Wall Street received the cut they beckoned for. Job growth has slowed meaningfully, while inflation remains significantly above target. As Chair Powell put it: “So we have a situation where we have two-sided risk, and that means there’s no risk-free path. And, so, it’s quite a difficult situation for policymakers.”
History may not repeat, but it’s that rhyming thing. Parallels to the culmination of the “Roaring Twenties” are as fascinating as they are unnerving. Revisionists (i.e., Milton Friedman and Ben Bernanke) have argued that the Fed’s overly restrictive rate policy was a defining contributor to the economic downturn and 1929 crash. Contemporaneous analyses and commentary share a very different experience. Credit growth and speculative excess pointed to destabilizing late cycle loose conditions. Fed officials were understandably mindful that easier monetary policy would only stoke precarious financial excess.
My analytical framework is unequivocal: prolonging “Terminal Phase” excess is today a much greater risk to system (i.e., market, financial, economic, social, political, geopolitical) stability than higher unemployment and/or consumer price inflation. The Fed erred with late last year’s Bubble-stoking 100 bps of cuts. It miscalculated again this week, further loosening monetary policy despite a backdrop of precariously loose conditions and market excess.
For the record, the Fed cut rates with the S&P500 trading at record highs, with a price/earnings (P/E) ratio of 25.3. Also at all-time highs, the NASDAQ100 trades with a 32.7 P/E (“MAG7” P/E 37.22). Surging to an all-time high this week, the small cap Russell 2000 sports a P/E of 34.72. Indicative of the intensity of speculative excess, the Goldman Sachs Most Short Index surged 12% in seven sessions.
September 14 – Bloomberg (Paul J. Davies): “‘This is one of my new phrases,’ Dan Simkowitz, co-president of Morgan Stanley, told an investor conference... ‘There’s ‘derivative-ization’ – that’s not a real word but it’s a Dan word – all around the world.’ Everyone hates a clunky neologism, but occasionally one clarifies something important, or names a force in business or finance. Simkowitz, who runs trading and investment banking at Morgan Stanley, did both. He was talking about the bank’s equities business, but his idea helps explain why the entire industry’s markets revenue has recovered from the long malaise it had fallen into in the years before 2020. It also shows how non-banks like Jane Street LLC and Citadel Securities have bloomed without eating into Wall Street’s income.”
The Fed cut rates in the face of the type of systemic derivatives market excess that has repeatedly culminated in financial crisis. Arguably, the broad scope of today’s excesses is without precedent. Options markets now captivate millions of online traders, while myriad derivative strategies become only more integral to institutional managers and the leveraged speculating community.
The Fed cut rates this week despite unprecedented speculative leverage – “basis trades,” “carry trades,” derivatives, and levered securities holdings more generally. Money Market Fund Assets inflated over $1 TN (16%) over the past year, while the “repo” market and Broker/Dealer assets continue their historic ballooning.
Investment-grade spreads to Treasuries ended the week at 72 bps, the narrowest since the exuberant market environment (June 1998) that presaged the Russia/LTCM financial crisis. At 2.62 percentage points, high yield spreads traded this week to lows since February – and within nine bps of the narrowest level back to pre-subprime blowup, June 2007. Junk bond yields dropped to lows since April 2022. JPMorgan CDS ended the week within a fraction of lows back to pre-Covid February 2020.
September 19 – Bloomberg (James Crombie): “High-grade bond spreads ratcheted to a fresh 27-year low and can go tighter as demand outstrips supply. That pushes investors deeper into private markets for yield, further sapping public issuance and shrouding corporate credit risk in mystery.”
The Fed cut rates irrespective of a historic late-cycle boom in high-risk lending. A sampling of the week’s “private Credit” headlines: “Apollo’s $10 Billion Wizardry to Woo Insurer Cash.” “Apollo’s Insurer Athene Embraces Private Credit.” “Blackstone Sees Tight Credit Spreads Fueling Private Debt Boom.” “Blackstone Says Private Credit Pays More.” “Private Credit Firms Eye Public Companies as Their Next Target.” “Inside the Big Boom in ‘Business Development Companies.” “Private Credit to Boom Even as Bank Credit Growth Softens: S&P Global.”
Powell: “So what will we do? We’ll do what we need to do. But we have two mandates, and we try to balance them. For a long time, our framework says that when our two goals are in tension – this is quite an unusual situation – how do we decide what to do? Because our tools can’t do two things at once. What we do is we ask, how far is each from the goal and how long is it expected to get to the goal? And then we think about those things, and as I mentioned, our policy had been really skewed toward inflation for a long time, really. Now we see that there’s downside risk clearly in the labor market. And, so, we’re moving in a direction of more neutral policy.”
Reasonable enough, but nonetheless deficient. When the Fed’s two congressional mandates are “in tension,” the FOMC should defer to its overarching responsibility for safeguarding financial stability. Powell stated that “you could think of this in a way as a risk management cut.” But proper focus on financial stability and risk management would suggest caution in lowering rates in an environment of exceptionally loose conditions and speculative excess.
Powell: “What we can say is this, that over the course of this year we’ve kept our policy at a restrictive level – and people have different views, but a clearly restrictive level, I would say.”
The U.S. “Bubble Economy” these days suffers extreme imbalances and divergences. Some sectors are booming, while others are deflating. In such a backdrop, loose conditions and liquidity excess will gravitate to sectors demonstrating strong “inflationary biases” – that are expanding, rewarding, and enticing. Loosening monetary policy in such a backdrop will only stoke the boom, further incentivize excess, and exacerbate imbalances.
The Fed Chair sent a subtle warning to the consensus view that a series of rate cuts are baked in the cake. “It’s gratifying to see that economic activity is holding.” “Consumer spending numbers were well above expectations.” “I think the economy is – it’s moving along.” “A fairly narrow sector is producing a lot of economic activity, which is the AI build-out and business investment.” “Forecasts have been coming up.” It’s worth noting that the Fed executed its “risk management cut” with the Atlanta Fed GDPNow Forecast at 3.34%.
The Fed is heavily leaning on its “full employment” mandate. August's 4.3% unemployment rate compares to a 50-year average of 6.1%. Powell acknowledges today’s unusual analytical challenges. “Payroll job gains have slowed significantly… A good part of the slowing likely reflects a decline in the growth of the labor force, due to lower immigration and lower labor force participation.” “So, the supply of workers has, obviously, come way down. There’s very little growth, if any, in the supply of workers, and at the same time demand for workers has also come down quite sharply and to the point where we see what I’ve called a curious balance.”
