GST 2.0, Cooling US Job Market, And China's Next Chapter | Talking Point This Week

GST 2.0 was the centerpiece of the Indian business world. But beyond that, the 30-year government bond yields across the world surging to fresh multi-year highs was the big story, driven by rising fiscal concerns, inflation expectations, and central bank policy uncertainty. The US 30-year Treasury yield approached 5%, marking its highest level in more than a year, while the UK 30-year gilt yield hit 5.72%, the most elevated since the turn of the century. The U.S. and China extended their tariff truce for another 90 days until Nov. 10, 2025, maintaining reduced tariff rates at 10% to support ongoing trade negotiations. Fashion followers would mourn the death of Georgio Armani, a billionaire designer who helped define “Made in Italy” as a sign of quality in fashion.

GST 2.0 was the centerpiece of the Indian business world. But beyond that, the 30-year government bond yields across the world surging to fresh multi-year highs was the big story, driven by rising fiscal concerns, inflation expectations, and central bank policy uncertainty. The US 30-year Treasury yield approached 5%, marking its highest level in more than a year, while the UK 30-year gilt yield hit 5.72%, the most elevated since the turn of the century. The U.S. and China extended their tariff truce for another 90 days until Nov. 10, 2025, maintaining reduced tariff rates at 10% to support ongoing trade negotiations. Fashion followers would mourn the death of Georgio Armani, a billionaire designer who helped define “Made in Italy” as a sign of quality in fashion.

Here are the key talking points of this week:

GST 2.0

Following Prime Minister Narendra Modi’s push for GST 2.0, the GST Council’s approval of a simplified two-tier rate structure (5% and 18%) with a 40% demerit rate for luxury and sin goods marks a pivotal reform to boost consumer sentiment and drive demand-led growth. As per most experts, there are certain silent yet deep-impact reforms coming up as well. The government is focusing on the ease of doing business and ease of living by bringing in several structural reforms in the GST structure, and streamlining various processes. The government’s first major initiative this term aims to enhance consumer confidence and spur consumption. It promotes growth and long-term capacity building for economic self-reliance amid global volatility. The Finance Ministry projects a manageable fiscal impact with Rs 48,000 crore in net tax foregone, supported by a history of conservative estimates and multiple levers to address potential revenue shortfalls.

The Experts' View

Brokerages including JPMorgan, BofA, and HSBC view the recent GST reforms as a positive catalyst for reviving India's growth, signalling a shift toward demand-led expansion amid past underperformance driven by weak domestic demand and single-digit earnings growth over five quarters. They highlight direct beneficiaries such as autos, insurance, staples, consumer durables, healthcare, cement, retail, agro chemicals, and renewables, with second-order gains for NBFCs and retail banks, potentially accelerating GDP by around 13 basis points with upside risks, though state capex could face pressures. Motilal Oswal's Raamdeo Agrawal views the reform as a huge positive for the economy, predicting a "bumper second half" for the financial year thanks to a combination of factors like the tax cuts, increased liquidity, and better credit flow. However, short-term uncertainties and US tariffs may keep markets range-bound near Nifty's 25,000 target with limited upside and downside risks skewed (4% bull case vs. 11% bear case as per BoFA Securities), improving macro indicators, moderated earnings cut risks, and a strong trajectory from second half of FY26 could spark a rally, supported by consensus expectations of 14% YoY EPS growth in 2026.

US Rate Cut Given?

US initial jobless claims rose to the highest since June, adding to signals that the labor market is cooling. Initial claims increased by 8,000 to 237,000 in the week ended Aug. 30. The median forecast in a Bloomberg survey of economists called for 230,000 applications. Meanwhile, hiring at US companies was less than forecast in August, with private-sector payrolls increasing by 54,000, roughly half the pace of the prior month, according to ADP Research data released Thursday.

A Look At China

China's factory activity remained in contraction in August, with the official manufacturing purchasing managers' index at 49.4. Better weather may have lifted travel, construction and related activity. But efforts to reduce overcapacity, temporary factory halts in northern China ahead of the Sept. 3 military parade, and a deepening housing downturn likely kept the economy under pressure. However, Chinese consumers do continue to spend. Back from a month travelling around China, Gavekal reports that while economic growth has clearly shifted down a gear, the nature of consumption has changed, with China’s consumers increasingly prioritising spending on services, including domestic tourism. In short, China has become middle-aged. But there is strong renewed interest in China among foreign investors, who have helped to drive US dollar returns of more than 20% in Hong Kong-listed equities so far in 2025. Louis Gave notes that often it is in the transition from investor pessimism to mere skepticism that emerging markets generate the best returns. 

As we wrap up, a small piece on the possible future of a popular sport.

The US Open has always been about more than the game of tennis: It’s an iconic New York event that draws celebrities, socialites and hundreds of thousands of fans. What used to be two weeks of tennis with a few jazzy extras has over the past eight years morphed into three weeks of on- and off-court entertainment — complete with silent discos, a reality dating series, multiple DJ sets and endless brand “activations.” Effectively, fans seeking elevated, high-end experiences are pushing prices to record. Mind you, US Open ticket prices are up more than 70% from 2019! And if IPL provided a glimpse of this way back in the Lalit Modi era, events like the upcoming Formula 1 Grand Prix in Las Vegas will look like a concert as much as a race, featuring artists including MGK and T-Pain. Welcome to the future of popular sport!