September 22–26, 2025: Weekly economic update

Macroeconomic Statistics

INFLATION

• Core Consumer Price Index (CPI) (m/m) (August): 0,3% (previous: 0.3%)
• Consumer Price Index (CPI) (m/m) (August): 0.4% (previous: 0.2%)
• Core Consumer Price Index (CPI) (y/y) (August): 3.1% (previous: 2.9%)
• Consumer Price Index (CPI) (y/y) (August): 2.9% (previous: 2.7%)

INFLATION EXPECTATIONS (MICHIGAN)

• 12-month expected inflation (August): 4.7% (prev: 4.8%)
• 5-year expected inflation (August): 3.7% (prev: 3.5%)

PRODUCER PRICE INDEX (PPI):

• PPI (m/m) (August): -0.1%, prev: 0.7%
• Core PPI (m/m) (August): -0.1%, prev: 0.7%

GDP (U.S. Bureau of Economic Analysis, BEA) (Q2 2025, annualized, second estimate): +3.8% (advance estimate: 3.30%; Q1 2024: – 0.5%):

Atlanta Fed GDPNow estimate (Q2): 3.9% (vs. 3.3%). *(The GDPNow forecasting model provides a “real-time” estimate of official GDP growth ahead of its release, using a methodology similar to that employed by the U.S. Bureau of Economic Analysis.)

The Federal Reserve’s preferred inflation gauge — the Personal Consumption Expenditures (PCE) index — for August: PCE: 2.7% (vs. 2.6%); Core PCE: 2.9% (vs. 2.9%).

Business Activity Index (PMI):

(Above 50 indicates expansion; below 50 indicates contraction)

• Services sector (August): 53.9 (previous: 54.5)
• Manufacturing sector (July): 52.0 (previous: 53,0)
• S&P Global Composite (August): 53.6 (previous: 54.6)

LABOR MARKET:

• Unemployment rate (August): 4.3% (previous: 4.2%)
• Change in nonfarm payrolls (August): 22K (previously revised: 79K)
• Change in U.S. private nonfarm payrolls (August): 38K (previous: 77K)
• Average hourly earnings (August, y/y): +3.7% (previous: +3.9%)
• JOLTS job openings (August): 7.181M (vs. 7.357M)
• Total number of individuals receiving unemployment benefits in the US: 1,926K (vs 1,920K).

MONETARY POLICY

• Federal Funds Effective Rate (EFFR): 4.00% - 4.25% (unchanged)
• Federal Reserve balance sheet increased: $6,608T (vs. previous week: $6,605T)

MARKET FORECAST FOR RATE (FEDWATCH)

Expectations for the upcoming FOMC meeting on October 29:

Today:

A week earlier:

Commentary

Midweek Fed speakers’ rhetoric put pressure on equity indices. However, Friday’s PCE data and a decline in short-term inflation expectations added a positive tone to the markets.

US

The U.S. economy expanded in the second quarter at its fastest pace in nearly two years. Real GDP was revised up by 0.5 pp to 3.8% (vs. the second estimate of 3.30%), driven primarily by stronger consumer spending. Such robust GDP data undermine the prospects of a rapid rate-cutting cycle.

The Personal Consumption Expenditures (PCE) price index rose 0.3% MoM (vs. 0.2% previously), while core PCE remained unchanged at 0.2% — no sharp spike, but the trend is gradually turning upward.Meanwhile, the GDP deflator (another key inflation gauge) halved to 2.1% (vs. 3.8%) over the same period. U.S. PMI indices remain above the 50 threshold, signaling expansion, but declined over the past week. Continuing jobless claims rose to 1.926M (vs. 1.920M), slightly higher but still below forecasts.

Federal Reserve Chair Jerome Powell addressed the Greater Providence Chamber of Commerce on the economic outlook. Overall, his tone remained consistent with the last FOMC meeting.

Powell reiterated:

Short-term risks to inflation remain tilted to the upside, while risks to employment are skewed to the downside, creating a challenging environment. These two-sided risks mean there is no risk-free path. Elevated risks to employment have shifted the balance that constrains our ability to achieve our dual mandate. Therefore, at our last meeting we judged it appropriate to take another step toward a more neutral policy stance.

However, he also pointed to the risk of slowing the pace of rate cuts:

If we ease monetary policy too aggressively, we may leave the job on inflation unfinished — and later be forced to reverse course to restore inflation to 2%. Uncertainty around the inflation trajectory remains elevated. We will carefully assess and manage the risk of higher and more persistent inflation. We will ensure that this one-time price surge does not turn into a sustained inflation problem.

Federal Reserve officials’ recent commentary:

• Raphael Bostic (Atlanta Fed): “At this point, I don’t see a compelling reason for further rate cuts.”
• Alberto Musalem (St. Louis Fed): “The room for additional rate reductions is limited.”
• Mary Daly (San Francisco Fed): “Further steps to lower the policy rate may still be necessary.”

Market expectations (CME FedWatch):

• For the next meeting (October 29): the implied probability of a 25 bps rate cut is 89.3%.
• By year-end: markets are pricing in two additional rate cuts.
• Over the next 12 months: expectations point to four 25 bps cuts in total, bringing the target range to 3.00–3.25%.

All former Federal Reserve Chairs have signed a letter urging the Supreme Court to safeguard the Fed’s independence.

EU

The PMI data showed a mixed picture: the composite index and the services sector remain in expansion territory, while the manufacturing PMI slipped into contraction, coming in at 49.5.