The confluence of waning new worker supply and a highly imbalanced economy argues for caution in terms of wage pressures and inflation more generally. Powell: “Core PCE prices rose to 2.9%.” “Near-term measures of inflation expectations have moved up…” “A reasonable base case is that the effects on inflation will be relatively short-lived—a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed. Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem.”
“The median projection in the SEP for total PCE inflation is 3.0% this year and falls to 2.6% in 2026 and to 2.1% in 2027.” The Fed cut rates while the median “dot” in the Summary of Economic Projections for 2026 Core PCE Inflation rose two tenths to 2.6%. Median 2026 Real GDP increased two-tenths to 1.9%. The Fed cut rates with the ISM Services Prices component at a highly elevated - just off a three-year high - 69.2.
One would traditionally monitor a mosaic of indicators for gauging the appropriateness of monetary policy. Gold traded Fed Wednesday at a record $3,708, with a y-t-d gain of 40% and a 19-month surge of 83%. Silver and Platinum sport 2025 gains of 49% and 55%. The Dollar Index has depreciated 10% y-t-d.
Curiously, newly appointed governor Stephen Miran provided the meeting’s lone dissent. After July’s dissents, governors Christopher Waller and Michelle Bowman voted with the majority. I’ve downgraded what I had viewed as slim odds Waller would be Trump’s pick to replace Powell.
September 15 – Wall Street Journal (Sam Goldfarb and Matt Grossman): “Two years ago, Stephen Miran’s career in finance seemed to reach a dead end. The investment firm he co-founded was closing, having never really gotten off the ground. Now he is at the forefront of President Trump’s bid to remake the Federal Reserve. Miran, chair of the White House’s Council of Economic Advisers, is poised to join the Fed’s board of governors… It would be the first time since the creation of the modern Fed in the 1930s that a sitting member of the executive branch would also serve at the central bank. Miran, who previously criticized a ‘revolving door’ between the Fed and the executive branch, has said he would take a leave from the council, but won’t resign, while he serves a four-month Fed term that could potentially extend beyond its official end date.”
Difficult to imagine a Federal Reserve official more beholden to a President. And Miran confirmed Friday that the outlier “dot” – a year-end projection of a 2.75%-3.0% policy rate – was his. The only rationalization for such aggressive rate cuts is that they would appease our impetuous President. This week’s meeting may have lacked some of the anticipated drama. Give it time.
September 17 – Axios (Claire Jones and Kate Duguid): “It is rare for four words — in a confirmation hearing for a single Federal Reserve governor, for a term that expires in just a few months — to get the attention of bond markets. But these are not normal times. Stephen Miran’s testimony before the Senate Banking Committee two weeks ago hinted that he and other President Trump appointees will view the Fed’s assignment differently than past officials. Miran did not refer to the often-discussed ‘dual mandate’ Congress has assigned the Fed, of stable prices and maximum employment. Instead, he said that ‘Congress wisely tasked the Fed with pursuing price stability, maximum employment, and moderate long-term interest rates’ — adding the third, more rarely noted, mandate contained in the Federal Reserve Act. That emphasis could imply the Fed looking to directly affect long-term borrowing costs, in contrast to the traditional view that low long-term rates are the happy result of achieving the other goals, particularly low inflation.”
September 16 – Bloomberg (Michael MacKenzie): “For generations on Wall Street, it was a statement of fact: The Federal Reserve’s ‘dual mandate’ of price stability and maximum employment governed how it set interest rates, invoked time and again from Alan Greenspan to Jerome Powell. So when Donald Trump’s latest pick for Fed governor, Stephen Miran, cited a third mandate — that it must also pursue ‘moderate long-term interest rates,’ chatter lit up on bond trading desks as analysts debated what it all meant. To the surprise of many, it turns out that Miran was simply quoting a long-forgotten part of the Fed’s statute in full. But for market veterans like Andrew Brenner, the import for financial markets was clear — and alarming, with the potential to upend portfolios. As Brenner sees it, the fact that Miran, of ‘Mar-a-Lago Accord’ fame and a newly minted Fed official, saw fit to mention the ‘third mandate’ in congressional testimony is one of the clearest signs yet that the administration intends to wield monetary policy to influence longer-term bond yields, using the central bank’s own bylaws as cover.”
“One of the clearest signs yet that the administration intends to wield monetary policy to influence longer-term bond yields.” The White House may have paused their plan to force Powell out, while the courts have stymied their attempt to oust Governor Lisa Cook. I expect only steely resolve in the pursuit of their primary objective of wresting control over the Federal Reserve.
They want lower rates. More importantly, their sights are fixated on the so-called “third mandate” – aka yield control (“Yield Curve Control”). To secure a boom through the midterms and beyond requires mechanisms that would thwart any destabilizing spike in market yields. Essentially, their pro-growth/pro-Bubble agenda of ongoing massive deficit spending, deregulation, AI/crypto/energy/manufacturing investment booms, and an aggressive tariff regime comes with risks of higher inflation and massive debt issuance. Control of the Fed (and its balance sheet) is fundamental to the ability to orchestrate boom-sustaining bond market manipulation.
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…, Treasury Secretary Scott Bessent and Rieder discussed monetary policy, the Fed’s organizational structure and regulatory policy… Rieder told CNBC earlier this week that he thinks the Fed should cut interest rates by 50 bps based on his reading of economic indicators… ‘Moving 25 bps in the overnight funding rate is not that exciting,’ Rieder said… The Fed could look at ‘how to use the balance sheet, how to use liquidity, where the yield curve is.’”
“Founded in 1988, initially as an enterprise risk management and fixed income institutional asset manager, BlackRock is the world’s largest asset manager, with US$12.5 trillion in assets under management as of 2025.”
Blackrock’s Rick Rieder: “Whoever ends up being the Fed chair, there’s so many innovative things.”
Music to the ears of President Trump, Secretary Bessent, Stephen Miller, and the leveraged speculating community. Yet “how to use the balance sheet, how to use liquidity, where the yield curve is” and the Fed doing “so many innovative things” are what got us into the monumental mess we’re in. But let me tell you, if I were masterminding a grand strategy for bond and financial market manipulation (to win elections and further my agenda), I’d camp out in the C-suite interviewing the top brass at Blackrock’s NYC headquarters.
