Weekly Commentary: Q2 '25 Z.1 and September 10, 2025?

Once a quarter, Bubble Analysis deciphers a bevy of new Fed data. It’s been quite a ride; epic monetary inflation. Outstanding Treasury securities were about $3.3 TN when I started my quarterly Z.1 analyses in 1999. It closed June at $28.5 TN. Agency Securities has more than tripled to $12.4 TN. Total Non-Financial Debt (NFD) inflated from $18 TN to $78 TN. Total (Debt and Equities) Securities have ballooned from $34 TN to $163 TN. Household Net Worth inflated from $40 TN to $176 TN.

Money Market Fund Assets (MMFA) ended 1999 at $1.6 TN and finished this June at $7.5 TN. System Repo Assets have ballooned from $1.7 TN to $7.8 TN. Bank Deposits inflated from $4.5 TN to $21.3 TN – Banking system Assets $7.5 TN to $28.6 TN. Broker/Dealers Assets have tripled to $6.0 TN. Rest of World (ROW) holdings of U.S. financial assets have ballooned from $7 TN to $60 TN.

Last quarter’s Z.1 CBB highlighted “Real Economy Sphere vs. Financial Sphere” analysis. The overheated financial sectors posted another quarter of booming growth. Overall NFD growth slowed to a seasonally adjusted and annualized (SAAR) $2.324 TN, down from Q1’s SAAR $2.681 TN and Q2 2024’s $2.783 TN. System Credit growth was held back by a temporary drop in federal borrowings (SAAR $471bn vs. $1.057 TN). At SAAR $1.257 TN, growth in financial sector borrowings was down somewhat Q/Q, but remains quite elevated (2023 $346bn and 2024 $575bn). The highly levered Banks and Broker/Dealers further expanded hefty securities portfolios.

The Z.1 category “Domestic Financial Sectors” (DFS) surged $5.117 TN, or 14.1% annualized, during Q2 to a record $150 TN. DFS inflated $10.230 TN y-o-y and $42.069 TN, or 39%, over 22 extraordinary quarters.

Outstanding Debt Securities increased nominal $436 billion to a record $63.149 TN, with one-year growth of $3.037 TN (5.1%). Total Equities surged $9.375 TN (41.5% ann.) to a record $99.797 TN. Equities inflated $12.611 TN y-o-y (14.5%) and $48.987 TN, or 96%, over six years. Equities-to-GDP rose to a non-Covid record 329% of GDP. This compares to 249% to end 2019, and cycle peaks 188% (Q3 2007) and 210% (Q1 2000). At $162.9 TN, Total (Debt and Equities) Securities ended June at a non-Covid record 537% of GDP. This compares to previous cycle peaks 376% (Q3 2007) and 357% (Q1 2000) – and the end of the eighties’ (“decade of greed”) 175%.

System “Repo” Assets jumped $291 billion, or 15% annualized, to a record $8.080 TN. Repo Assets inflated $1.090 TN, or 15.6% y-o-y, and $3.267 TN, or 68% over 22 quarters.

Money Market Fund Assets expanded $83 billion (4.5% annualized) to a record $7.481 TN, with one-year inflation of $933 billion (14.2%) and 22-quarter ballooning of $3.479 TN, or 87%. MMFA Repo holdings surged $284 billion, or 40.3% annualized, to $3.105 TN. Repo holdings inflated $490 billion, or 18.8%, y-o-y and $1.863 TN, or 150%, over 22 quarters. Treasury holdings declined $267 billion during Q2 to $2.614 TN, while Agency Securities increased $90 billion to a record $993 billion. MMFA Agency Securities holdings grew $252 billion, or 34%, y-o-y and $501 billion, or 102%, over 11 quarters.

Bank Asset growth moderated somewhat to $301 billion, or 4.3% annualized, to a record $28.576 TN. Loan growth surged to $316 billion, or 8.4% annualized – the fastest growth since Q4 2022 - to a record $15.353 TN (up $633bn y-o-y, 4.3%). Loans NEC (“not elsewhere classified”/mostly business) expanded $217 billion (16.4% ann.) to a record $5.513 TN, with y-o-y growth of $519 billion (10.4%) and 22-quarter ballooning of $1.603 TN (41%).

Mortgage loans increased $67 billion to a record $7.114 TN, the largest increase in two years. Consumer Credit increased $30 billion (4.5% ann.) to $2.696 TN, the strongest expansion in six quarters. Repo Assets gained $35 billion to $817 billion, with one-year growth of $164 billion, or 25% (strongest since 2019).

Banking system Debt Securities holdings gained $106 billion to a four-year high $6.336 TN (up $364bn y-o-y, 6.1%). Treasury holdings surged $108 billion, or 24.9% annualized, to a record $1.849 TN. Treasury holdings were up $245 billion, or 15.3% y-o-y, and an unprecedented $970 billion, or 110%, over 22 quarters.

On the Liability side, Bank Repos expanded $67 billion to $814 billion. Total Deposits increased $111 billion to a record $21.256 TN. Deposits were up $886 billion y-o-y (4.4%), with 22-quarter growth a historic $5.730 TN, or 37%.

Broker/Dealer Assets expanded another $259 billion, or 18% annualized, to a record $6.018 TN. Assets surged $849 billion, or 16.4%, y-o-y; $1.594 TN (36%) over 11 quarters; and $2.076 TN, or 53%, in 22 quarters. Broker/Dealer Loan assets jumped $75.4 billion (40.6% ann.) to $818 billion – the strongest quarterly growth in four years. Loans expanded $143 billion y-o-y, or 21.2%.

Broker/Dealer Debt Securities holdings surged $106 billion, or 36.3% annualized, to a record $1.279 TN. Debt Securities inflated $316 billion, or 32.8% annualized, over the past year, and $677 billion, or 112%, over 11 quarters. Treasury holdings increased $26 billion (21.3% ann.) during Q2; $155 billion (43%) y-o-y; and $287 billion (127%) over 11 quarters. Ballooning Agency Securities holdings (to a record $624 billion) were even more notable: Q2 $57 billion (40.6% ann.); one year $479 billion (332%); and 11 quarters $557 billion (815%). The only comparable period was the two-year doubling of Agency Securities into the 2008 crisis.

Broker/Dealer Miscellaneous Assets surged $109 billion (27% ann.) to $1.745 TN (high since Q3 2008). One-year growth increased to $173 billion, or 11%, with 22 quarter ballooning of $511 billion, or 41%. After Q1’s blistering $241 billion expansion, Repo Asset growth slowed to $75 billion - to $1.855 TN. Repo Assets expanded $147 billion y-o-y (8.6%) and $525 billion, or 39%, over 11 quarters.

How did the Broker/Dealers finance such lavish asset growth? Growth slowed, though the $15 billion increase pushed “Repo” Liabilities to $2.713 TN – the high since Q3 2008 - following Q1’s monster $362 billion surge. This put one-year growth at $333 billion, or 14%, with 11-quarter ballooning of $1.100 TN, or 68%. Miscellaneous Liabilities jumped $147 billion to $1.265 TN – the high since pre-crisis Q3 2008. It was the strongest quarterly growth since Q2 2007. The liability Loans increased $69 billion (24% ann.) to $1.248 TN, with one-year growth of $208 billion, or 20%.

“Other Financial Businesses” – formerly “Funding Corps” – “Includes funding subsidiaries, custodial accounts for reinvested collateral of securities lending operations.” Assets expanded $76.8 billion, or 24% annualized, to $1.353 TN – the high back to Q4 2008. One-year growth accelerated to $266.7 billion, or 24.4%, with 22-quarter growth of $726 billion, or 115%. It’s worth noting that “Funding Corp” Assets surged $267 billion, or 22%, in the nine quarters preceding the 2008 financial crisis. Funding Corps invest a portion of incoming balances (i.e., proceeds from short sales) into Open Market Paper (commercial paper), with the increase in Funding Corp holdings accounting for $63 billion of the total $71 billion Q2 gain in system Open Market Paper.

System Asset-Backed Securities (ABS) increased $32 billion (7.6% ann.) to $1.728 TN – the high since Q1 2013. At $179 billion (11.6%), one-year growth was the strongest in three years. ABS inflated $467 billion, or 37%, over four years.

Exchange Traded Funds (ETF) inflated $1.123 TN, or 43.3% annualized, during Q2 to a record $11.492 TN, with one-year growth of $2.349 TN, or 25.7%. ETFs ballooned $7.721 TN, or 205%, over the past 25 quarters. Domestic Equities ETFs surged $788 billion during Q2, or 47.2% annualized, to a record $7.468 TN. Equities ETFs ballooned $1.530 TN, or 25.8% y-o-y, and an incredible $5.277 TN, or 241%, over the past 25 quarters.

Household Assets inflated $7.269 TN during Q2, the largest gain since coming out of the covid crisis (Q2 2021). Assets were up $10.446 TN, or 5.6%, y-o-y, with 21-quarter growth of $69.818 TN, or 54.8%. Household Liabilities increased $183 billion (3.5% annualized), the largest increase since Q4 2022. Household Net Worth (Assets less Liabilities) jumped $7.086 TN, or 16.8% annualized, to a record $176.293 TN. Net Worth was up $10.133 TN over one year (6.1%); $29.996 TN over three years (19.7%); and $65.388 TN, or 59%, over 21 quarters. Household Net Worth rose to (a non-Covid record) 581% of GDP, which compares to 534% to end 2019 and previous cycle peaks 487% (Q1 2007) and 443% (Q1 2000).

Inflating Household wealth comes from all directions. Real Estate holdings increased $1.236 TN (9.5% ann.) to a record $53.224 TN – with 21 quarter growth of $19.042 TN, or 55.7%.

Meanwhile, Household Financial Assets inflated $5.847 TN, or 18.2% annualized, to a record $134.590 TN. Financial Assets increased to 443% of GDP. This compares to Q4 2019’s 428%, and the previous cycle peaks 372% (Q3 2007) and 353% (Q1 2000). Household Debt Securities holdings expanded $93 billion to a record $5.844 TN. Debt holdings gained $277 billion y-o-y (4.9%); $2.720 TN over three years (86%); and $1.589 TN (37%) over 21 quarters.

Household Equities surged $3.734 TN (39% ann.) to a record $41.790 TN - with three-year growth of $14.980 TN (56%), and a 21-quarter surge of $25.456 TN, or 156%. With Mutual Fund holdings rising to $12.759 TN, Total (mostly) Equities expanded to a record $54.549 TN, or 180% of GDP. This compares to Q4 2019’s 142% and previous cycle peaks 105% (Q3 2007) and 116% (Q1 2000).

