Economic Update 9-15-2025

Economic data released last week included producer price inflation coming a bit flatter than expected, while consumer price inflation inched higher in a variety of areas.

Equities gained around the world, notably by the most in emerging markets. Bonds also saw gains as interest rates fell for longer-term maturities. Commodities saw positive returns as well, led by segments other than energy.

U.S. stocks gained last week, with solidified hopes for a Federal Reserve rate cut this coming week, as well as continued optimism about the potential for artificial intelligence, which has been the broad theme driving much of the market’s upward movement. Early in the week, hopes for a ‘jumbo’ (0.50%) Fed rate cut in Sept. elevated the mood, with that hope driven by weaker labor markets. (This was particularly driven home by revisions for the year ended March 2025 showing that 911k fewer jobs were created than first assumed.) However, the Fed usually has a high bar for extreme easing moves, especially if inflation remains at current elevated levels.

By sector, gains were strongest in technology and utilities, each of which are tied to optimism about artificial intelligence, and the latter in response to lower rates, in addition to energy and financials. Specifically, Oracle rose over 25% last week when AI cloud business line gains were announced. On the other hand, consumer staples fell back, being the single negative outlier for the week. Real estate was up a fraction of a percent.

Foreign stocks in developed markets performed largely in line with the U.S. market. This was led by the ECB electing to hold steady on policy rates at 2%, with commentary alluding to the cutting cycle being over for now, with expectations for growth moving up a bit (even if still around 1%) and inflation down. This was coupled with U.K. GDP coming in flat for the prior month, while Japanese GDP was revised higher to over 2% in Q2. On the more positive side, emerging markets gained several percent, notably in China, South Korea, and Taiwan—the latter of which tend to correspond with U.S. technology stocks due to the composition of their indexes.

Bonds experienced gains as yields fell along the longer end of the U.S. Treasury yield curve, with investment-grade corporates outperforming governments, which in turn outperformed small gains in high yield and floating rate bank loans. Foreign bonds were little-changed on the developed market side, but emerging market debt saw strong gains for the week, along with increased risk-taking and hopes for an easier Fed.

Commodities saw gains across the board last week, led by agriculture and industrial metals. Crude oil bounced around a bit last week, rising just over a percent to $63/barrel. For petroleum, continued high supplies outweighed some geopolitical blips of Israel’s strikes inside Qatar and a group of Russian drones violating Poland’s airspace during a strike on Ukraine.

Period ending 9/12/2025	1 Week %	YTD %
DJIA	0.97	9.07
S&P 500	1.60	12.98
NASDAQ	2.05	15.20
Russell 2000	0.27	8.50
MSCI-EAFE	1.15	24.52
MSCI-EM	3.96	25.49
Bloomberg U.S. Aggregate	0.41	6.40

U.S. Treasury Yields	3 Mo.	2 Yr.	5 Yr.	10 Yr.	30 Yr.
12/31/2024	4.37	4.25	4.38	4.58	4.78
9/5/2025	4.07	3.51	3.59	4.10	4.78
9/12/2025	4.08	3.56	3.63	4.06	4.68

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.