It all seems crazy wacko stuff. Initially, analysis that the Trump administration would replicate Viktor Orban’s autocratic playbook seemed the height of Wackoism.
September 18 – CNN (Brian Stelter): “Weaponize the levers of government for partisan political gain. Pressure privately owned media companies to toe the party line. Punish the owners who resist and reward the ones who acquiesce. That’s how Hungarian prime minister Viktor Orbán consolidated control of the media in his country, according to scholars who witnessed Hungary’s democratic backsliding firsthand. President Trump and his allies appear to be running the same playbook against media outlets in the US. Using legal maneuvers, financial incentives and public pressure campaigns, Trump is persuading companies to make changes that benefit his party and bolster his own power… Gábor Scheiring, who experienced Orbán’s autocratic power plays firsthand as a member of the Hungarian parliament, told CNN that ‘this story is very familiar.’ Scheiring said that both ABC’s decision-making about Kimmel and last July’s move by CBS to cancel ‘The Late Show with Stephen Colbert’ reek of what is sometimes called ‘Orbanism.’ Scheiring, now an assistant professor at Georgetown University Qatar, said Orbán weakened public broadcasting, muzzled independent media through ‘autocratic carrots and sticks,’ and incentivized owners to fall in line. ‘A key underlying story is that media owners, both foreign and domestic, largely capitulated individually rather than mounting collective resistance, which enabled Orbán’s systematic capture strategy,’ he said.”
It was clear within hours of the horrific assassination that Charlie Kirk’s death would be used to further the administration’s political agenda. As I noted last week, “they” didn’t assassinate Charlie Kirk. Tyler Robinson committed this heinous murder.
“I think when people do this – I guess they do know the extreme hate that they must have for him and his family to commit such an act. But justice will be served… They thought they could silence Charlie. All of this chatter - all of this hate. They couldn’t silence Charlie. What they’ve done is they’ve created an army of people. I think millions of young people are coming out of the woodwork now… They thought they silenced him, but it was the opposite.” Attorney General Pam Bondi, September 15, 2025, The Sean Hannity Show
September 15 – Wall Street Journal (Alex Leary, Aaron Zitner and Siobhan Hughes): “The White House is moving swiftly to galvanize the outpouring of support for slain conservative activist Charlie Kirk into political momentum, as President Trump’s advisers weigh a slate of executive actions targeting liberal organizations. Among the actions being discussed by the president’s team: reviewing the tax-exempt status of left-leaning nonprofit groups and targeting them with anticorruption laws, according to administration officials. The president could begin rolling out the actions as soon as this week, officials said, part of a bid to harness support for Kirk, particularly among young voters, ahead of the midterm elections. Officials across the administration are working to identify groups suspected of targeting conservatives or causes conservatives support.”
September 18 – Bloomberg (Erika D. Smith): “Since the murder of conservative influencer Charlie Kirk last week, President Donald Trump has been throwing gasoline on the fires of partisanship, blaming the ‘radical left’ for political violence. In contrast, Utah Governor Spencer Cox has (mostly) played the man with the fire extinguisher. ‘We can always point the finger at the other side,’ the governor said… ‘And at some point, we have to find an off-ramp or it’s going to get much, much worse.’ He’s right. This is a dangerous moment for America. But in a fractured media environment, dominated by politics so polarized that every issue seems to get sucked into existential culture wars, it’s far from certain whether a single voice can cut through the noise and truly make a difference.”
September 18 – Wall Street Journal (Natalie Andrews and Aaron Zitner): “The Trump administration is putting the weight of the federal government behind a crackdown on political speech it deems objectionable in the aftermath of the fatal shooting of conservative activist Charlie Kirk. On Wednesday afternoon, the head of the Federal Communications Commission suggested the agency could punish ABC over comments made by comedian Jimmy Kimmel... By Wednesday evening, Disney, ABC’s parent company, said it was taking Kimmel’s late-night show off the air indefinitely. Hours later, President Trump said he was labeling antifa—a loose affiliation of far-left activist groups—as ‘a major terrorist organization.’ Earlier this week, Attorney General Pam Bondi raised the prospect of prosecuting people who engage in hate speech. And behind the scenes, senior administration officials are drawing up plans to take action against left-leaning organizations. Taken together, the moves appear to mark an escalation of Trump’s efforts to target his perceived opponents and critics.”
September 18 – CNBC (Dan Mangan): “Federal Communications Commission Chairman Brendan Carr said Thursday that ABC late-night host Jimmy Kimmel appeared to ‘mislead’ the American public about facts regarding conservative activist Charlie Kirk’s killing in the days leading up to his show’s suspension. Carr also told CNBC… that ‘we’re not done yet’ with the changes in ‘the media ecosystem’ that are consequences of President Donald Trump’s election last fall… ‘This is a very, very serious issue right now for Disney. We can do this the easy way or the hard way,’ Carr told right-wing commentator Benny Johnson. ‘These companies can find ways to take action on Kimmel, or there is going to be additional work for the FCC ahead.’”
September 19 – Reuters (David Shepardson and Jonathan Allen): “U.S. Senator Ted Cruz, the Republican who leads oversight of the Federal Communications Commission, joined Democrats… in criticizing FCC Chair Brendan Carr’s recent threats against Disney and local broadcasters for airing ‘Jimmy Kimmel Live.’ The conservative senator from Texas, one of the most powerful Republicans in Congress, said Carr’s threat to fine broadcasters or pull their licenses over the content of their shows was dangerous. ‘I got to say that’s right out of ‘Goodfellas’,’ Cruz said… ‘That’s right out of a mafioso coming into a bar going, 'Nice bar you have here. It would be a shame if something happened to it’’.”
September 18 – Associated Press (Chris Megerian): “President Donald Trump has used threats, lawsuits and government pressure as he remakes the American media landscape, unleashing his long-standing grievances against an industry that has mocked, criticized and scorned him for years. He’s extracted multimillion-dollar settlements, forced companies into costly litigation and prompted changes to programming that he found objectionable. Now Trump is escalating his campaign of censure and retaliation, invigorated by successful efforts to push ABC late-night host Jimmy Kimmel off the air for his commentary on conservative activist Charlie Kirk’s assassination… Trump said federal regulators should consider revoking broadcast licenses for networks that ‘give me only bad publicity.’ ‘All they do is hit Trump,’ he said. ‘They’re licensed! They’re not allowed to do that. They’re an arm of the Democrat Party.’”