Household Treasury holdings gained another $58 billion to a record $2.751 TN, expanding $253 billion (10.1%) over one year and $2.048 TN (291%) over three years. Money Market (MM) holdings jumped $53.4 billion during Q2 to a record $4.876 TN. MM inflated $682 billion (16.3%) y-o-y and $2.036 TN over three years (72%). The expansion of total Treasuries, Agency Securities, Bank Deposits and Money Fund holdings slowed to $102 billion during the quarter – with one-year growth of $1.418 TN (6.5%) and unprecedented 21-quarter inflation of $6.986 TN (43%).

Household Assets-to-GDP rose to 650% (previous cycle peaks 584% 513%). Financial Asset holdings increased to 443% of GDP, up from Q4 2019’s 428%, and the previous cycle peaks 372% (Q3 2007) and 353% (Q1 2000). In the most consequential of these ratios, Household Net Worth jumped to (non-Covid GDP contraction record) 581% of GDP, up from 2019’s 534% and previous peaks 487% (Q1 2007) and 443% (Q1 2000).

Federal Reserve Assets declined $51 billion during Q2 to $5.737 TN. Total Fed Liabilities contracted $54 billion to $6.632 TN.

Life Insurance Assets inflated $336 billion for the quarter to a record $10.719 TN, with one-year growth of $721 billion, or 7.2%.

Finance Company Assets expanded $32 billion to $1.728 TN, with one-year growth of $180 billion, or 11.6%.

Federal expenditures of SAAR $7.340 TN were up 6.9% versus Q2 2024, with Receipts of SAAR $5.593 TN increasing 10.3%.

Rest of World (ROW) holdings of U.S. financial assets surged a quarterly record $4.136 TN, or 29% annualized, during Q2 to an all-time high $60.637 TN. This put one-year growth at $6.878 TN, or 12.8%, with 19-quarter ballooning of $21.921 TN, or 12.8%. Debt Securities holdings gained $286 billion (7.6% ann.) during Q2 and $1.405 TN, or 10.1%, y-o-y. U.S. Corporate Bond holdings jumped $189 billion, or 17.2% annualized, to a record $4.597 TN, with one-year growth of $468 billion, or 11.3%. Treasury Securities increased $96 billion during the quarter to a record $9.146 TN, with one-year growth of $896 billion (10.9%) and 19-quarter ballooning of $1.892 TN, or 26%. Agency holdings flatlined at $1.366 TN (up $20bn y-o-y). Repo Assets expanded $34 billion to a record $1.528 TN (up $153bn y-o-y, 11%), with 19-quarter ballooning of $668 billion, or 78%.

ROW Total Equities (Equities & Mutual Funds) inflated $2.000 TN, or 45% annualized, during Q2 to a record $19.648 TN. Total Equities ballooned $2.970 TN, or 17.8% y-o-y, and $9.541, or 94%, over 19 quarters. On the ROW Liabilities side, Repo Liabilities jumped $84 billion, or 17.6% annualized, to a record $1.980 TN. Repo Liabilities inflated $322 billion, or 19.4%, y-o-y and $774 billion, or 64%, over 19 quarters.




September 11, 2001. February 24, 2022. October 27, 2023. September 10, 2025?

There are individual days in our lives that changed history. I’ll leave it to others to debate the “costs and benefits” of the post-9/11 “war on terror.” It certainly inflicted disparate monumental costs on our nation. In 2023, the Ukrainian nation responded with incredible courage to the Russian invasion. Future historians will opine on the Israeli government’s response to the most heinous Hamas terrorist attack. I feared for Israel’s future when an IDF official was quoted just days after the attack: “Gaza will eventually turn into a city of tents. There will be no buildings.”

How will the heinous assassination of Charlie Kirk impact our deeply fractured nation? At such a critical juncture, many of us deeply appreciate the distinguished leadership provided by Utah Governor Spencer Cox:

“This is our moment. Do we escalate or do we find an off-ramp?”

“We can return violence with violence, we can return hate with hate, and that’s the problem with political violence – it metastasizes because we can always point the finger at the other side. At some point, we have to find an offramp, or else it’s going to get much, much worse. These are choices that we can make. History will dictate if this is a turning point for our country, but every single one of us gets to choose right now if this is a turning point for us.”

“To my young friends out there, you are inheriting a country where politics feels like rage. It feels like rage is the only option. Our generation has an opportunity to build a culture that is very different than what we are suffering through right now. Not by pretending differences don't matter, but by embracing our differences and having those hard conversations.”

“Over the past 48 hours, I have been as angry as I have ever been - as sad as I have ever been. As anger pushed me to the brink, it was actually Charlie’s words that pulled me back… Charlie said, when people stop talking, that’s when you get violence. He said, “the weak can never forgive. Forgiveness is the attribute of the strong. The only way out of the labyrinth of suffering is to forgive. Welcome without judgment. Love without condition. Give without limit.’ He said, ‘always forgive your enemies, nothing annoys them so much.’ A few months ago… Charlie posted to social media: ‘When things are moving very fast, and people are losing their minds, it’s important to stay grounded. Turn off your phone. Read scripture. Spend time with friends. And remember Internet fury is not real life. It’s going to be okay.’ He again said, ‘when you stop having a human connection with someone you disagree with, it becomes a lot easier to commit violence.’ He said, “what we as a culture have to get back to is being able to have reasonable agreement where violence is not an option.”

It's as if I've lost a brother. I wasn’t aware of this until after his tragic death. Charlie and I shared something special – a wonderful passion.

September 12 – Eugene Register Guard: “Charlie Kirk, a conservative activist who was shot and killed Sept. 10 at a college event in Utah, was a well-known Oregon Ducks supporter. In a statement addressing the nation Sept. 12, his wife, Erika, said the Illinois native loved the MLB's Chicago Cubs and the Ducks. ‘My goodness, did he love the Oregon Ducks,’ Erika Kirk said Sept. 12. ‘He’d want me to say ‘go Ducks’, so I have to since they play on Saturday. So go Ducks.’”

Right now, his controversial politics are irrelevant to me. We shared a great experience together, a classic University of Oregon Ducks vs. the Ohio State Buckeyes football game at a deafening Autzen Stadium last fall. Today, many are left devastated, especially his family and the younger generation he so inspired. Right, left and center, it was a sad and ominous week for our United States of America.

Something quite dangerous is unfolding in our country. According to Mass Shooting Tracker, there have been 357 mass shootings so far this year. There was a school shooting in Colorado the same day as Charlie Kirk’s assassination. “They” didn’t commit that shooting. Desmond Holly committed the heinous crime.

“They” didn’t assassinate Charlie Kirk. The cold-blooded murderer was Tyler Robinson, not the Democrats, and not the “radical left”. The assassin is said to be from a good home and community, was a top student, was not affiliated with a political party, and somehow became perilously radicalized.

Our nation is dealing with very serious issues of mental health and radicalization – particularly with young men. Social media is inciting hatred and violence. It has become so lucrative for some media and “influencers” to foment polarizing and emotionally charged views. When there’s a school shooting, the community doesn’t fracture and blame the other evil enemy side. We need a bipartisan group of leaders that will promote a much more constructive response to what, most regrettably, will be recurring acts of domestic terrorism. The course we’re on right now is spiraling toward some elements of civil war.

Friday evening, September 12, 2025. The Sean Hannity Show

The White House’s Stephen Miller: “The Democrat party, its pundits, its allies, the educators, for ten years have waged a campaign of eliminationist rhetoric against President Trump, against Republicans, against MAGA, against Trump officials. It has been willful and deliberate, Sean. The rhetoric that you played – the messages that you played in that clip – are the same exact rhetoric and messages that are used by the assassins – that are used by the two assassins who tried to kill Donald Trump. That are used by the assassin who claimed the life of my friend, an American hero, Charlie Kirk. This is willful and deliberate radicalization. They know what they’re doing. Our universities in many cases have become incubators for extremism. They become the equivalent of madrassas for jihadism. There is a domestic terrorism movement in this country. When you see these organized doxing campaigns, where the left calls people ‘enemies of the Republic’, calls them fascists, says they’re Nazis, says they’re evil, says they have to be removed. And then prints their addresses. What do you think they’re trying to do? They are trying to inspire someone to murder them. That is their objective. That is their intent. And when you see online, Sean, as we’ve seen for the last few days: tape after tape after tape of federal workers, bureaucrats, staffers in the Pentagon, educators, professors, healthcare workers, nurses celebrating the assassination of Charlie Kirk. These are radicalized people. There is a domestic terrorism movement in this country. And let me tell you something I haven’t shared with anybody: the last message that Charlie Kirk gave to me before he joined his creator in Heaven was he said we have to dismantle and take on the radical left organizations in this country that are fomenting violence. That was the last message that he sent me before that assassin stole him from all of us. And we are going to do that. Under President Trump’s leadership, I don’t care how, it could be a RICO charge, a conspiracy charge, conspiracy against the United States, insurrection. But we are going to do what it takes to dismantle the organizations and the entities that are fomenting riots, that are doxing, that are trying to inspire terrorism, that are committing acts of wanton violence. It has to stop. My message is to all the domestic terrorists in the country spreading this evil hate: you want us to live in fear; we will not live in fear. But you will live in exile. Because the power of law enforcement under President Trump’s leadership will be used to find you, used to take away your money, take away your power and, if you have broken the law, to take away your freedom, Sean.”

Sean Hannity: “Well said, Stephen Miller.”



For the Week:

The S&P500 gained 1.6% (up 11.9% y-t-d), and the Dow rose 1.0% (up 7.7%). The Utilities increased 1.7% (up 11.3%). The Banks rallied 2.0% (up 18.8%), and the Broker/Dealers jumped 2.4% (up 30.6%). The Transports slipped 0.6% (down 1.7%). The S&P 400 Midcaps dipped 0.4% (up 5.2%), while the small cap Russell 2000 added 0.3% (up 7.5%). The Nasdaq100 advanced 1.9% (up 14.7%). The Semiconductors surged 4.2% (up 20.5%). The Biotechs fell 2.4% (up 5.4%). With bullion rising another $56, the HUI gold index jumped 4.1% (up 103%).

Three-month Treasury bill rates ended the week at 3.93%. Two-year government yields rose five bps to 3.56% (down 69bps y-t-d). Five-year T-note yields reversed five bps higher to 3.63% (down 75bps). Ten-year Treasury yields slipped a basis point to 4.06% (down 50bps). Long bond yields fell eight bps to 4.68% (down 10bps). Benchmark Fannie Mae MBS yields declined seven bps to 5.07% (down 78bps).