ECB Consumer Expectations Survey (August 2025):

• Median inflation expectations for the next 12 months rose to 2.8% (from 2.6% in July), while three-year ahead expectations remained unchanged.
• Expected nominal income growth over the next 12 months increased to 1.1% in August (vs. 0.9% in July).
• Economic growth expectations for the next 12 months held steady at –1.2%.
• Unemployment expectations for the next 12 months ticked up to 10.7% (from 10.6% in July). Consumers still anticipate that future unemployment will remain only slightly above the perceived current level — signaling a broadly stable labor market outlook.

China

The People’s Bank of China (PBoC) kept its policy interest rates unchanged at 3.00–3.50%.

Trade Wars

President Donald Trump announced a new round of sector-specific tariffs aimed at protecting U.S. manufacturing:

Effective October 1, 2025:

• 25% tariffs on heavy trucks,
• 30% tariffs on upholstered furniture,
• 50% import tariffs on kitchen cabinets and bathroom vanities. The five largest exporters of heavy trucks to the U.S. in 2024.

Additionally, Trump announced that starting October 1, the U.S. will impose a 100% tariff on branded and patented pharmaceuticals if the manufacturer does not build production facilities in the U.S.

• Exemptions: countries with trade agreements that include provisions on pharmaceuticals — notably the EU and Japan.
• Tariffs will not apply if construction of a U.S. production facility has begun.

The ten largest pharmaceutical exporters to the U.S. in 2024 were:

According to Bloomberg Economics, the newly announced tariffs could raise the average U.S. import duty rate by 3.3 percentage points. However, this impact may be partially offset by exemptions granted to companies that establish local manufacturing capacity. (Source: Bloomberg)

The OECD stated that the global economy remains on track to face a significant hit from Donald Trump’s trade measures, even though it has shown greater resilience than expected in recent months.

The organization now expects global growth to slow from 3.2% to 2.9% in 2026, amid higher import tariffs and rising uncertainty — with the full impact of the trade measures yet to be felt.

OECD Growth Forecasts

Average U.S. Import Tariff Rates — Share of Total Import Value:

Market

For the week, the market posted a median decline of –0.66%. The strongest performance came from the Energy, Basic Materials, and Utilities sectors, while the Consumer Staples, Real Estate, and Technology sectors lagged behind.

Year to date (YTD), the market is up +3.94%. The top-performing sectors are Basic Materials, Communication Services, and Utilities, while the laggards are Consumer Staples, Health Care, and Technology.

SP500

The S&P 500 index ended the week down 0.31%, closing at 6,643.71. Year to date, the index is up +12.54%.

NASDAQ100

The Nasdaq 100 finished the week down 0.50%, closing at 24,503.85. Year to date, the index is up +16.02%.

Euro Stoxx 600

The Euro Stoxx 600 ended the week up 0.20%, closing at 556.9. Year to date, the index has gained +10.15%.

Hang Seng TECH Index (HSTECH.HK)

The Hang Seng TECH Index (HSTECH.HK) opened Monday up 1.07%, at 6,324.25. Year to date, the index has advanced +42.54%.

BOND MARKET

The 20+ Year U.S. Treasury Bond ETF (TLT) ended the week down 0.13%, closing at 88.90. Year to date, the fund is up +1.25%.

U.S. Treasury auctions for new issues continue to show declining yields: 2-year notes were sold at 3.561% (vs. 3.641% previously), and 5-year notes at 3.71% (vs. 3.724% previously).

YIELDS AND SPREADS

• Market yield on U.S. Treasury securities (10-year constant maturity): 4.16% (vs. 4.14%).
• ICE BofA BBB U.S. Corporate Index effective yield: 4.97% (vs. 4.93%).
• Yield spread — 10-year vs. 2-year Treasuries: 53.0 bps (vs. 56.0 bps).
• Yield spread — 10-year vs. 3-month Treasuries: 19.0 bps (vs. 16.0 bps).

GOLD FUTURES (GC)

The gold futures (GC) contract ended the week up 1.89%, closing at $3,789.8 per troy ounce. Year to date, it has gained +43.50%.

Annual Gold Returns

DOLLAR INDEX FUTURES (DX)

The U.S. Dollar Index futures (DX) ended the week up 0.55%, closing at 97.845. Year to date, the index is down –9.68%.

OIL FUTURES

The crude oil futures (CL) contract ended the week up 4.54%, closing at $65.19 per barrel. Year to date, it is down –9.27%.

BTC FUTURES

Bitcoin ended the week down 4.79%, closing at $109,915. Year to date, it has gained +15.37%.

ETH FUTURES

Ethereum ended the week down 9.40%, closing at $4,043.50. Year to date, it has gained +19.49%

The total cryptocurrency market capitalization stands at $3.86 trillion (vs. $3.89 trillion a week earlier) (source: CoinMarketCap).

• Bitcoin’s share is 57.8% (vs. 57.7%),
• Ethereum’s share is 12.9% (vs. 13.0%),
• Other assets account for 29.3% (vs. 29.2%).

Public companies with a Bitcoin treasury strategy hold 4.92% of the total Bitcoin supply (vs. 4.85% a week earlier) — the share remained unchanged from the prior week’s level.

• The stablecoin supply has reached an all-time high of approximately $283.2 billion.
• The number of monthly stablecoin senders has also hit a record high, reaching about 25.2 million.