September 16 – Associated Press (David Bauder): “President Donald Trump has added The New York Times to the list of media companies he’s challenged in court, filing a $15 billion defamation lawsuit that targets four of its journalists in a book and three articles published within a two-month period before the last election… Trump called the Times ‘one of the worst and most degenerate newspapers in the nation’s history’ and a virtual mouthpiece for Democrats. The Times called the lawsuit meritless and an attempt to discourage independent reporting. ‘The New York Times will not be deterred by intimidation tactics,’ spokesman Charlie Stadtlander said.”
September 16 – Axios (Sara Fischer): “President Trump’s $15 billion lawsuit against the New York Times — his fifth complaint against a major news company in the past two years — represents a notable shift in conservatives' approach to free speech issues. For years, conservatives targeted Big Tech firms for alleged censorship, while criticizing newsrooms but mostly avoiding legal action against them. Now that President Trump has Silicon Valley titans singing his praises, he and other Republicans are shifting their free-speech fight to individuals and news companies. The latter’s editorial standards give them less flexibility than social media platforms to carry out ad hoc policy changes. In the wake of Charlie Kirk’s assassination, conservative media activists and Trump officials are going after individuals and journalists, compiling lists of people to target based on their social media posts.”
“Orbanism.” The first full week after Charlie Kirk’s assassination provided a rather blaring wake-up call. It’s one thing when the administration’s shakedowns target elite universities and major law firms. We could only have hoped the ABC and CBS settlements – and the Stephen Colbert cancellation – were one-offs. While much of the country has been unnerved by the administration’s actions, for the most part it seemed removed from our daily lives.
It’s quite an escalation when Americans fear that the First Amendment right to free speech is now in jeopardy. I furthermore believe that most of us hold comedy near and dear to our hearts and lives. Especially during these fraught times, a good laugh can be therapeutic. Throughout history, comedy has been a defining feature of the American ethos.
Comedians will live on the edge; some will cross the line. The nature of their craft dictates that they often operate at the “fringe” that - especially with respect to lampooning and criticizing politicians and the government - serves as the core of our First Amendment protections. There are many that I find objectionable - and choose my sources of laughter and entertainment accordingly. The last thing I – and I assume most Americans – want is the President of the United States and his administration involved in censoring comedy - or news and entertainment more generally.
Things are turning more “interesting.” “Orbanism” has corporate executives running scared. Disney, ABC, CBS, the corporate owners of local broadcast stations, and others have capitulated to White House coercion. More generally throughout the economy, corporations are succumbing to pressure delivered forcefully by the administration and MAGA, to the detriment of the “silent majority.”
So far, millions of Americans have participated in widespread peaceful protests. Weeks like this raise the temperature. I’m not sure why the majority at some point doesn’t push back - attempt to wield the power of its eyes, ears, and formidable pocketbooks. Obedience and appeasement, it became starkly clear this week, spur only greater authoritarianism. On multiple levels, our nation’s fissures deepened this week.
For the Week:
The S&P500 gained 1.2% (up 13.3% y-t-d), and the Dow added 1.0% (up 8.9%). The Utilities slipped 0.6% (up 10.6%). The Banks jumped 2.1% (up 21.3%), and the Broker/Dealers increased 0.9% (up 31.7%). The Transports were little changed (down 1.8%). The S&P 400 Midcaps were about unchanged (up 5.2%), and the small cap Russell 2000 jumped 2.2% (up 9.8%). The Nasdaq100 advanced 2.2% (up 17.2%). The Semiconductors surged 3.8% (up 25.1%). The Biotechs rallied 3.0% (up 8.6%). With bullion jumping $42, the HUI gold index rose 3.3% (up 109.6%).
Three-month Treasury bill rates ended the week at 3.87%. Two-year government yields added two bps to 3.57% (down 67bps y-t-d). Five-year T-note yields increased four bps higher to 3.68% (down 71bps). Ten-year Treasury yields rose six bps to 4.13% (down 44bps). Long bond yields jumped six bps to 4.75% (down 4bps). Benchmark Fannie Mae MBS yields gained five bps to 5.12% (down 73bps).
Italian 10-year yields added a basis point to 3.53% (up 1bp y-t-d). Greek 10-year yields increased two bps to 3.39% (up 18bps). Spain's 10-year yields added one basis point to 3.30% (up 23bps). German bund yields rose three bps to 2.75% (up 38bps). French yields gained five bps to 3.55% (up 36bps). The French to German 10-year bond spread widened about two to 80 bps. U.K. 10-year gilt yields increased four bps to 4.72% (up 15bps). U.K.'s FTSE equities index declined 0.7% (up 12.8% y-t-d).
Japan's Nikkei 225 Equities Index added 0.6% (up 12.9% y-t-d). Japanese 10-year "JGB" yields jumped five bps to 1.65% (up 54bps y-t-d). France's CAC40 increased 0.4% (up 6.4%). The German DAX equities index slipped 0.2% (up 18.7%). Spain's IBEX 35 equities index dipped 0.3% (up 31.6%). Italy's FTSE MIB index declined 0.6% (up 23.8%). EM equities were mixed. Brazil's Bovespa index rallied 2.5% (up 21.3%), while Mexico's Bolsa index declined 1.0% (up 23.6%). South Korea's Kospi gained 1.5% (up 43.6%). India's Sensex equities index rose 0.9% (up 5.2%). China's Shanghai Exchange Index retreated 1.3% (up 14.0%). Turkey's Borsa Istanbul National 100 index surged 8.9% (up 14.9%).
Federal Reserve Credit increased $2.6 billion last week at $6.559 TN. Fed Credit was down $2.330 TN from the June 22, 2022, peak. Over the past 314 weeks, Fed Credit expanded $2.833 TN, or 76%. Fed Credit inflated $3.748 TN, or 133%, over the past 671 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt dropped another $21.2 billion last week to $3.120 TN - the low back to November 2016. "Custody holdings" were down $195 billion y-o-y, or 5.9%.
Total money market fund assets (MMFA) declined $19.5 billion to $7.283 TN. MMFA were up $1.003 TN, or 15.9%, y-o-y - and have ballooned a historic $2.700 TN, or 58.9%, since October 26, 2022.
Total Commercial Paper dropped $18.3 billion to $1.383 TN. CP has expanded $295 billion y-t-d and $192 billion, or 16.1%, y-o-y.
Freddie Mac 30-year fixed mortgage rates dropped nine bps to a one-year low of 6.26% (up 17bps y-o-y). Fifteen-year rates fell nine bps to 5.41% (up 26bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates down seven bps to a 20-month low of 6.53% (down 13bps).