Italian 10-year yields added two bps to 3.52% (unchanged bps y-t-d). Greek 10-year yields rose three bps to 3.37% (up 16bps). Spain's 10-year yields gained four bps to 3.29% (up 23bps). German bund yields rose five bps to 2.72% (up 35bps). French yields jumped six bps to 3.51% (up 31bps). The French to German 10-year bond spread widened one to 79 bps. U.K. 10-year gilt yields increased three bps to 4.67% (up 10bps). U.K.'s FTSE equities index increased 0.8% (up 13.6% y-t-d).

Japan's Nikkei 225 Equities Index surged 4.1% (up 12.2% y-t-d). Japanese 10-year "JGB" yields added a basis point to 1.59% (up 49bps y-t-d). France's CAC40 rallied 2.0% (up 6.0%). The German DAX equities index increased 0.4% (up 19.0%). Spain's IBEX 35 equities index jumped 3.1% (up 32.0%). Italy's FTSE MIB index recovered 2.3% (up 24.5%). EM equities were mixed. Brazil's Bovespa index slipped 0.3% (up 18.3%), while Mexico's Bolsa index rose 2.1% (up 24.8%). South Korea's Kospi surged 5.9% (up 41.5%). India's Sensex equities index gained 1.5% (up 4.3%). China's Shanghai Exchange Index advanced 1.5% (up 15.5%). Turkey's Borsa Istanbul National 100 index dropped 3.3% (up 5.5%).

Federal Reserve Credit was little changed last week at $6.557 TN. Fed Credit was down $2.333 TN from the June 22, 2022, peak. Over the past 313 weeks, Fed Credit expanded $2.830 TN, or 76%. Fed Credit inflated $3.746 TN, or 133%, over the past 670 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt sank $24.4 billion last week to $3.141 TN - the low back to December 2016. "Custody holdings" were down $173 billion y-o-y, or 5.2%.

Total money market fund assets (MMFA) inflated another $44 billion to a record $7.303 TN. MMFA were up $996 billion, or 15.9%, y-o-y - and have ballooned a historic $2.719 TN, or 59.3%, since October 26, 2022.

Total Commercial Paper slipped $2.3 billion to $1.401 TN. CP has expanded $313 billion y-t-d and $164 billion, or 13.2%, y-o-y.

Freddie Mac 30-year fixed mortgage rates bps to a 10-month low of 6.5% (up 1bps y-o-y). Fifteen-year rates bps to 5.6% (up 1bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates bps to a one-year low of 6.6% (down 1bps).

Currency Watch:

For the week, the U.S. Dollar Index slipped 0.2% to 97.55 (down 10.1% y-t-d). For the week on the upside, the Norwegian krone increased 1.8%, the Mexican peso 1.5%, the Australian dollar 1.4%, the South African rand 1.1%, the Brazilian real 1.1%, the New Zealand dollar 1.1%, the Swedish krona 0.8%, the British pound 0.4%, the Swiss franc 0.2%, the euro 0.2%, and the Singapore dollar 0.1%. On the downside, the South Korean won declined 0.5%, the Japanese yen 0.2%, and the Canadian dollar 0.1%. The Chinese (onshore) renminbi increased 0.11% versus the dollar (up 2.45% y-t-d).

Commodities Watch:

September 6 – Bloomberg: “The People’s Bank of China increased its gold holdings in August for a 10th month, in a continued push to diversify its reserves away from US dollars. Bullion held by the central bank rose by 0.06 million troy ounces to 74.02 million troy ounces last month… China began this round of gold purchases in November, accumulating a total of 1.22 million troy ounces over the period.”

The Bloomberg Commodities Index gained 1.3% (up 5.1% y-t-d). Spot Gold rose 1.6% to a record $3,643 (up 38.8%). Silver jumped 2.9% to $42.1866 (up 46%). WTI crude recovered 82 cents, or 1.3%, to $62.69 (down 13%). Gasoline increased 1.1% (down 2%), while Natural Gas dropped 3.5% to $2.941 (down 19%). Copper rose 2.2% (up 16%). Wheat increased 0.4% (down 9%), while Corn was unchanged (down 13%). Bitcoin surged $5,500, or 5.0%, to $110,575 (up 23.9%).

Market Instability Watch:

September 12 – Bloomberg (William Horobin and Alice Gledhill): “Fitch Ratings downgraded France, indicating the upheaval of repeated government collapse has locked the country into an enduring battle to contain a swelling debt burden. The rating company cut its credit assessment to A+ from AA-, taking it a notch lower than the UK and on par with Belgium. Among the main arbiters of sovereign borrowers, Fitch’s France rating is now the lowest at six levels above junk.”

September 9 – Bloomberg (Greg Ritchie): “A measure of France’s borrowing costs exceeded Italy’s for the first time in the euro zone’s history, demonstrating how investor concerns over fiscal policy are redrawing the region’s bond markets. The shift on Tuesday was due to technical reasons, as the underlying bond used for benchmark French 10-year yields moved to a slighter later maturity than the Italian equivalent. But the trend toward convergence between the two nations’ debt has been years in the making. For market veterans, it’s a remarkable development given lower-rated Italy was for years the region’s poster-child for fiscal profligacy.”

September 9 – Financial Times (Ian Smith, Emily Herbert and Leila Abboud): “France has joined the club of riskier borrowers on the Eurozone’s ‘periphery’, big investors say, as political turmoil undermines efforts to confront the country’s soaring debt… At 3.47%, France’s benchmark 10-year borrowing costs are above those of longtime Eurozone troubled borrower Greece at 3.37%, and closing in on Italy at 3.51%, two of the borrowers long deemed riskier by global investors. ‘France is the new periphery,’ said Kevin Thozet, a member of the investment committee at French asset manager Carmignac.”

September 10 – Bloomberg (Erik Hertzberg): “Funding issues are cropping up in Canada’s money markets again, prompting some analysts to recommend the central bank step in. The Canadian Overnight Repo Rate Average, or Corra, has settled 5 bps above the Bank of Canada’s overnight rate for most of September. On a weekly basis, that’s the widest spread since January and if it persists, officials may be forced to intervene again to improve market functioning.”

September 10 – Bloomberg (Carter Johnson): “The Trump administration’s call for steep Federal Reserve interest-rate cuts, coupled with the prospect of higher short-term US debt issuance, risks disrupting the Treasury market and could end up driving longer-term borrowing costs higher, according to the Carlyle Group Inc. ‘Bondholders want to be convinced that the Fed’s job is to preserve the real value of their principal. If instead they feel the Fed is more focused on government finance, you could see a bond selloff and higher term premiums,’ Jason Thomas, the head of global research and investment strategy at Carlyle, said…”

Global Credit and Financial Bubble Watch:

September 7 – Wall Street Journal (Allysia Finley): “Serious credit-card and auto-loan delinquencies have climbed to 2008-09 recession levels. The housing market shows cracks while the labor market is weakening. You wouldn’t know it from the buoyant stock market and consumer spending. Credit America’s ‘buy now, pay later’ economy, increasingly fueled by leverage. Consumers, investors, businesses and the government are taking on more debt, which we may all pay for later. As Americans max out their credit cards after years of inflation, buy-now-pay-later offers are popping up everywhere, from concert vendors and travel-booking sites to supermarkets. Consumers can tap an app to split the cost of their purchases into installment payments over weeks or months, sometimes without interest.”

September 11 – Bloomberg (Carmen Arroyo, Isabella Farr, and Scott Carpenter): “The sudden collapse of a Texas subprime car lender is sending shock waves from border-town dealerships all the way to the upper echelons of Wall Street, ensnaring giants including JPMorgan… and BlackRock and raising concern that pain in the multibillion-dollar market for bundled auto loans is starting to mount. Just hours after reports emerged… of an alleged fraud scheme, Tricolor Holdings filed for bankruptcy and said it plans to liquidate, marking the latest and most painful blow yet to a risky lending business that’s been buffeted by a surge in interest rates and weakening jobs market. Federal prosecutors are now looking into allegations of fraud by Tricolor…”

September 7 – Financial Times (Sun Yu): “US public pension funds are allocating less capital to private credit investments amid concern about looser underwriting standards and rising credit risks. A Financial Times analysis… shows 70 major US public pension funds reported an 18% decline in allocation to private credit in the first six months of 2025 from a year earlier. Public pensions have been a key source of capital for the sector, which posted an overall 40% drop in North American fundraising in the first half of the year… State and city pension plans told the FT they have tightened scrutiny of new private credit managers and paused allocations since the start of the year. The pullback highlights institutional investors’ growing unease with a boom that emerged as private investment funds became key lenders to small- and mid-market businesses.”

Trump Administration Watch:

September 11 – Axios (Tal Axelrod): “Charlie Kirk's assassination has unleashed an outpouring of rage across the MAGA universe, with many leaders feeling his death is evidence the movement is under attack from leftist forces. At a moment of extreme volatility in American politics, many MAGA leaders are now calling for retribution — including the criminalization of the Democratic Party. The MAGA movement has long believed that it’s under siege, especially after the two assassination attempts against President Trump during the 2024 campaign. Right-wing activists see Kirk's death as the ultimate vindication of that mentality — and proof that the movement is at ‘war,’ whether it wants to be or not. What they're saying: Within minutes of the shooting at Utah Valley University on Wednesday, MAGA leaders cast Kirk as the victim of an existential political battle. Trump called Kirk a ‘martyr for truth and freedom,’ vowing to crack down on the ‘radical left’ for fomenting violence with its ‘demonization’ of conservatives. ‘Charlie Kirk gave his life for his country. He’s on the battlefield of political combat, and they cut him down with an assassin's bullet,’ Steve Bannon said on his ‘War Room’ podcast Wednesday evening. ‘They are at war with us. Whether we want to accept it or not, they are at war with us. And what are we gonna do about it?’ Fox News host Jesse Watters asked…”

September 6 – Axios (Justin Kaufmann): “President Trump on Saturday threatened to unleash ‘the Department of WAR’ on Chicago in a Truth Social image evoking the film ‘Apocalypse Now.’ Language that seemingly threatens to wage war on an American city is a significant escalation from Trump who has already deployed the National Guard to support his immigration crackdowns in Los Angeles and Washington, D.C. What they’re saying: ‘I love the smell of deportations in the morning,’ the president wrote on his Truth Social account, accompanied by an seemingly AI-generated photo of him dressed as Robert Duvall's character in the movie. The text on the image says ‘Chipocalypse Now.’ ‘Chicago about to find out why it's called the Department of WAR,’ Trump added.”

