Weekly Market Recap: Week of September 15, 2025

The week in review

• Core CPI ticked up to 3.1% y/y
• Core PPI fell 0.1% m/m
• Consumer sentiment fell to 55.4

The week ahead

• FOMC meeting
• Retail sales
• Housing starts

Thought of the Week

To cut or not to cut? Markets have been weighing each economic data print on the Fed’s balance of risks. As this week’s chart shows, mixed reports on jobs and inflation have sent the scale tipping back and forth, underscoring the difficulty of the Fed’s position.

After several months of stronger than expected payroll gains, July’s jobs report showed definitively that hiring momentum had slowed. Last Friday’s August report told a similar story. The U.S. economy added just 22k jobs last month, well below expectations of 75k, and 27k jobs were removed from the past two months. But this weaker labor market hasn’t translated to material disinflation. Immigration policies are contracting the labor supply, putting upward pressure on wage growth, despite the slowdown in hiring. August’s 4.3% unemployment rate is the highest since the pandemic, but well below the 50-year average of 6.1%. On the other hand, Thursday’s CPI report showed core inflation of 3.1%, well above the Fed’s 2% target, and tariffs and OBBBA stimulus could spark an acceleration.

So, while the last two jobs reports green light the Fed to cut next week, the margin of error is razor thin. Stock and bond markets might cheer the decision initially, but the longer-term investing implications aren’t so clear. Rather than boosting demand, rate cuts can destroy it as households lose interest income much faster than the cost of debt comes down. Longer-term yields may actually rise, as a cut next week could fuel concerns about inflation and Fed independence. Real assets like infrastructure and diversifying globally could help investors with the tough task of building portfolios resilient to both a growth slowdown and an inflation speedup.

Chart of the Week: Bloomberg, J.P. Morgan Asset Management.
Thought of the week: BLS, J.P. Morgan Asset Management.

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Originally Posted September 15, 2025 – Weekly Market Recap

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