Currency Watch:
For the week, the U.S. Dollar Index was little changed at 97.644 (down 10.0% y-t-d). On the upside, the Brazilian real increased 0.6%, the Canadian dollar 0.4%, the South African rand 0.3%, the Mexican peso 0.2%, the Swiss franc 0.1%, and the euro 0.1%. On the downside, the New Zealand dollar declined 1.6%, the Swedish krona 1.0%, the Norwegian krone 0.8%, the Australian dollar 0.8%, the British pound 0.6%, the South Korean won 0.3%, the Japanese yen 0.2%, and the Singapore dollar 0.1%. The Chinese (onshore) renminbi increased 0.1% versus the dollar (up 2.54% y-t-d).
Commodities Watch:
September 17 – Bloomberg (Javier Blas): “The big question troubling the energy market now is why China is stockpiling so much oil. In problem-solving, the principle of Occam’s razor recommends searching for the simplest explanation. So perhaps the answer is as straightforward as ‘because it’s cheap.’ Still, the conspiracy theorist in me says there’s more to it. China has purchased more than 150 million barrels — costing about $10 billion at current prices — above its actual use so far this year. For a country that buys more electric vehicles than anywhere else, that demands dissecting.”
The Bloomberg Commodities Index declined 0.8% (up 4.3% y-t-d). Spot Gold advanced 1.2% to a record $3,685 (up 40.4%). Silver jumped 2.1% to $43.0841 (up 49.1%). WTI crude was unchanged at $62.68 (down 13%). Gasoline slipped 0.7% (down 3%), and Natural Gas fell 1.8% to $2.888 (down 20%). Copper declined 0.5% (up 15%). Wheat rallied 3.9% (down 5%), and Corn jumped 6.3% (down 8%). Bitcoin declined $460, or 0.4%, to $115,600 (up 23.4%).
Market Instability Watch:
September 15 – Bloomberg (Bastian Benrath-Wright): “Recent gains in financial markets don’t adequately reflect dangers looming from higher sovereign debt and disrupted world trade, the Bank for International Settlements warned. Investors in both stocks and credit, cheered by prospects of government spending and lower borrowing costs, have driven buoyancy that might paint a brighter picture for the world than warranted, the Basel-based institution said. ‘This very sanguine assessment seems to be disregarding some of the very real challenges in the real economy,’ Hyun Song Shin, head of the BIS’s monetary and economic department, told reporters. Markets are ‘vulnerable to repricing from bad news,’ he added… Shin echoed earlier warnings by his institution that national borrowing burdens seen around the world are reaching levels that are at the limits of sustainability. ‘Historical experience shows that market stress can emerge long before debt levels exceed textbook definitions,’ he said.”
September 16 – Bloomberg (Alexandra Harris): “A key interest rate for the US financial system jumped to the highest level this year — exceeding the Federal Reserve’s target range for its own benchmark — as dwindling liquidity is exacerbated by Treasury auction settlements and quarterly corporate tax payments this week. The Secured Overnight Financing Rate… rose to 4.51% as of Sept. 15 from 4.42% the prior session… That’s the biggest increase in the fixing since Dec. 31.”
September 13 – Financial Times (Leila Abboud, Delphine Strauss and Janina Conboye): “French debt has surged, deficits are widening and two prime ministers have fallen trying to fix it… Last year’s budget shortfall hit 5.8%, the highest of all Eurozone countries. François Bayrou, the second premier this year to walk the plank over deficit plans, attempted a €44bn fiscal package that will now certainly have to be scaled back by his successor.”
September 18 – Bloomberg: “Just as China’s long bull run for bonds is fading, the nation’s banks have loaded up on government debt at the fastest pace since 2019. In each of the past two months, commercial banks such as China Construction Bank Corp. raised their overall central and local government debt holdings by more than 20% year-over-year, reaching 72 trillion yuan ($10 trillion) by August, according to central bank data. It comes at a risky time… China had about 9 trillion yuan of government debt at the end of July, and commercial banks held about 70% of such debt in the interbank market, data from the central bank and ChinaBond showed. That demand, to some extent, ensures that China can effectively carry out a proactive fiscal policy and keep financing costs low.”
September 15 – Bloomberg (Yiqin Shen, Lu Wang and Justina Lee): “Gary Garland is putting his money where his advice is. The 58-year-old wealth adviser just bought $450,000 of structured products, investing a big chunk of his cash alongside that of his clients… ‘I love them,’ says Garland, the founder of Integrated Wealth Solutions... Garland is one of a growing number of US financial advisers touting structured products to their wealthy clients, and those rich investors are lapping them up. America’s market for the hybrid instruments, which combine the properties of a bond and derivative, ballooned to be worth a record $194 billion last year. It’s on course to top that in 2025.”
Global Credit and Financial Bubble Watch:
September 14 – CNBC (Jeff Huang): “Buy now, pay later plans offer an attractive alternative to credit cards for consumers: They allow purchases to be split into short-term, typically interest-free installments. ‘Credit isn’t new. Credit’s been around for thousands of years and credit cards aren’t new. But they’ve had a hard time adapting to consumer needs,’ said Michael Linford, chief operating officer of Affirm. ‘I think the thing that we’re seeing in the industry right now is widespread adoption of alternatives to credit cards.’ An estimated 86.5 million Americans used buy now, pay later loans in 2024, according to eMarketer, and that number could rise to 91.5 million in 2025. A recent LendingTree survey found that nearly half of Americans have used a buy now, pay later service… at least once, including 11% who have used the service at least six times.”
September 16 – Bloomberg (Mark Cudmore): “The balance sheet of China’s central bank is bigger than ever before, in dollar terms. In contrast, those of the Fed, ECB and BOJ have all reduced by trillions of dollars since their pandemic peaks. As of the end of August, the Fed’s balance sheet was $6.6 trillion, having fallen $40 billion from the prior month. The equivalent figures for the PBOC are $6.5 trillion, after a $120 billion increase. Assume the same rates of change again this month, the PBOC will overtake its American rival for the first time since March 2020.”