September 8 – Politico (Rachael Bade): “A private dinner attended by dozens of administration officials and close advisers to President Donald Trump was temporarily marred by a dramatic clash between two of Trump’s top economic officials, with Treasury Secretary Scott Bessent at one point threatening to punch top housing finance official Bill Pulte ‘in the fucking face’… But amid the cocktail-hour din, Bessent lashed out at Pulte in an expletive-laden diatribe. The Treasury secretary had heard from several people that the Federal Housing Finance Agency director had been badmouthing him to Trump, a person close to him said. He wasn’t about to engage in chit-chat as if nothing was amiss. ‘Why the fuck are you talking to the president about me? Fuck you,’ Bessent told Pulte. ‘I’m gonna punch you in your fucking face’… Pulte appeared stunned, and the tense encounter prompted club co-owner and financier Omeed Malik to intervene, according to the three people. But Bessent wasn’t having it — he sought to get him kicked out, the eyewitness said. ‘It’s either me or him,’ Bessent said to Malik. ‘You tell me who’s getting the fuck out of here.’ ‘Or,’ he added, ‘we could go outside.’ ‘To do what?’ asked Pulte. ‘To talk?’ ‘No,’ Bessent replied. ‘I’m going to fucking beat your ass.’”

September 9 – Financial Times (Editorial Board): “Dramatic images of workers shackled at the ankles, wrists and waist during a raid by US Immigration and Customs Enforcement last week will have a chilling effect on foreign companies with operations, or plans to invest, in America. The detention of 475 workers, mostly South Korean nationals, at a battery plant being built by Hyundai and LG in Georgia, which involved helicopters, armoured vehicles and heavily armed agents, was clearly choreographed to send a message to Donald Trump’s base, and to shock international businesses into respecting US visa rules. Instead, the optics could backfire on the president’s plans to reinvigorate America’s manufacturing sector.”

September 10 – Bloomberg (Soo-Hyang Choi and Heesu Lee): “South Korean President Lee Jae Myung said a US immigration raid that led to the detention of more than 300 Korean workers has unsettled companies pouring billions into America. ‘They simply needed skilled technicians to install the equipment to build the plant because there aren’t workers available in the US,’ Lee said… ‘This could have a significant impact on future direct investment into the US.’ Lee said the workers were dispatched on short-term stays to install equipment and got caught up in the raid amid repeated difficulties obtaining visas. He added that the raid had left him ‘baffled’.”

September 8 – Financial Times (Gregory Meyer, Kaye Wiggins and Lauren Fedor): “Multinational companies with foreign employees in the US have sought legal advice and paused some travel after federal authorities arrested hundreds of South Korean workers at an electric-car battery plant in Georgia last week. The detention of 475 people, mostly South Korean nationals, at the Hyundai-LG Energy Solution factory under construction in Ellabell represented a new front in the White House’s broad crackdown on illegal immigration… ‘Clients are flooding our inboxes asking if they too have exposure,’ said Matthew Dunn, head of business immigration for the US at the law firm HSF Kramer. ‘They ask if corporate headquarters should be concerned, they ask if their US managers are at risk, and they wonder if their foreign national population here on work sponsored visas will be targeted by [the] government.’”

September 10 – New York Times (Andrew Ross Sorkin, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Niko Gallogly and Ian Mount): “It’s hard to rank the economic policy norms the Trump administration has broken, given how many have been shattered — in trade, regulation, etc. But many of the moves have been carried out by Commerce Secretary Howard Lutnick. Those actions, including extracting an equity holding in the chipmaker Intel in exchange for federal funds, surprised corporate leaders, who had seen Lutnick as an ally. And… what he’ll actually accomplish from them is far from certain. Lutnick’s goal is becoming clear: to set up a so-called investment accelerator, which he has described as a ‘national and economic security fund’ within the Commerce Department… It’s led by Michael Grimes, Morgan Stanley’s former star tech banker, and David Shapiro, a former partner at the law firm Wachtell, Lipton, Rosen & Katz. That project is meant to be funded by the hundreds of billions of dollars that countries like Japan and South Korea have pledged to invest as part of their trade deals, The Times reports. It has taken control of tens of billions of dollars from the CHIPS Act, which led to the Intel deal; Lutnick has suggested that the government may also seek holdings in defense and shipbuilding companies.”

September 10 – Axios (Ben Berkowitz): “After taking a stake in Intel and a cut of Nvidia's chip sales in China, the U.S. government may next target a share of the money generated by patents developed at major universities using federal funding, Commerce Secretary Howard Lutnick tells Mike Allen in the premiere episode of ‘The Axios Show.’ The Trump administration… now aims to do the same in academia, capturing potentially tens or hundreds of billions of dollars in future upside from the work of university scientists… The administration has spent months pressuring colleges over admissions, DEI policies and antisemitism. Multiple university leaders have resigned; other schools have paid huge settlements. The next step, Lutnick says, is to guarantee the U.S. gets a share of the upside from intellectual property that scientists at those schools develop with taxpayer dollars… When we asked Lutnick about other types of deals that might give the U.S. a cut, he replied: ‘I think universities, who are getting all this money. The scientists get the patents, the universities get the patents and the funder of $50 billion, the U.S. government, you know what we get? Zero.’”

September 12 – Axios (Adriel Bettelheim): “President Trump is turning up pressure on drugmakers to lower prices and demanding they commit within weeks to his ‘most-favored nation’ policy, Commerce Secretary Howard Lutnick tells Mike Allen… The initiative — which calls for charging the U.S. less for drugs than comparable countries — continues Trump's efforts to reshape drug pricing through threats and public shaming. It also raises the stakes for pharmaceutical manufacturers as they face threatened tariffs… ‘The president's going to say that you drug manufacturers cannot sell here unless you sell there at a higher price. Stop being willing to sell to them at such a low price,’ Lutnick said.”

September 9 – Axios (April Rubin): “Eleven retired senior military officers warned in… a court filing about the downsides of the Trump administration's deployment of the National Guard to Los Angeles earlier this year. The generals warned about President Trump’s politicization of the National Guard as law enforcement and its harm to the ‘cohesiveness and reputation’ of the military. ‘Deployment of the military within our country's borders to be used against its population is not only contrary to core American values, but can also be harmful to the reputation, integrity, and morale of the military itself,’ they wrote in the amicus briefing in the case between Trump and California Gov. Gavin Newsom. The military must remain a nonpartisan institution for recruitment and retention, they emphasized.”

China Trade War Watch:

September 9 – Financial Times (James Politi, Amy Mackinnon and Henry Foy): “Donald Trump has asked the EU to impose tariffs of up to 100% on India and China as part of a joint effort to increase pressure on Russia to end its war in Ukraine, according to three officials familiar… The US president made the extraordinary demand after dialling into a meeting on Tuesday between senior US and EU officials gathered in Washington to discuss ways to heighten the economic cost of the war for Russia. ‘We’re ready to go, ready to go right now, but we’re only going to do this if our European partners step up with us,’ one US official said. A second US official said Washington was prepared to ‘mirror’ any tariffs on China and India imposed by the EU… Trump’s proposal comes amid frustration within the White House at the difficulty of brokering a peace deal and Russia’s increasingly aggressive aerial attacks on Ukraine.”

September 5 – Wall Street Journal (Lingling Wei): “With trade negotiations between China and the U.S. showing little progress, Beijing is taking a new stance: Keep talking, but yield little. That position was illustrated by the recent visit to Washington by Li Chenggang, a key member of Beijing’s negotiating team… According to people familiar…, his visit didn’t come at the request of the U.S. government. Li didn’t meet with administration officials such as Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer… He instead met with deputy-level officials at the Treasury Department, the Commerce Department and the USTR, where he largely repeated Beijing’s long-held positions. The trip signaled a new mandate from Chinese leader Xi Jinping: By seeking to engage with the Trump administration while making few concessions, Beijing is trying to hold itself up as a responsible party at a time of intensifying great-power competition. The result is a delicate detente—but one that isn’t likely to produce a trade deal soon.”

September 11 – Bloomberg (Mark Trevelyan): “China urged Mexico to ‘think twice’ before levying tariffs, a warning that could signal Beijing’s willingness to retaliate over a move it sees as giving into demands from the US. ‘Any unilateral tariff increase by Mexico, even within the framework of WTO rules, would be seen as appeasement and compromise toward unilateral bullying,’ a spokesperson for the Ministry of Commerce said… ‘We urge the Mexican side to exercise extreme caution and consider carefully before taking any actions.’ Mexico has come under growing pressure from Donald Trump’s protectionist stance on trade, particularly his push for steep tariffs on Chinese goods. The Latin American country announced plans Thursday to impose duties of as much as 50% on cars and other products made by China and several Asian exporters.”

Trade War Watch:

September 11 – New York Times (Daisuke Wakabayashi and River Akira Davis): “In the span of 24 hours last week, President Trump managed to roil both South Korea and Japan, two longtime allies that less than two months earlier had said they would invest a combined nearly $1 trillion in the United States in exchange for lower tariffs. Last Thursday, U.S. immigration officials raided the construction site of a major Hyundai-LG plant in Georgia, a flagship project by two of South Korea’s most prominent companies. Hundreds of South Korean citizens were arrested and detained for, according to federal officials, living or working in the country illegally. On the same day, Mr. Trump signed an executive order enacting a trade deal he had struck with Japan in July, committing Japan to invest $550 billion in the United States. The order codified the reduced automotive tariffs that Tokyo had desperately sought. However, it came with a memorandum of understanding between the two countries stating outright that Mr. Trump, not Japanese officials, will select how the $550 billion will be invested.”

September 6 – Wall Street Journal (Bertrand Benoit and Kim Mackrael): “When President Trump unveiled his trade deal with the European Union in July, businesses across the bloc thought it would end months of uncertainty for one of the world’s most lucrative trade relationships. Less than two months on, frustration with the deal is growing in Europe. Businesses are halting exports to the U.S., complaining about new bureaucratic hurdles and warning about a new era of unpredictability. The reason: the Trump administration’s decision to expand its 50% metals tariffs to cover hundreds of additional products that contain steel and aluminum, slapping a large number of European manufacturers with tariffs higher than the 15% that Trump and the EU agreed on for most products.”

September 8 – Bloomberg (Soo-Hyang Choi): “The US and South Korea are in a deadlock over details of a $350 billion investment fund the two countries agreed to as part of a broader trade deal, with a top Seoul official warning that even the shipbuilding partnership is at risk if they fail to narrow the differences. Speaking at a forum on Tuesday, Kim Yong-beom, director of national policy at South Korea’s presidential office, said Seoul has been emphasizing to US officials that it cannot accept the same terms as Japan’s $550 billion investment pledge finalized last week, citing the disparity in the size of the two economies and the potential repercussions on the foreign exchange market.”

