# Roundup of the week: 13 June 2025 _Global trade steadies, UK data surprises on the upside, and two undervalued sectors (semiconductors and housebuilders) show clear signs of recovery._ Neil Woodford · 13 June 2025 · 7 min read ![Steve Travelguide / Shutterstock.com A very public feud broke out between Elon Musk and Donald Trump this week.](https://cdn.sanity.io/images/v3acfbvo/production/11ab40743ccb0cc12dd9745d3794020680417f68-4030x2795.jpg?w=1600&fit=max&auto=format) --- As my first week writing Noise Cancelling draws to a close, I want to thank you for your support, and for being among the very first to join. It really does mean a great deal. I’d love to hear your early thoughts: what’s working for you, what could be improved, and any ideas you have that might make things better. Whether it’s feedback on the writing, the experience, or just something you’d like to see added, drop us a note at [hello@noisecancelling.co](mailto:hello@noisecancelling.co). And if you’ve hit any technical snags along the way, do let us know. _—Neil_ This will be the first of a regular series of round-ups summarising the significant political, economic, and market events of the last week across the geographies most relevant to the companies I follow and financial markets. These summaries will not be a diary of recent events but an attempt by me to provide some analysis and interpretation of the most important. Sometimes I hope to show you that events about which the media might be obsessing should be dismissed or even ignored, but I will always try to explain why. Naturally, there will be a tendency to write more about issues concerning the UK, but I will balance that with views on the most important events covering the US, Europe and China. ## Politics First, to the week’s significant political news. For me, the most significant event this week was the trade talks in London between China and the US, which appear to have successfully resolved the issues that had undermined the trade war truce between the two countries. The net effect appears to be that the deal secured in London ensures that Chinese exports of critical rare earths to the US, and US tech export controls on China, will no longer undermine the broader and deeper trade talks between the sides. Basically, the trade ceasefire announced in Geneva last month is back on. This is good news, and I think it continues to underwrite not only decreasing trade tension between China and the US but also continues to help defuse this issue as a major concern for financial markets. Clearly, it has the potential to blow up again, but I sense that both sides have now recognised that an escalating trade war between these two interlinked economies will harm both of them and should be avoided if possible. My guess is that we will end up with higher tariffs on Chinese exports than we started with, but we should also see eased restrictions on US chip exports to China when the final deal is done. This week, a showpiece political event in the UK was held in the form of the Chancellor’s spending review. Unlike budgets, these are not annual events but take place every few years and importantly are not “audited” by the OBR. Essentially, this is more politics than economics in that it allows the government to talk about big numbers, often with little context, and champion their most important political projects. In terms of new information, it’s important to remember that the aggregate spending numbers were already known in that they were a part of the Spring statement. The new news is that the Chancellor announced how the departmental spending cake will be divided up over the next three years. Departmental spending is also not total government spending. Departmental spending is the bit the government “controls.” The rest, called annual managed expenditures, is not really managed. It includes things over which the government exercises less control, including welfare, pensions, and debt interest, and, maybe not surprisingly, is significantly larger than departmental spending. The media naturally make much of the spending numbers, and some have used the plans to highlight the imminence of tax increases to pay for these commitments. Given that these numbers are not new, in aggregate, these stories are really just a rehash of what was said earlier in the year at the time of the Spring Statement. My view is that, although like most Western European economies, government spending is way too high, I don’t expect further tax increases to pay for these growing spending commitments. In fact, if I am right about the trajectory of growth here in the UK, the fiscal headroom available to the Chancellor by the end of the forecasting period should be comfortably above most forecasts. ## Economics There haven’t been any material economic developments this week. (The ECB cut interest rates again last week after good inflation numbers. The ECB’s key deposit rate is now down at 2%, under half UK base rates which are at 4.25%.) The only news out in the UK that ruffled a few feathers was the labour market data released on Tuesday. In summary, the data showed a slightly softening labour market here, but not the sort of labour market deterioration many politicians were talking about. Businesses in the UK are not, in aggregate, laying people off. In fact, the number of people in work continues to grow, but more people joined the workforce than got a job, so unemployment rose. The detail in the data was, however, quite encouraging because wage growth slowed, which should be taken well by the MPC for obvious reasons. Also, because output growth has comfortably exceeded total hours worked in recent months, this bodes well for UK productivity data. April’s UK GDP data was published on Thursday. I still have serious doubts about this data series and really wonder why the ONS tries to measure monthly GDP by reference to output. As far as I am aware, no other major developed economy does this. Not surprisingly, the data showed a contraction in UK GDP after five consecutive months of increasing output, which is unusual. The apparent contraction in April was larger than analysts had expected (at 0.3%) but based on what I expect in May and June, the fact that this number is likely to be revised up, and bearing in mind what happened in Q1 (0.7% growth), the average growth rate over the two quarters will be something close to 0.5% per quarter, which is also close to the UK’s long run average expansion. So, broadly, I am encouraged by these data and still believe that my non-consensus, more bullish view about the UK economy is right. ## Financial markets I don’t intend to summarise all the company announcements from the businesses I follow here, but I will select the things that have made me sit up and think. This week, I want to focus on these four. ### 1. TSMC’s May Revenue Report TSMC isn't a business I hold, but is a very important global business, especially in the semiconductor industry. I've written before about companies with exposure to this sector. In short, TSMC’s May Revenue Report showed sales up 40% from May last year. That growth exceeded market expectations and is yet another sign that the global semiconductor market is beginning to turn up after two difficult years of destocking and weak pricing. ### 2. The UK housing market A number of businesses focused on this sector updated the market this week. In general, it is clear that the UK housing market is starting to recover after a difficult three-year period following Russia’s invasion of Ukraine. The industry is a long way from buoyant, but what is clear is that housing completions are increasing as confidence begins to return to the market. Affordability is improving with falling interest rates, banks are lending with greater confidence and build cost inflation has moderated significantly. This bodes well for UK housebuilders and building materials businesses exposed to the sector, reflecting a general improvement in consumer confidence. A number of the businesses I follow are exposed to these undervalued sectors. ### 3. UK ten-year yields The UK gilt market’s volatility this year has continued this week. Four times already this year, ten-year yields have risen above 4.75% and then fallen significantly. The latest episode saw yields rise to 4.75% on the 21st May from just over 4.4% on April 30th and then fall back again to below 4.5%. Frankly, it is hard to explain this roller coaster ride in the gilt market this year. Clearly, the influence of ten-year yields in the US is ever present, as are shifting consensus views about growth and inflation here in the UK. My view has been consistent throughout the year, which is that yields will fall in the UK and track base rates as they decline to below 4% in the relatively near future. I stick to that view and expect that by December, ten-year yields in the UK will be below 4%. ### 4. BioNTech – acquisition BioNTech is a company I’ve written about. I wrote about this business recently following a significant $11bn partnership deal it executed with BMS at the start of June. Today, it has followed up that transaction with an announcement that it has acquired a German biotech business called CureVac in an all-paper $1.25bn deal. CureVac had historically competed with BioNTech in the development of mRNA vaccines but has subsequently focused on complementary cancer immunotherapy technology. The deal also ends litigation between the two companies, which had been ongoing since the development of BioNTech’s COVID vaccine back in 2020. CureVac sold its vaccine business to GSK last year.