As 2025 Q3 comes to a close over the next two weeks, we’re going to continue providing economic outlook summaries, bringing you the easily digested big picture.
Today, I offer five headlines, the tale of the tape for US and Global Economics.
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Dollar steady as inflation data and central banks take focus.
The Dollar. The U.S. dollar stabilized in Asian markets after a surprise drop in factory-gate prices (Producer Price Index fell 0.1% in August). This reinforced expectations that the Federal Reserve may cut interest rates at its upcoming meeting. Traders are pricing in a 25 basis point cut as likely, with a smaller chance of a larger 50-point cut.
Central Banks. Political tension surrounds the Federal Reserve Board, as President Trump seeks to remove Governor Lisa Cook before the next meeting. Stephen Miran’s nomination to the Fed Board is advancing, potentially shifting the Fed’s policy stance.
Consumer prices rise more than expected.
Monthly Increase: The Consumer Price Index (CPI) rose 0.4% in August, up from 0.2% in July, signaling a stronger-than-expected uptick in consumer prices.
Annual Inflation: CPI climbed 2.9% year-over-year, the largest increase since January, driven primarily by shelter costs and a shift from goods deflation to mild inflation.
Europe: Central Banks Hold Steady as Inflation Softens—Q4 May Bring a Policy Pivot
The European Central Bank (ECB) left interest rates unchanged at its September meeting, maintaining the deposit rate at 2%. This marks the second consecutive pause after a year of rate cuts, as inflation trends closer to the ECB’s 2% target.
Together, the ECB and Fed are signaling a pause-and-watch strategy, balancing inflation control with growth support.
The Results for Q4?
- Equities: Expect volatility but potential upside in sectors tied to defense, infrastructure, and AI.
- Fixed Income: Bond yields may dip further if rate cuts materialize—good for long-duration assets.
- Currency: The dollar may weaken, while the euro could stabilize or strengthen if ECB holds firm.
Mortgage Demand at 3 Year High, Possible Q4 Real Estate Rebound
30-year fixed mortgage rates fell to 6.49%. This rate drop has encouraged both new buyers and existing homeowners to act, especially those looking to refinance larger loans for monthly savings. This spike in demand reflects growing consumer confidence and may signal a rebound in housing market activity heading into Q4.
- Purchase applications increased 7% for the week, and are 23% higher than the same week last year.
- Refinance applications jumped 12% week-over-week and are up 34% year-over-year.
- Total mortgage applications rose 9.2% last week, according to the Mortgage Bankers Association.
245 Global family offices are pulling back on private equity.
The data comes from a Goldman Sachs survey of 245 global family offices, offering a snapshot of how the ultra-rich are navigating current market conditions.
- Family offices are doubling down on public equities, especially in opportunistic buys and secondaries, as broader investor sentiment remains cautious.
- The shift reflects a desire for liquidity, transparency, and tactical flexibility, especially as macroeconomic uncertainty and geopolitical risks persist.
Sources:
- https://www.msn.com/en-us/money/markets/dollar-steady-as-inflation-data-and-central-banks-take-focus/ar-AA1MjOmD
- https://www.reuters.com/business/view-us-consumer-prices-rise-more-than-expected-rate-cut-still-coming-2025-09-11/
- https://www.cnbc.com/2025/09/10/mortgage-demand-jumps-to-the-highest-level-in-three-years.html
- https://www.msn.com/en-us/money/companies/family-offices-double-down-on-stocks-and-dial-back-on-private-equity/ar-AA1MlyPJ?ocid=Mafost
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