September 11 – Wall Street Journal (Jon Emont and Patrick Thomas): “In just a few weeks, U.S. farmers will begin harvesting tens of millions of tons of soybeans. But they have a big problem on their hands: The world’s biggest buyer doesn’t want any. Over the years, China had become one of the biggest buyers of American agricultural products, as the country’s growing middle class developed a taste for pork and poultry that are fattened, in part, on soybean meal. U.S. farmers in turn rushed to cash in on China’s ravenous demand. But now, soy has emerged as a potent weapon that Beijing is wielding in its trade fight with Washington. Chinese buyers haven’t booked any U.S. soybean purchases, turning instead to Brazilian suppliers.”

September 5 – Financial Times (Aime Williams and Leo Lewis): “Japan has agreed to let Donald Trump decide where $550bn worth of its capital is invested in the US as part of a deal to avoid high tariffs, according to an unpublished memorandum signed by the two countries. The memo, signed on Thursday in the US when Trump officially enacted the trade deal, also gives Japan just 45 days to fund projects earmarked by the president — or face the reimposition of his steep tariffs. The unusual terms agreed between the US president and the world’s fourth-largest economy underscore the extraordinary lengths that Washington’s trading partners will go to in order to secure tariff relief.”

September 6 – Reuters: “Japan’s broad trade agreement with the United States is ‘not settled,’ as Washington has not issued expected presidential orders on tariffs for pharmaceuticals and semiconductors, Tokyo's top tariff negotiator said… ‘While a presidential order has been issued concerning adjustments to general tariffs as well as automobile and auto parts tariffs, presidential orders for most-favoured-nation status for pharmaceuticals and semiconductors have not been issued,’ Ryosei Akazawa told reporters after returning from talks in Washington. ‘Therefore, it cannot be said that this is settled,’ said Akazawa, Japan’s minister for economic policy, adding that Tokyo would continue to press for the remaining orders.”

September 5 – Financial Times (Ilya Gridneff): “Prime Minister Mark Carney has launched a C$5bn (US$3.6bn) fund to support tariff-hit industries and ordered the public sector to ‘Buy Canadian’ as part of sweeping measures to combat Donald Trump’s trade war. ‘We will build more with Canadian steel, Canadian lumber, Canadian technology, (with) Canadian workers,’ Carney said… The prime minister announced the ‘bold new approach’ in response to the US pressure on Canada’s lumber, car, steel and aluminium sectors that has hit the economy.”

September 9 – Axios (Skylar Woodhouse and Shruti Srivastava): “President Donald Trump and Indian Prime Minister Narendra Modi pledged to talk and resume trade negotiations, signaling a possible thaw after weeks of a blistering fight over tariffs and Russian oil purchases. ‘I am pleased to announce that India, and the United States of America, are continuing negotiations to address the Trade Barriers between our two Nations,’ Trump wrote... ‘I look forward to speaking with my very good friend, Prime Minister Modi, in the upcoming weeks. I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries!,’ he added.”

Constitution Watch:

September 11 – Financial Times (Stefania Palma and Ian Hodgson): “When the US Supreme Court’s nine justices gather in their ceremonial chamber in early November, topping the docket will be Donald Trump’s use of emergency powers to impose blanket tariffs on trading partners. The case marks the first time the court will squarely tackle the legality of the president’s sprawling second-term agenda. The decision will affect not just global trade but may shape the American government for decades. The Supreme Court is in the midst of what could be one of the most consequential periods in its history. Learning Resources vs Trump is among many cases that could rewrite everything from presidential power to US citizenship. Leah Litman, professor at the University of Michigan Law School, said: ‘Even though the court didn’t explicitly address the merits of various Trump policies over the last few months, it has allowed the president to do very sweeping things,’ including deporting people to third countries. The full hearing on the tariffs case is ‘significant because we will have some insight into what they are thinking’, Litman added.”

September 9 – Axios (Ben Berkowitz): “The Supreme Court will expedite an appeal of a ruling that struck down most of President Trump’s tariffs. The blockbuster case will determine the future of Trump’s efforts to reshape the global trade system, and potentially impact hundreds of billions of dollars in government revenue. The high court granted the Trump administration's request to both take the appeal and consider it on an accelerated schedule. The court’s order gave both sides until Sept. 19 to file their initial briefs, with oral arguments set for the first week of the November session.”

September 7 – Axios (Ben Berkowitz): “The U.S. Treasury would have to refund about half the tariffs collected since President Trump took office if the Supreme Court rules they were imposed illegally, Treasury Secretary Scott Bessent said… That could put the government on the hook for tens of billions of dollars in refunds, a prospect that has scared bond market investors in recent days. Two courts have ruled Trump lacked the authority to impose most of the tariffs he's put in place. The government has requested that the Supreme Court hear an appeal as early as November. Economists estimate about 71% of Trump's tariff revenue would be subject to that ruling, or more than $70 billion already this calendar year. ‘So we would have to give a refund on about half the tariffs, which would be terrible for the Treasury,’ Bessent told NBC’s ‘Meet the Press’…”

September 12 – Reuters (Jarrett Renshaw and Andy Sullivan): “U.S. President Donald Trump said on Friday that he would send National Guard troops to Memphis, Tennessee, to combat crime, following his administration's unprecedented police takeover in Washington, D.C. last month. Trump has sought to make crime a central issue even as violent crime rates have fallen in many cities. His crackdown on Democratic-led municipalities has spurred protests, including a demonstration by several thousand people in Washington last weekend.”

September 8 – Bloomberg (Greg Stohr): “US Chief Justice John Roberts let President Donald Trump temporarily oust a Democratic member of the Federal Trade Commission, signaling that the Supreme Court is likely to back Trump’s bid to assert control over the independent agency. Rebecca Kelly Slaughter, the FTC’s only Democrat, had briefly returned to her job after a federal appeals court ruling in her favor last week. Roberts’ order, which came with no explanation, nullifies that decision at least until the full Supreme Court decides how to handle the case.”

Budget Watch:

September 11 – Bloomberg (Daniel Flatley): “US tariff revenue hit a new monthly record in August…, though that still left the federal government with the third-biggest deficit on record so far this fiscal year. Customs duties climbed to $30 billion last month… At the same time, the monthly budget deficit came in at $345 billion. August’s deficit was 15% wider than the same month the year before after accounting for calendar differences… For all the surge in revenue, however, the total budget gap for the fiscal year through August came in at $1.973 trillion, Thursday’s report showed. That’s only surpassed by 2020 and 2021, a senior Treasury official said on a call with reporters — a time when the US was spending extraordinary amounts to cope with the Covid crisis.”

September 11 – Bloomberg (Erik Wasson and Steven T. Dennis): “Republicans are moving forward with a plan to fund the government past an Oct. 1 deadline without making concessions to Democrats demanding health-care policy changes, setting up a standoff that risks a chaotic shutdown. The gambit to brush off Democrats, whose votes are needed in the Senate to pass the funding legislation, also lowers the chances of a deal to avert a large increase in Obamacare premiums that will affect millions of Americans starting Jan. 1. Senate Democratic leader Chuck Schumer has demanded any funding measure address Democratic priorities like the Obamacare premiums, a move that Senate Majority Leader John Thune disparaged as ‘odd.’ Thune is betting there are enough moderate Democrats who will break ranks to avoid a shutdown.”

U.S./Russia/China/Europe/Iran Watch:

September 9 – Financial Times (Samantha Pearson): “Nato fighter jets have shot down Russian drones over Polish airspace for the first time, after what Warsaw described as an ‘unprecedented violation’ of its territory that prompted the alliance to hold emergency consultations. The operation in the early hours of Wednesday, during a massive Russian attack on Ukraine, involved Dutch and Polish fighter jets, while German Patriot missiles were put on alert and an Italian early warning aircraft provided support. Nato secretary-general Mark Rutte said the incursion was ‘not an isolated incident’, adding that the alliance was ‘resolved to defend every inch of allied territory’. It marks the most serious clash between Russia and the US-led military alliance since the start of Moscow’s full-blown war against Ukraine in February 2022.”

September 12 – Associated Press (Claudia Ciobanu): “NATO said Friday it’s bulking up its defensive posture on its eastern flank bordering Belarus, Russia and Ukraine with new equipment to deter potential Russian aggression following an incursion by Russian drones into Polish territory. The alliance’s supreme commander in Europe said a new operation, dubbed Eastern Sentry, will add equipment from France, Denmark, Germany and the U.K. to its existing air and ground-based defenses. ‘The key to this is an entirely new defense design,’ U.S. Gen. Alexus Grynkewich told reporters at the alliance’s Brussels headquarters. French Rafale fighter jets, Danish F-16s, a frigate and ground-based defense systems have been pledged for the operation.”

September 10 – Bloomberg (Natalia Drozdiak, Andrea Palasciano, Maciej Martewicz, and Ellen Milligan): “Poland has asked allies for additional air defense systems and counter-drone technology to better protect its land from Russian incursions, according to people familiar with the matter. The request came after the NATO and European Union member shot down drones that crossed into its territory during Russia’s latest massive air strike on Ukraine, the first such response since the full-scale invasion began more than three and a half years ago.”

September 12 – Reuters (Mark Trevelyan): “Russia and Belarus began a major joint military exercise on NATO's doorstep on Friday at a time of heightened tension with the Western alliance, two days after Poland shot down Russian drones that crossed into its airspace. The ‘Zapad-2025’ exercise, a show of force by Russia and its close ally Belarus, is taking place at training grounds in both countries, including close to the Polish border.”

September 10 – Politico (Nette Nostlinger): “German Chancellor Friedrich Merz said the Kremlin deliberately provoked NATO by sending Russian drones into Polish airspace. The incident showed that Europe's air defenses need to improve, he said. ‘This completely reckless action by the Russian government is part of a long series of provocations that we have been seeing for months in the Baltic region and on NATO's eastern flank as a whole,’ said Merz... ‘This is a very serious threat to peace in Europe.’”

September 7 – Financial Times (Cheng Leng): “China is preparing to reopen its domestic bond market to major Russian energy companies, in a shift of policy that reflects deepening diplomatic and economic ties between Beijing and Moscow. Two people familiar… said senior Chinese financial regulators told top Russian energy executives at a late August meeting in China’s southern city of Guangzhou that they would support their companies’ plans to sell renminbi ‘panda bonds’. Such borrowing would be the first Russian corporate fundraising in mainland China since Moscow’s full-scale invasion of Ukraine in 2022 and the first Russian debt sold on China’s public onshore market since state aluminium producer Rusal’s panda bond issue raised a total Rmb1.5bn ($210mn) in 2017.”

