WEEKLY MARKET SUMMARY
Global Equities: Increased odds of further rate cuts in 2025 helped keep the equity rally going, with US stocks hitting further all-time highs during the week. The S&P 500 added 1.6%, the Nasdaq rose 2.0%, and the Dow Jones Industrial Average gained 1.0% in weekly trading. US small caps were positive but lagged large caps with a 0.2% weekly return. Developed market international stocks rose 1.3%, while emerging market stocks were the week’s biggest winners with a 3.6% gain.
Fixed Income: US Treasury yields continued to fall after poor jobs data opened the door to the possibility of more aggressive easing from the Federal Reserve. The 10-year Treasury yield briefly fell below 4% on Thursday before ending the weekly session at 4.07%. Investment-grade corporate bonds continued to attract inflows, gaining 0.8% during the week, while high yield bonds gained 0.1%.
Commodities: US West Texas Intermediate crude oil rose during the week, ending slightly higher at $62.60 a barrel. The incredible rise in gold prices continued, hitting $3,686/oz. Silver also saw increased demand, rising 3.1% during the week to $42.83/oz.
WEEKLY ECONOMIC SUMMARY
More Jobs Weakness: The data on weekly jobless numbers showed 263,000 Americans filed first-time claims for unemployment, the highest total since October 2021. Markets rose in reaction to the data because the strong jobs market has been the primary reason that the Fed has cited to hold off on cutting rates. The Bureau of Labor Statistics also revised the 12-month data through March 2025, removing 911,000 job gains in the biggest ever downward revision. With the jobs market now looking weak, the Fed is more likely to cut rates multiple times in the next several months.
Mixed Inflation Data: Producer Price Index (PPI) data was negative in August, thanks to declining energy and trade services costs. The PPI data suggests that US firms are attempting to absorb some of the tariff costs, with trade services showing shrinking margins. Consumer Price Index (CPI) data was less encouraging, rising 0.4% in August to an annual rate of 2.9%. The Core CPI (ex-food and energy) rose 0.3% to an annual rate of 3.1%. The cost of shelter was a driver of higher inflation, rising 0.4%, the highest monthly increase since January of this year. Food prices also surged, with “food at home” up 0.5% and “food away from home” up 0.6%, the largest increase since November 2022.
Shift in Consumer Sentiment: American consumers have carried the economy for several years now, defying economists’ predictions for a recession. Consumers are starting to worry about the labor market and inflation, however, as reflected in the latest University of Michigan Consumer Sentiment survey. The index declined 21% from a year ago to a reading of 55.4 in September, which was the lowest reading since May. The survey showed consumers expect inflation to rise by 4.8% in the coming year, with 60% of respondents expressing anxiety over the added cost of tariffs.
CHART OF THE WEEK
The Chart of the Week is the Core Consumer Price Index (CPI) broken out into subcategories of Goods, Housing, and Services. The Core measure excludes food and energy, due to sometimes volatile month-to-month fluctuations in those categories. Progress in bringing down Housing and Services has stalled out, with both still well in inflationary territory. Housing is by far the most significant component, accounting for over 40% of the total Core CPI calculation. Meanwhile, Goods inflation continues to rapidly accelerate as consumers deal with the added cost of tariffs. With inflation accelerating and unemployment rising, the Fed is becoming increasingly concerned with a “stagflationary” environment, which will likely be the focal point of the upcoming Fed meeting.