September 15 – Bloomberg (Spencer Soper): “Joseph Asia faced a dilemma. Tariffs imposed on his Chinese-grown, kosher frozen vegetables were jacking up his costs by about $2,000 for every shipping container entering the US. But the Brooklyn owner of Pardes Farms Inc. didn’t want to raise prices. So to help cover the tariffs and avoid a cash crunch, Asia swallowed hard and took out a $200,000 credit line charging 20%-plus interest. He has plenty of company. Slope Inc., the JPMorgan…-backed lending startup that arranged the short-term financing, says applications for its credit lines surged 730% year over year in August… In recent years, a flock of lending startups including Slope, Clearco and Wayflyer has emerged that cater to small- and medium-sized businesses.”
September 14 – CNBC (Editorial Board): “Subprime auto lender Tricolor Holdings filed for Chapter 7 bankruptcy last week, and the collateral damage could strike banks and trading houses. Investors have poured into risky consumer and corporate debt in a hunt for higher yields. Could Tricolor be a canary in a subprime debt mine? Tricolor caught investors and creditors off guard when it said… it is liquidating after 18 years in business. The… firm specialized in lending to car buyers with no credit history or Social Security number, including undocumented migrants in the Southwest. Its business grew amid the Biden-era surge in migration and auto prices. The company made loans by drawing on a line of credit from banks. It then packaged the loans and sold them to investors as asset-backed securities (ABS).”
September 16 – Bloomberg (Dorothy Ma): “Private equity firms are doubling down on pouring funds into struggling companies but only a handful of them see meaningful or lasting improvement in their credit quality, according to S&P Global Ratings. The sponsors have injected more than $2.5 billion in total capital into at least 165 distressed portfolio companies in the middle market over the past five years…”
Trump Administration Watch:
September 18 – Axios (Zachary Basu and Sara Fischer): “Trump-friendly billionaires are consolidating control over American media, steering legacy brands and social platforms in a new conservative direction. The media landscape of 2016 is unrecognizable. Once dominated by critics of President Trump, today’s fragmented ecosystem is increasingly controlled — or threatened — by forces aligned with the White House. ABC pulled Jimmy Kimmel off air ‘indefinitely’… The extraordinary move came after Federal Communications Commission chair Brendan Carr warned ABC that it could face fines or license revocations if it did not ‘operate in the public interest.’ Trump celebrated Kimmel's removal — just as he did CBS's decision to cancel Stephen Colbert’s show — and called for NBC to take action against remaining late-night hosts Seth Meyers and Jimmy Fallon. The media’s MAGA makeover is unfolding on two fronts — high-profile acquisitions that give Trump allies control of marquee platforms, and quieter rebrands that soften once-critical coverage or policies.”
September 18 – Axios (Neil Irwin): “The communications out of the Federal Reserve on Wednesday show the present and potential future of American monetary policy in vivid contrast. Current leaders of the central bank view the U.S. economy as in basically sound shape, experiencing some labor market softness that is nothing a few modest interest rate cuts can't solve. They emphasize sober consensus-building and moving gradually and predictably. Barely two days into his time as a Fed governor, Trump appointee Stephen Miran wants a substantial resetting of rates lower. His past comments and writings also suggest an eagerness for much more sweeping change in the institution. As the president installs other appointees at the Fed — including a new chair eight months from now — it is an early glimpse of major change coming to the institution with which Wall Street has a long love/hate relationship.”
September 17 – Wall Street Journal (Chip Cutter): “Corporate leaders regularly praise the Trump administration and its policies in public. Behind closed doors, their mood is darker. At a meeting of CEOs and other executives on Wednesday convened by the Yale School of Management, dozens of America’s business leaders sounded off on their concerns about tariffs, immigration, foreign policy matters and what many described as an increasingly chaotic, hard-to-navigate business environment. ‘They’re being extorted and bullied individually, but in private discourse, they’re really upset,’ said Jeffrey Sonnenfeld, a Yale management professor who organized the event, referring to recent deals that give the U.S. government a cut of certain Nvidia chip sales and a ‘golden share’ in U.S. Steel.”
September 14 – Bloomberg (María Paula Mijares Torres): “President Donald Trump predicted a ‘big cut’ from the Federal Reserve this week ahead of a pivotal meeting at which the central bank’s governors are expected to ease policy for the first time in nine months. ‘I think you have a big cut,’ Trump told reporters… ‘It’s perfect for cutting’.”
September 18 – Financial Times (Brian Spegele): “The Trump administration is drawing up plans to use tariff revenue to fund a programme to support US farmers as they head into harvest facing falling export sales and rising input costs, agriculture secretary Brooke Rollins said. ‘There may be circumstances under which we will be very seriously looking to and announcing a package soon,’ Rollins told the Financial Times... ‘We are reviewing markets every day.’ She added that financing the bailout through ‘tariff income that is now coming into America’ was ‘absolutely a potential’.”
September 17 – Bloomberg (Anthony Cormier and Zachary R Mider): “US Treasury Secretary Scott Bessent once agreed to occupy two different houses as his ‘principal residence’ at the same time, mortgage documents show — the same kind of contradictory pledges that President Donald Trump has been using to try to oust Federal Reserve Governor Lisa Cook. Bessent’s conflicting agreements obligated him to occupy homes in New York and Massachusetts as his main residence at the same time in 2007. But there’s no sign of any wrongdoing on his part, mortgage experts say. Rather, his case demonstrates that an incongruity in home-loan filings isn’t necessarily proof of fraud.”
September 16 – Wall Street Journal (Matt Grossman): “In her first public comments since President Trump fired her, the former head of the government agency that measures inflation and job growth called her dismissal ‘a dangerous step’ for the economy. Erika McEntarfer was fired Aug. 1 from the Bureau of Labor Statistics after Trump complained about massive downward revisions to the number of jobs created... The president accused her of manipulating the data to make him look bad… McEntarfer pointed to what she called ‘not a good list’ of other countries where statisticians have been pushed out over disappointing statistics, including Argentina, Greece and Turkey. ‘The resulting loss of trust in economic statistics led these countries to worsening economic crises, higher inflation and higher borrowing costs,’ she said.”
September 14 – Financial Times (Stefania Palma and Philip Stafford): “The head of Wall Street’s top watchdog is moving to scrap the aggressive enforcement agenda pursued under former US president Joe Biden, pledging to give businesses notice of any technical violations before regulators ‘bash down their door’. Paul Atkins, who this year was appointed chair of the Securities and Exchange Commission by President Donald Trump, told the Financial Times… the agency was geared to go after ‘crooks’… But he added there were ‘other gradations of that where you have to give people notice’. ‘You can’t just suddenly come and bash down their door and say ‘uh-uh we caught you, you’re doing something and it’s a technical violation’.”