September 7 – Wall Street Journal (Joel Schectman): “As the Trump administration’s contentious trade talks with China were set to begin in Sweden last July, staffers on the House committee focused on U.S. competition with China began to get puzzling inquiries… Several trade groups, law firms and U.S. government agencies had all received an email appearing to be from the committee’s chairman, Rep. John Moolenaar (R., Mich.), asking for input on proposed sanctions with which the legislators were planning to target Beijing. ‘Your insights are essential,’ the email read, asking the groups to review a draft of the legislation attached to the message. But why had the chairman sent the message from a nongovernment address? It turned out to be the latest in a series of alleged cyber espionage campaigns linked to Beijing…”

New World Order Watch:

September 8 – Reuters (Lisandra Paraguassu, Yukun Zhang and Sudipto Ganguly): “Brazilian President Luiz Inacio Lula da Silva said… more trade and financial integration among the BRICS group of developing nations would help mitigate the effects of protectionism. ‘Tariff blackmail is being normalized as a tool for conquering markets and interfering in domestic issues,’ Lula said in… a Monday virtual meeting of BRICS leaders…”

Ukraine Watch:

September 9 – Associated Press (Hanna Arhirova and Illia Novikov): “A Russian glide bomb struck a village in eastern Ukraine as people stood in line in the open air Tuesday morning to collect their monthly pension. The blast killed at least 24 people and injured 19 others, the Ukraine Emergency Service said.”

September 7 – Financial Times (Ben Hall and Christopher Miller): “Russian forces launched the largest mass aerial attack on Ukraine since their full-scale invasion, firing more than 800 drones and a dozen missiles at targets across the country. A building housing the cabinet of ministers in central Kyiv was struck for the first time during the war, a rare hit on a government building that foreign minister Andriy Sybiha called ‘a serious escalation’. Two high-rise residential buildings were also damaged.”

September 10 – Wall Street Journal (Editorial Board): “President Trump thought he could negotiate peace in Ukraine with his friend Vladimir Putin, and perhaps it was worth a shot. Yet the Russian has offered nothing but brutal escalation for eight months, and now he is taunting Mr. Trump and NATO by flying drones into Poland. Your move, Mr. President. An estimated 19 Russian drones violated Polish airspace on Tuesday night, and North Atlantic Treaty Organization allied assets from Patriots to F-16s scrambled to take down the projectiles. NATO Secretary-General Mark Rutte called the drone foray ‘absolutely reckless’ and ‘not an isolated incident.’ That many incursions can’t be explained by incompetence or bad directions.”

September 8 – Financial Times (Christopher Miller): “Ukraine is at risk of shortages of air defence weapons after a US defence department review of military aid resulted in slower deliveries just as Moscow intensifies air attacks, according to western and Ukrainian officials. Pressure on supplies has become more acute after months of irregular and smaller than expected shipments since a Pentagon directive in June. Officials and analysts warned that if Moscow keeps escalating or just sustains its higher tempo of missile and drone attacks, Ukrainian air defence units will face shortfalls. ‘It’s a question of time for when munitions run out,’ said a person familiar with US deliveries of air defence materiel to Ukraine.”

Middle East Watch:

September 9 – Wall Street Journal (Dov Lieber, Summer Said and Lara Seligma): “Hamas’s senior leaders—long hiding in host countries across the Middle East—flew this past weekend to the group’s headquarters in the Qatari capital of Doha. On the agenda: a new U.S. cease-fire plan for Gaza, apparently with Israeli backing. Israel had pledged to track down and kill every Hamas member involved in the Oct. 7, 2023, attacks that left 1,200 Israelis dead and some 250 hostages taken, but hitting them in Qatar, a Gulf ally of the U.S., was off limits. Now, Israeli officials had a shot and decided no taboo would stop them from taking it—even at the risk of straining relations with the Trump administration. By noon Tuesday, Prime Minister Benjamin Netanyahu had given the green light for an audacious attack on Qatari soil, targeting a residence used by Hamas figures in the dusty northern suburbs of Doha—the same place where the militant group’s leaders celebrated the Oct. 7 attacks. More than 10 Israeli jet fighters fired long-range munitions at the house, causing explosions heard across the capital.”

September 7 – Associated Press (Jon Gambrell): “Undersea cable cuts in the Red Sea disrupted internet access in parts of Asia and the Middle East, experts said Sunday, though it wasn’t immediately clear what caused the incident. There has been concern about the cables being targeted in a Red Sea campaign by Yemen’s Houthi rebels, which the rebels describe as an effort to pressure Israel to end its war on Hamas in the Gaza Strip. But the Houthis have denied attacking the lines in the past.”

AI Bubble Watch:

September 9 – Financial Times (Katie Martin): “For evidence of froth in financial markets right now, look no further than our trusty friend, crypto. The seemingly unstoppable rise of this most speculative of assets — for want of a better word — this week reached new extremes with the quirky tale of Eightco Holdings. This time last week, Eightco Holdings was just a rinky-dink corrugated packaging and ecommerce inventory management company. On Monday, however, it announced plans to refocus its efforts away from packaging and on to borrowing money to buy crypto tokens linked to the eyeball-scanning technology championed by OpenAI’s Sam Altman. Questions like ‘why?’, ‘what are these tokens for?’ and ‘who would scan their eyeballs for Silicon Valley magnates?’ are, seemingly, for squares. Markets did not wait to find out — the stock rocketed more than 5,000 per cent higher before settling down to ‘just’ a 3,000% gain on the day after what the company described as a ‘first-of-its-kind’ initiative.”

September 9 – Axios (Scott Rosenberg): “Tech giants' astronomical spending on AI infrastructure comes with a colossal hedge: In a crucial way, it's not really spending on AI at all. Most of the hundreds of billions of dollars in AI-related capital investment today is going into computing power, hardware and buildings — assets that will retain real value even if AI itself never pays off. Of course everyone in the AI race — Microsoft, Google, their giant rivals and their startup challengers — views AI as the industry's next big platform and believes it will keep getting more useful and lucrative. But if or when the current investing frenzy subsides, or even if there’s a big AI bust, a company that built a giant data center for AI still has a giant data center. That’s why no one in Silicon Valley is terribly worried about the risk of overbuilding.”

September 9 – Financial Times (Hannah Kuchler and Melissa Heikkilä): “In the mid-2010s, a spate of start-ups hoping to transform the laborious process of finding new drugs launched with big promises. Artificial intelligence would dramatically reduce the time it took to discover new medicines and cut the average of $2bn it takes to develop a drug. The emerging businesses attracted the attention of Big Pharma companies such as Bristol Myers Squibb and Sanofi, which signed deals worth billions of dollars pending the drugs’ eventual approval. Press releases boasted of ‘breakthrough productivity gains’ and ‘groundbreaking research collaborations’. But now, sceptics are asking: where are the drugs? It has been longer than the average 10 years that it takes to discover and develop a medicine, yet there are few AI-discovered candidates in late-stage clinical trials, and not one has been approved. Despite pledging to cut the industry’s high failure rate, many of the companies’ initial studies flopped.”

September 8 – Bloomberg (Angus Whitley): “Artificial intelligence-powered chatbots that encourage suicide or hold sexually explicit conversations pose a ‘clear and present danger’ to children, Australia’s online safety regulator said, as it rolled out new rules governing the services. The measures are the latest in a series of stringent digital restrictions in Australia, including a world-first social media ban for under-16s… Australia’s eSafety Commissioner Julie Inman Grant said children are being exposed to ‘awful’ age-inappropriate content at an increasingly young age. Inman Grant said she’d heard of 10-year-olds engaging sexually with the artificial companions, which are mostly unregulated.”

September 7 – Bloomberg (Emma Ockerman): “Northern Virginia’s energy-hungry data center juggernaut shoulders roughly 70% of the world’s internet traffic. Behind that buildout is an army of blue-collar electrical workers. ‘Forty-five to 70% of construction of a data center is electrical,’ said Joe Dabbs, the former business manager for the International Brotherhood of Electrical Workers Local 26, the union representing 12,500 electricians in Washington, D.C., Maryland, and Virginia. ‘The teledata portion, the fiber optic portion, the power and power distribution … all the gear work — that’s us. We build all of that stuff.’ Electricians are also needed for maintenance and changing out equipment, Dabbs said, meaning the local union has ‘people in data centers around the clock, 24/7.’ And the demand for workers keeps rolling in — making it a good time to be an electrician in America, where experienced workers can earn over six figures.”

September 11 – Bloomberg (Gao Yuan): “China should develop chips to create AI that doesn’t rely on the type of accelerators popularized by Nvidia Corp., a top government adviser said, warning that Asian companies in particular risk becoming beholden to US technology. Asian nations including China should reduce their dependence on the general-purpose graphics processing units now used around the world to train platforms from ChatGPT to DeepSeek, Wei Shaojun, a professor at Beijing-based Tsinghua University, told a forum… ‘It’s unfortunate to see that we in Asia, including China, are emulating the US when it comes to developing algorithms and large models,’ said Wei, who as an academic has advised senior Chinese government officials for years. Continuing down that path could be ‘lethal’ for the region, he added.”

Bubble and Mania Watch:

September 10 – Reuters (Ateev Bhandari): “Goldman Sachs is set to see its busiest week for initial public offerings since July 2021, its CEO David Solomon said… His comments come after the Swedish buy-now, pay-later lender Klarna made its long-awaited New York debut earlier in the day, setting the stage for more IPOs from fintech hopefuls. ‘This week, we will do more IPOs and have more IPO activity at Goldman Sachs than we've had since July 2021,’ he said. Rallying equity markets and bumper first-day performances from high growth tech-focused stocks have revived investor confidence in new issues, which had plummeted in April after sweeping U.S. tariffs roiled global markets.”

September 11 – New York Times (Michael J. de la Merced): “After years of trying, the financial payment company Klarna has gone public, a sign that investors are ready to embrace initial public offerings again after a yearslong lull. Klarna, best known for its buy-now-pay-later loans, is now worth more than $17 billion, after its shares rose 14% in their trading debut on Wednesday. New listings are regarded as a sign of the health of stock markets and investors’ willingness to take on risks like buying into newly public companies. About 146 companies went public this year, according to the research and investment firm Renaissance Capital, up nearly 54 percent from last year — and double the lows of 2022.”

