.

Here's how it breaks down:

• Non-financial companies: 171
• Government: 86
• Individuals: 64
• Financial companies: 45

Even with this massive debt, China does not seem to be on track to meet its 5% annual GDP growth target. How much more debt does China need to boost growth? And at what cost?