September 15 – Associated Press (Aamer Madhani and Regina Garcia Cano): “President Donald Trump said the U.S. military… again targeted a boat allegedly carrying drugs from Venezuela, killing three aboard the vessel, and hinted that the military targeting of cartels could be further expanded. ‘The Strike occurred while these confirmed narcoterrorists from Venezuela were in International Waters transporting illegal narcotics (A DEADLY WEAPON POISONING AMERICANS!) headed to the U.S., Trump said… ‘These extremely violent drug trafficking cartels POSE A THREAT to U.S. National Security, Foreign Policy, and vital U.S. Interests.’”
September 15 – Reuters (Johann M Cherian, Lewis Krauskopf and Douglas Gillison): “U.S. companies should be allowed to report earnings every six months instead of on a quarterly basis, President Donald Trump said…, announcing what could prove to be a major shift for corporate America. The president said… that change… would cut costs and discourage shortsightedness on the part of publicly traded companies. The U.S. Securities and Exchange Commission said it was making Trump's proposal a priority.”
September 15 – New York Times (Eric Lipton, David Yaffe-Bellany, Bradley Hope, Tripp Mickle and Paul Mozur): “This summer, Steve Witkoff, President Trump’s Middle East envoy, paid a visit to the coast of Sardinia, a stretch of the Mediterranean Sea crowded with super yachts. On one of those extravagant vessels, Mr. Witkoff sat down with a member of the ultrarich ruling family of the United Arab Emirates. He was meeting Sheikh Tahnoon bin Zayed Al Nahyan, a trim figure in dark glasses who controls $1.5 trillion of the Emiratis’ sovereign wealth. It was the latest engagement in a consequential alliance. Over the past few months, Mr. Witkoff and Sheikh Tahnoon had become both diplomatic allies and business partners, testing the limits of ethics rules while enriching the president, his family and his inner circle, according to an investigation by The New York Times. At the heart of their relationship are two multibillion-dollar deals. One involved a crypto company founded by the Witkoff and the Trump families that benefited both financially. The other involved a sale of valuable computer chips that benefited the Emirates economically.”
China Trade War Watch:
September 17 – Financial Times (Zijing Wu, Cheng Leng and Tim Bradshaw): “China’s internet regulator has banned the country’s biggest technology companies from buying Nvidia’s artificial intelligence chips, as Beijing steps up efforts to boost its domestic industry and compete with the US. The Cyberspace Administration of China (CAC) told companies, including ByteDance and Alibaba, this week to end their testing and orders of the RTX Pro 6000D, Nvidia’s tailor-made product for the country… Several companies had indicated they would order tens of thousands of the RTX Pro 6000D, and had started testing and verification work with Nvidia’s server suppliers… After receiving the CAC order, the companies told their suppliers to stop the work…”
September 16 – New York Times (Daisuke Wakabayashi and Keith Bradsher): “The trade war this year between China and the United States started with a bang, a fast-and-furious escalation of tariffs to astronomical levels. In the ensuing months, both countries showed a willingness to pull back and not shut down trade between the world’s largest economies. But they have made little discernible progress in resolving their differences on trade. On Monday, after a fourth round of talks, U.S. Treasury Secretary Scott Bessent said that the two sides would talk about trade again in about a month. While other countries have scrambled to meet President Trump’s demands to strike deals for reduced tariffs, China has kept to its own timetable.”
September 15 – New York Times (Alan Rappeport): “On a windy September morning, Josh and Jordan Gackle huddled to discuss the looming crisis facing their North Dakota soybean farm. For the first time in the history of their 76-year-old operation, their biggest customer — China — had stopped buying soybeans. Their 2,300-acre soybean farm is projected to lose $400,000 in 2025. Soybeans that would normally be harvested and exported to Asia are now set to pile up in large steel bins. Since President Trump imposed tariffs on Chinese goods in February, Beijing has retaliated by halting all purchases of American soybeans. That decision has had devastating repercussions for farmers in North Dakota, which exported more than 70% of its soybeans to China before Trump unveiled the new tariffs this year.”
September 16 – Financial Times (Ryan McMorrow, Hannah Murphy, Zijing Wu and Demetri Sevastopulo): “Beijing has said the US spin-off of TikTok to be sold to American investors in a deal orchestrated by President Donald Trump will use parent company ByteDance’s Chinese algorithm. Wang Jingtao, deputy head of China’s powerful cyber security regulator, …said US and Chinese officials had agreed a framework that included ‘licensing the algorithm and other intellectual property rights’. He said ByteDance would ‘entrust the operation of TikTok’s US user data and content security’, without elaborating.”
September 16 – Politico (Camille Gus, Antonia Zimmermann, Victor Jack and Gabriel Gavin): “The EU plans to propose sanctions on more Chinese companies linked to the Kremlin’s war effort this week, as part of a diplomatic charm offensive to persuade U.S. President Donald Trump to finally press Russia to end the war in Ukraine. Over the weekend, Trump said he would join the EU in ratcheting up sanctions against Russian President Vladimir Putin, but only if NATO countries cut all oil imports from Russia and imposed tariffs of between 50% and 100% on China.”
September 14 – Financial Times (Camilla Hodgson and Nian Liu): “Chinese export restrictions on germanium, a metal crucial for the defence industry, have created a ‘desperate’ supply crunch and pushed prices to their highest level in at least 14 years, traders say. Germanium is essential to the production of thermal imaging systems used in military equipment, including fighter jets. But its production is heavily dominated by China and companies do not typically hold large stockpiles.”