September 12 – Financial Times (Robin Wigglesworth and Costas Mourselas): “ARK Invest’s flagship fund has abruptly ballooned by $3.5bn ahead of the initial public offering of payments company Klarna, echoing a similar phenomenon around last month’s flotation of cryptocurrency exchange Bullish. The assets of the ARK Innovation ETF — an exchange traded fund managed by the investment manager’s head Cathie Wood — have jumped from $7.3bn at the start of the week to $10.8bn at the end of Thursday…”

Inflation Watch:

September 11 – Associated Press (Christopher Rugaber): “Inflation rose last month as the price of gas, groceries, and airfares jumped, while a measure of layoffs also increased… Consumer prices increased 2.9% in August from a year earlier…, up from 2.7% the previous month and the biggest increase since January. Excluding the volatile food and energy categories, core prices rose 3.1%, the same as in July… On a monthly basis, overall inflation accelerated, as prices rose 0.4% from July to August, faster than the 0.2% pace the previous month. Core prices rose 0.3% for the second straight month. Gas prices jumped 1.9% just from July to August, the biggest monthly increase since a 4% rise in December. Grocery prices climbed 0.6%, pushed higher by more expensive tomatoes, apples, and beef. The cost of travel soared, with air fares rising 5.9% just from July to August and hotel room prices rising 2.3%. Rental costs also increased, rising 0.4%, faster than the previous month.”

September 10 – CNBC (Jeff Cox): “Wholesale prices surprisingly fell slightly in August, providing breathing room for the Federal Reserve to approve an interest rate cut at its meeting this month… The producer price index… dropped 0.1% for the month, after a downwardly revised 0.7% increase in July and well off the… estimate for a 0.3% rise. On a 12-month basis, the headline PPI saw a 2.6% gain. The core PPI, which excludes volatile food and energy prices, also was off 0.1% after being expected to climb 0.3% as well. Excluding food, energy and trade, the PPI posted a 0.3% gain and was up 2.8% from a year ago… Services prices, a key metric for the Fed when evaluating the stance of monetary policy, posted a 0.2% drop… A 1.7% slide in prices for trade services was the primary impetus, with margins for machinery and vehicle wholesaling tumbling 3.9%. Goods prices did increase, but just 0.1% as core prices rose 0.3%.”

September 10 – Wall Street Journal (Anna Wilde Mathews): “U.S. businesses are facing the biggest health-insurance cost increases in at least 15 years, after already-steep boosts in recent years that have pushed the annual expense for family coverage high enough to equal the price of a small car. Costs for employer coverage are expected to surge about 9.5% in 2026, according to an estimate from Aon, while an employer survey by WTW suggested 9.2%. Both benefits-consulting firms’ projections, which were provided exclusively to The Wall Street Journal, would represent the fastest rate of increase since at least 2011… ‘It’s an unsustainable number for a lot of employers,’ said Shawn Gremminger, chief executive of the National Alliance of Healthcare Purchaser Coalitions… The reaction from employers to the increases ‘ranges between upset, shocked, freaked-out and resigned,’ he said.”

Federal Reserve Watch:

September 12 – Reuters (Chris Prentice and Marisa Taylor): “A loan estimate for an Atlanta home purchased by Lisa Cook, the Federal Reserve governor accused of mortgage fraud by the Trump administration, shows that Cook had declared the property as a ‘vacation home,’ according to a document reviewed by Reuters. The document, dated May 28, 2021, was issued to Cook by her credit union in the weeks before she completed the purchase and shows that she had told the lender that the Atlanta property wouldn’t be her primary residence. The document appears to counter other documentation that Cook’s critics have cited in support of their claims that she committed mortgage fraud by reporting two different homes as her primary residence, two independent real-estate experts said.”

September 10 – Wall Street Journal (Nick Timiraos): “President Trump’s unprecedented bid to wrest greater control of the Federal Reserve barreled toward a suspense-filled conclusion Wednesday amid two parallel efforts to decide who will be able to participate at next week’s interest-rate meeting. Late Tuesday, a federal judge granted Fed governor Lisa Cook an injunction that temporarily halted Trump’s attempt to remove her. The decision was a crucial legal victory for Cook—and the central bank’s independence more broadly—because it allows her to remain in her job, at least for now. It clears the path for her to vote at a consequential Fed meeting next week, when officials are expected to make their first interest-rate cut of the year. On Wednesday morning, attention shifted to the Senate Banking Committee, where Republicans rushed to confirm a Trump adviser, Stephen Miran, to fill a separate vacancy on the Fed’s board, setting up the possibility of a Senate floor vote as soon as this week that would allow him to join the same meeting.”

September 11 – CNBC (Jeff Cox): “The search for the next Federal Reserve chair is continuing, with Treasury Secretary Scott Bessent taking point in meeting with several candidates on President Donald Trump’s short list. In recent days, Bessent has met with former Fed officials Lawrence Lindsey, Kevin Warsh and James Bullard, a Treasury source told CNBC’s Steve Liesman. Lindsey and Warsh both served as governors, and Bullard was president of the St. Louis Fed.”

September 12 – Bloomberg (Saleha Mohsin): “BlackRock Inc. executive Rick Rieder is rising up the list of contenders to serve as the next chair of the Federal Reserve after Jerome Powell’s term expires in May, according to an administration official. In a wide-ranging interview that lasted for two hours on Friday in New York, Treasury Secretary Scott Bessent and Rieder discussed monetary policy, the Fed’s organizational structure and regulatory policy, said the person…”

September 8 – Bloomberg (Sridhar Natarajan): “Goldman Sachs… Chief Executive Officer David Solomon signaled there’s no need for the Federal Reserve to rapidly cut interest rates, diverging from the Trump administration’s pressure on the central bank to loosen monetary policy. ‘It just doesn’t feel to me like the policy rate is extraordinarily restrictive when you look at risk appetite,’ Solomon said… Investor enthusiasm in markets currently is at the exuberant end of the spectrum, he said.”

U.S. Economic Bubble Watch:

September 9 – Associated Press (Christopher Rugaber): “The income for the typical U.S. household barely rose last year and essentially matched its 2019 peak, the Census Bureau said…, a stark illustration of the impact that the pandemic inflation spike had on Americans’ finances. The report also showed that the highest-earning households received healthy inflation-adjusted income increases, while middle- and lower-income households saw little gain. Median household income, adjusted for inflation, in 2024 was $83,730…, a 1.3% increase from the previous year’s level of $82,690… The figures help illustrate why many Americans have been dissatisfied with the economy since the pandemic, even as unemployment has been historically low: Median household incomes are essentially unchanged from five years earlier, the report showed.”

September 9 – Reuters (Lucia Mutikani): “U.S. small-business sentiment improved further in August amid expectations for higher sales, but worries about the quality of available labor lingered. The National Federation of Independent Business said… its Small Business Optimism Index increased 0.5 point to 100.8 last month. The share of business owners expecting higher sales rose six points to 12%. The survey’s uncertainty index dropped four points to 93, but stayed well above the historical average. ‘While owners have cited an improvement in overall business health, labor quality remained the top issue on Main Street,’ said NFIB Chief Economist Bill Dunkelberg. Economists say an immigration crackdown by President Donald Trump's administration has reduced the pool of workers, contributing to a stagnation in job growth. The NFIB said 32% of owners reported job openings they could not fill in August, noting that the last time unfilled job openings fell below 32% was in July 2020.”

September 11 – Associated Press (Matt Ott): “In another grim sign for the U.S. labor market, jobless claim applications jumped to their highest level in almost four years last week… The number of Americans filing for unemployment benefits for the week ending Sept. 6 rose by 27,000 to 263,000… That’s the most applications since the week of Oct. 23, 2021 and well above the 231,000 new applications economists forecast. It’s also the biggest week-to-week increase in almost a year.”

September 9 – Associated Press (Paul Wiseman): “The U.S. job market was much weaker in 2024 and early this year than originally reported, adding to concerns about the health of the nation’s economy. Employers added 911,000 fewer jobs than originally reported in the year that ended in March 2025… The department issues the so-called benchmark revisions every year. They are intended to better account for new businesses and ones that had gone out of business. The numbers issued Tuesday are preliminary. Final revisions will come out in February 2026. The revision showed that leisure and hospitality firms — including hotels and restaurants — added 176,000 fewer jobs than originally reported, professional and business services companies 158,000 fewer and retailers 126,000 fewer.”

September 9 – Bloomberg (Samantha Delouya): “Buying a home has become increasingly pricey in the past few years. Now, Zillow has put a staggering number to those higher costs: America’s housing market has climbed 57% since 2020, to a record $55 trillion. That means that in just five years, the US housing market’s value has climbed $20 trillion, according to… the real estate company… New York added $216 billion in value over the last year, more than any other state. New Jersey, Illinois and Pennsylvania were close behind. ‘Demand continues to outpace supply in the Northeast,’ Orphe Divounguy, a senior economist at Zillow, said. ‘When you look at housing inventory in New York, there are only half as many homes for sale as there were before the pandemic. So you have the value of the existing housing stock really rising a lot in that market.’”

September 8 – Bloomberg (Nazmul Ahasan): “US consumer borrowing rose in July by most in three months, led by the strongest gain in credit-card balances this year. Total credit outstanding climbed $16 billion after a revised $9.6 billion gain in June… The median projection in a Bloomberg survey of economists called for a $10.4 billion rise. Revolving debt, which includes credit cards, jumped $10.5 billion. Non-revolving credit, such as loans for autos and education, increased $5.5 billion.”

September 10 – CNBC (Diana Olick): “A sharp drop in mortgage interest rates finally got some homebuyers off the fence. It also helped more current homeowners save on their monthly payments. Total mortgage application volume jumped 9.2% last week compared with the previous week… As a result, applications to refinance a home loan jumped 12% for the week and were 34% higher than the same week one year ago… Applications for a mortgage to purchase a home rose 7% for the week and were 23% higher than the same week one year ago. This is the highest level since July.”

September 8 – Bloomberg (Gerson Freitas Jr.): “The US agricultural trade deficit widened further in July, highlighting the challenge facing President Donald Trump as he vows to reverse the trend. Agricultural exports lagged imports by $4.97 billion in July, a gap 9% wider than a year earlier and the largest on record for the month. That pushed the sector’s deficit to an unprecedented $33.6 billion for the first seven months of the year…”

September 10 – Bloomberg (Sridhar Natarajan): “Jamie Dimon said the Bureau of Labor Statistics’ record revision to US payrolls data is further proof that the US economy is battling a slowdown. ‘The economy is weakening,’ the JPMorgan… chief executive officer said… ‘Whether that is on the way to recession or just weakening, I don’t know.’”

China Watch:

September 8 – Bloomberg: “China’s export growth slowed to the weakest in six months as a slump in shipments to the US deepened again, although a surge in sales to other markets kept Beijing on track for a record trade surplus of over $1.2 trillion this year. Overall sales abroad rose 4.4% in August from a year earlier to $322 billion… Exports to the US fell 33%, the fifth month of double-digit declines. ‘The story is still that the tariff shock can be offset by a more diversified market and strength in manufacturing goods for China,’ said Michelle Lam, Greater China economist at Societe Generale SA. ‘Over the coming quarters, we should see some gradual slowdown further as US demand slows. But the impact should be milder than we initially envisaged.’”

