DFG Navigator Archives | September 2025

Your Capital Markets Snapshot: Strong GDP, Rising Yields, and Gold at Record Highs

Last week, U.S. economic data surprised to the upside, with second-quarter GDP growth revised higher to 3.8% annualized, well above trend rates. Consumer spending remained healthy, and personal income and spending for August both exceeded forecasts, signaling continued household strength. The Atlanta Fed’s GDPNow model now points to third-quarter growth near 3.9%. Inflation, as measured by the Fed’s preferred PCE index, ticked up slightly but remained in line with expectations, with headline PCE at 2.7% and core at 2.9%. Treasury yields rose modestly, driven by strong economic data, while expectations for Fed rate cuts in 2025 edged lower. Equity markets saw volatility, with the S&P 500 hitting a record high before pulling back, partially fueled by profit-taking in tech and AI stocks. Gold continued its rally, setting another record high, and oil surged over 5% for its biggest weekly gain in months. Political uncertainty around a potential U.S. government shutdown and upcoming jobs data remain key risks for markets.

Your Capital Markets Snapshot: Fed Cuts Rates as Markets Hit Record Highs

Last week, the U.S. Federal Reserve resumed its rate-cutting cycle, delivering a widely anticipated 25 basis point reduction in response to signs of a slowing labor market. While most FOMC members expect further cuts, there is significant uncertainty about the timing and extent, which could fuel market volatility as investors parse economic data. The Fed’s move was seen as proactive “risk management,” aiming to ensure against recession risks without signaling imminent economic distress. U.S. equity markets responded positively, with all major indices closing at record highs and small caps outperforming large caps for the week. Retail sales surprised to the upside, indicating resilient consumer demand despite labor market softness and persistent inflation. Yields on U.S. government bonds rose modestly, especially for longer durations, even as mortgage rates declined.

Your Capital Markets Snapshot: Labor Market Weakens, Rate Cuts in Focus

Last week was a loaded week for US labor market data, and it contained clear signs of a softening U.S. labor market. August jobs data showed only 22,000 jobs were added, well below expectations, and the unemployment rate rose to 4.3%. This weaker labor data increased expectations for Federal Reserve rate cuts, with markets expectations for a rate cut of either 25 or 50 basis points at the September meeting. Eyes will be on this week’s CPI and PPI releases, which will provide the last read on inflation going into the September meeting. Treasury yields fell sharply, supporting consumer and corporate borrowing, while the yield curve steepened, benefiting lenders. Equity markets were volatile to end the week, with the S&P 500 hitting an all-time high before pulling back following Friday’s nonfarm report. Despite the volatility, the S&P 500 and Nasdaq managed to post slightly positive weeks while the Dow Jones slipped slightly. Gold rallied to a record high, and mortgage rates saw their largest one-day drop in over a year.

Your Capital Markets Snapshot: Equity Markets Experienced Modest Declines

Last week, equity markets experienced modest declines as midweek gains were offset by a Friday sell-off ahead of the Labor Day weekend. The S&P 500 briefly reached a new all-time high Thursday before slipping back below. AI remained a dominant  market driver, with NVIDIA’s earnings drawing significant attention.  Its muted stock reaction highlighted the challenge of lofty expectations. Economic data was generally positive, including an upward revision to Q2 GDP growth and resilient consumer spending. However, inflation ticked higher, with core PCE rising to 2.9%. Expectations for a September rate cut from the Federal Reserve continue to grow. Market breadth improved across large and small cap stocks (measured by stocks trading above their 200-day moving averages), suggesting healthy underlying sentiment. Market history suggests we may experience seasonal volatility risks in September and October; however, fundamentals remain supportive so this could create opportunities to strategically rebalance across asset classes.

Close Menu

Connect with us!