September 10 – Bloomberg: “China is preparing to tackle the significant backlog of unpaid bills owed by local governments to the private sector, according to people familiar…, an amount of arrears some have estimated at over $1 trillion. The government is considering asking state lenders and policy banks including China Development Bank to lend to local authorities so they can make the payments in arrears, the people said, asking not to be named because the matter is private. The amount of money under discussion would plug at least 1 trillion yuan ($140bn) of debt owed to private companies in the first phase of a longer-term initiative…”

September 9 – Bloomberg: “China’s factory deflation eased for the first time in six months even as consumer prices slipped below zero again, leaving open the question of whether the government will make a lasting difference with its campaign to ease overcapacity across the economy. The producer-price index decreased 2.9% in August from a year earlier… remaining in negative territory for the 35th straight month but narrowing its decline from July’s 3.6% drop. In month-on-month terms, output prices in some upstream sectors such as the mining and processing of metals rose for the first time in months.”

September 10 – Financial Times (William Sandlund): “Chinese government bond yields have climbed to their highest since November as investors shift into equities on expectations that the world’s second-largest economy can move past its deflationary pressures. Yields on 30-year Chinese government bonds rose 0.08 percentage points on Wednesday to 2.21%. Ten-year yields rose 0.03 percentage points to 1.82%, their highest level since just before US President Donald Trump’s ‘liberation day’ tariff announcement in April…”

Central Banker Watch:

September 11 – Associated Press (David McHugh): “The European Central Bank left interest rates unchanged… with inflation back under control and the economy weathering Trump’s tariff onslaught better than expected. The bank’s rate-setting council left its benchmark deposit rate unchanged at 2%... The focus in Europe has shifted to the fiscal crisis in France and any possible role for the ECB in containing potential market turmoil that could erupt from the country’s out-of-control deficit and political logjam. Bank President Christine Lagarde said after the rate decision that monetary policy was ‘in a good place’ and that decisions are being made ‘meeting by meeting,’ She gave no hint of future moves, saying the bank is ‘not on a predetermined path.’”

France/Europe Watch:

September 9 – Politico (Clea Caulcutt): “President Emmanuel Macron’s escape route out of the political and economic crisis gripping France now looks almost impossibly narrow. On Monday, his key ally, Prime Minister François Bayrou, was toppled in a bloodbath of a no-confidence vote, with 364 lawmakers voting to oust him and only 194 coming out in support… Macron is now squarely in the line of public fire, ahead of threats of a national shutdown on Sept. 10 and major protests planned by trade unions on Sept. 18. The president’s popularity has dropped to an all-time low, with polls showing he is more unpopular today than at the peak of the Yellow Jacket protests in 2018 and 2019, one of the gravest crises of his tenure.”

September 8 – Associated Press (John Leicester): “Legislators toppled France’s government in a confidence vote on Monday, a new crisis for Europe’s second-largest economy that obliges President Emmanuel Macron to search for a fourth prime minister in 12 months. Prime Minister François Bayrou was ousted overwhelmingly in a 364-194 vote against him. Bayrou paid the price for what appeared to be a staggering political miscalculation, gambling that lawmakers would back his view that France must slash public spending to rein in its debts. Instead, they seized on the vote that Bayrou called to gang up against the 74-year-old centrist who was appointed by Macron last December.”

September 9 – Financial Times (Leila Abboud and Sarah White): “French President Emmanuel Macron has appointed defence minister Sébastien Lecornu as his new prime minister, turning to one of his closest allies to try to quell political turmoil in the country… Lecornu, 39, is the only minister to have served continuously in all Macron’s governments since the president was first elected in 2017. A former army reservist and career politician, Lecornu is the youngest defence minister in French history and has played a key role in Macron’s efforts to build up the military and respond to Russia’s war in Ukraine.”

September 10 – Reuters (Stephane Mahe and Juliette Jabkhiro): “Protesters across France obstructed highways, burned barricades and clashed sporadically with police on Wednesday in a show of anger against President Emmanuel Macron, the political elite and planned spending cuts. Authorities deployed more than 80,000 security personnel across the country, removing barriers and spraying water hoses at demonstrators as tensions flared in several places… The ‘Block Everything’ movement - a broad expression of discontent that has spread on social media - sprang up online in May among right-wing groups but has since been co-opted by the left and far-left.”

Japan Watch:

September 8 – Financial Times (Leo Lewis): “Japan’s Prime Minister Shigeru Ishiba had vowed to ‘restore the smiles’ to a nation suffering under economic, demographic and geopolitical strains when he took office. But faced with the challenge of an unpredictable US president and a rising populist challenge at home, that ambition went unrealised. Ishiba announced his resignation on Sunday following a surge in living costs and two disastrous election setbacks in just 10 months. ‘I don’t think he did anything that would be memorable for ordinary Japanese, let alone something worth smiling about,’ said Koichi Nakano, a political scientist at Sophia University. On the face of it, Ishiba’s brief tenure fits a familiar pattern. Japan has had 18 prime ministers since 1990, of whom 11 have lasted roughly one year.”

EM Watch:

September 8 – Wall Street Journal (Ryan Dubé and Kejal Vyas): “Argentina’s markets tumbled Monday after President Javier Milei’s party suffered a setback in a provincial election that raised questions about support for his pro-market overhauls. The peso traded about 4% weaker at 1,423 a dollar after closing Friday at 1,365. Shares of Argentine companies that trade in New York also fell. Banking companies Grupo Financiero Galicia and Grupo Supervielle were both down more than 18%, while oil company YPF fell 14%. The price of Argentina’s benchmark 4.125% bond due in 2035 dropped about 10% Monday morning to 55 cents on the dollar, according to data from MarketAxess. The yield rose to 15%, a level that likely discourages new bond issuance because of the cost. Milei’s Freedom Advances party received about 34% of the vote in the legislative elections in Buenos Aires province, home to nearly half of Argentina’s population. His left-wing Peronist opponents received 47% of the vote in what has long been their stronghold. Sunday’s vote was seen as a bellwether for popular support for Milei’s free-market policies ahead of national congressional elections in October.”

September 9 – Wall Street Journal (Samantha Pearson): “The plot was code-named Green and Yellow Dagger and is central to a Supreme Court decision this week over whether to convict Jair Bolsonaro of trying to stage a coup and stay in power as Brazilian president. It was, prosecutors allege, a plan to assassinate his political rivals. Masterminded in late 2022 by an army general in Bolsonaro’s government, the alleged scheme laid out ways to kill President Luiz Inácio Lula da Silva, Vice President Geraldo Alckmin and Supreme Court Justice Alexandre de Moraes. The justice will be one of those deciding Bolsonaro’s fate. Reading more like the script of a Hollywood thriller than a government dossier from one of the world’s largest democracies, the alleged plan lists a menu of methods that range from poisoning Bolsonaro’s rivals to blowing them up with grenades. ‘I have to be very thankful to be alive!’ da Silva quipped after police said they had unearthed the scheme as part of their two-year investigation into the coup attempt.”

September 10 – Reuters (Ricardo Brito and Luciana Novaes Magalhaes): “Two Brazilian Supreme Court justices… voted to convict former President Jair Bolsonaro of leading a criminal conspiracy to overturn the 2022 election, as they cast the first votes in the final phase of the ex-president's trial. The five-judge panel is now one vote away from a majority convicting Bolsonaro of orchestrating an attempted coup to remain in power after his 2022 electoral defeat to leftist President Luiz Inacio Lula da Silva.”

September 11 – Bloomberg (Daniel Carvalho): “Brazil’s Supreme Court sentenced Jair Bolsonaro to 27 years and three months in prison for plotting a coup after his 2022 election defeat, making him the first former president convicted of such a crime in a nation long scarred by successful and failed power grabs. The sentence was decided… by a panel of five justices who oversaw the case. Four of them voted in favor of Bolsonaro’s conviction on charges that he sought to cling to power by plotting a military coup that included plans to assassinate President Luiz Inacio Lula da Silva.”

September 9 – Wall Street Journal (Ying Xian Wong and Amanda Lee): “The ousting of Indonesia’s finance minister has rattled local markets, sending equities and the rupiah lower as investors worry about political pressure on fiscal and monetary policy. The benchmark Jakarta Composite Index fell as much as 1.8% on Tuesday, extending losses after President Prabowo Subianto removed Finance Minister Sri Mulyani Indrawati—long seen as the country’s fiscal guardian—in a cabinet shuffle on Monday… The move comes at a delicate time, with Indonesia rocked by protests against economic hardships and anger over proposed perks for politicians.”

Social, Political, Environmental, Cybersecurity Instability Watch:

September 9 – Wall Street Journal (Matt Barnum): “American high-school seniors’ scores on major math and reading tests fell to their lowest levels on record, according to… the U.S. Education Department. Twelfth-graders’ average math score was the worst since the current test began in 2005, and reading was below any point since that assessment started in 1992. The share of 12th-graders who were proficient slid by 2 percentage points between 2019 and 2024—to 35% in reading and 22% in math. There also were drops in the proportion of students who were able to reach at least a basic level of performance, a tier below proficiency.”

September 10 – Wall Street Journal (Richard Rubin): “U.S. population growth will slow to a crawl over the next few decades as fertility rates decline and net immigration shrinks because of stricter enforcement, the Congressional Budget Office said… Deaths are now projected to exceed births in 2031. Just eight months ago, CBO had projected that threshold wouldn’t be crossed until 2033. By 2055, the U.S. population will be about 367 million, up from 350 million today. In January, CBO had projected a 2055 population of 372 million. From 1975 through 2024, U.S. population growth averaged 0.9% annually. By the early 2050s… population growth will effectively be zero.”

September 8 – Financial Times (Kenza Bryan and Jana Tauschinski): “The north Pacific and northern Atlantic seas to the west of France and the UK are hotter than they have ever been, in what scientists say could be a knock-on effect of heat stored during the past two years of global record temperatures. The EU’s Earth observation service Copernicus said sea surface temperatures in August had reached record highs in those parts of the oceans in the northern hemisphere during the peak of summer. This is despite the global average temperature in August being the third highest on record for the month, at 20.82C for the sea surface excluding polar regions and 16.6C on land.”

Geopolitical Watch:

September 9 – Bloomberg (Magdalena Del Valle): “United Nations Secretary-General Antonio Guterres decried the rise in global military spending to a record high, saying that priorities like child malnutrition, poverty and climate change were being neglected. ‘The evidence is clear: Excessive military spending does not guarantee peace,’ Guterres told reporters… ‘It often undermines it – fueling arms races, deepening mistrust, and diverting resources from the very foundations of stability.’”