Trade War Watch:
September 14 – Financial Times (Rana Foroohar): “America seems to have no friends these days, only frenemies. That’s not a reflection on the rest of the world, but rather on the Trump administration. In the current age of great power conflict, the US desperately needs solid allies to help it reindustrialise and counter both China’s economic and political influence and Russia’s growing aggression in Europe… Consider the recent US-Japan investment ‘alliance’, in which one of America’s greatest allies in Asia will have to accept 15% tariffs in exchange for the privilege of pouring $550bn into the US economy. Even after recouping its investment, it will reap just 10% of the ultimate gains. Then there were the US Immigration and Customs Enforcement raids on a Hyundai factory in Georgia…”
September 16 – Financial Times (Christian Davies, Song Jung-a and Aime Williams): “South Korea and the US are struggling to finalise the terms of their trade deal, as Seoul resists pressure from Washington to allow Donald Trump to decide where billions of dollars of its capital should be invested in the US. Seoul’s trade minister Yeo Han-koo is in Washington for talks…, more than two months after the sides announced that South Korea would make $350bn in American investments in exchange for the US reducing its threatened tariffs from 25% to 15%. ‘The devil is in the details. We are in tense negotiations over the details,’ Yeo said… The South Korean government had balked at Washington’s insistence that it follow Japan’s lead in letting Trump decide where hundreds of billions of dollars’ worth of its capital was invested…”
September 18 – Wall Street Journal (Santiago Pérez and Vipal Monga): “President Trump’s trade war almost broke Mexico and Canada’s relationship. Now they are trying to repair the damage ahead of tough negotiations with the U.S. Canadian Prime Minister Mark Carney is expected to meet Thursday afternoon with Mexican President Claudia Sheinbaum at the ornate National Palace in Mexico City, where the two leaders are expected to agree on a strategic partnership to bolster security and trade cooperation. Their goal: preserve North America’s deep economic ties in key sectors such as the automotive industry as Trump tries to remake trade across the world.”
Constitution Watch:
September 16 – Wall Street Journal (Editorial Board): “Is a basic understanding of the First Amendment too much to expect from the nation’s Attorney General? Progressives have spent years trying to create and define a category called ‘hate speech.’ This misunderstanding of the First Amendment seems to have infiltrated the D.C. water supply because AG Pam Bondi repeated it Monday in the wake of Charlie Kirk’s assassination. Discussing Kirk’s work on college campuses, Ms. Bondi mentioned the ‘disgusting’ antisemitism on display at many universities, and so far so good. But wait. ‘There’s free speech and then there’s hate speech, and there is no place—especially now, especially after what happened to Charlie, in our society,’ the country’s top law enforcer told a podcast. ‘We will absolutely target you, go after you, if you are targeting anyone with hate speech.’ Kirk would want a word. ‘My position is that even hate speech should be completely and totally allowed in our country. The most disgusting speech should absolutely be protected,’ he once told a crowd.”
September 18 – Axios (Josephine Walker): “Former President Obama condemned ABC for pulling Jimmy Kimmel off the air…, calling it ‘government coercion’ by a Trump administration official. Obama, who infrequently wades into political fights, joined other high-profile personalities in accusing the administration of hypocrisy for threatening broadcasters after the MAGA movement spent years railing against ‘cancel culture’ and "censorship.’ ‘After years of complaining about cancel culture, the current administration has taken it to a new and dangerous level by routinely threatening regulatory action against media companies unless they muzzle or fire reporters and commentators it doesn’t like,’ Obama said… ‘This is precisely the kind of government coercion that the First Amendment was designed to prevent — and media companies need to start standing up rather than capitulating to it,’ he added.”
September 18 – Axios (Courtenay Brown): “President Trump’s economic agenda collided with the Supreme Court Thursday, as Trump asked the justices to let him fire Fed governor Lisa Cook and the court scheduled arguments on a challenge to his trade agenda. The outcome of both cases has major implications for the future of the economy and administration policy. A federal appellate court struck down tariffs late last month after they were imposed by Trump under the International Emergency Economic Powers Act. The court argued the import taxes were an overreach of power… Earlier this month, the high court agreed to put the case on a fast track and promptly hear the case, which it will now do Nov. 5.”
September 15 – Bloomberg (Josh Wingrove): “Vice President JD Vance pledged to investigate left-leaning organizations following the killing of Charlie Kirk, amplifying efforts to memorialize the conservative activist and laying the groundwork for federally scrutinizing political opponents that some administration officials and supporters have blamed in part for his death… ‘We have to talk about this incredibly destructive movement of left-wing extremism that has grown up over the last few years and I believe is part of the reason why Charlie was killed by an assassin’s bullet. We’re going to talk about how to dismantle that,’ Vance said... ‘We’re going to go after the NGO network that foments, facilitates and engages in violence,’ he later added, referring to non-governmental organizations.”
Budget Watch:
September 19 – Bloomberg (Erik Wasson): “Congress moved closer to an Oct. 1 government shutdown as Senate Democrats and Republicans on Friday each blocked the other party’s rival plans to provide temporary funding. Democrats are demanding a boost to health care spending while Republicans refuse to go along and back a simple bill to keep the lights on through Nov. 21. Resolving the conflict is complicated by the Senate’s plan to take a week-long break as the Oct. 1 funding lapse nears. The Senate could return to Washington as late as Sept. 29. The House plans to stay on recess until after Oct. 1.”
September 17 – Wall Street Journal (Lindsay Wise, Siobhan Hughes and Katy Stech Ferek): “America is headed toward a government shutdown in two weeks unless lawmakers reach a spending deal. On Capitol Hill, Republican and Democratic leaders are busy arguing over who should pick up the phone first. ‘What have we heard from them? Crickets! Nothing!’ complained Senate Minority Leader Chuck Schumer… ‘They seem like they’re kind of having this meltdown over the fact that we’re not talking to them,’ said Senate Majority Leader John Thune (R., S.D.)… On Wednesday, Thune told reporters that he had met with Schumer on the floor last week to discuss nominations and that the Democrat ‘couldn’t get out of that meeting fast enough—he headed for the exits.’ Each party claims it is the other one that is driving the country to a disastrous shutdown.”
U.S./Russia/China/Europe/Iran Watch:
September 13 – BBC (Stuart Lau): “More Nato countries will move troops and fighter jets eastwards after more than a dozen drones entered Polish airspace on Wednesday. Denmark, France and Germany have joined a new mission to bolster the military alliance's eastern flank. Other Nato allies are expected to take part later. Tensions have been high across Europe since Poland accused Russia of an unprecedented incursion. Some of the 19 drones that entered Polish territory were shot down, while others crashed into fields and even a house in eastern Poland. Warsaw said the incursion was deliberate, but Moscow downplayed the incident, saying it had ‘no plans to target’ facilities in Poland.”
September 16 – Reuters (Andrew Osborn and Mark Trevelyan): “Russia and Belarus are rehearsing the launch of Russian tactical nuclear weapons as part of joint war games, Belarusian leader Alexander Lukashenko said… State media quoted the Belarusian chief of staff as saying that the exercises also featured Russia’s Oreshnik hypersonic missile, which it test-fired last year in the war with Ukraine. Russia and Belarus are ending five days of war games codenamed Zapad (West) in a show of force they say is to test combat readiness but which has unnerved some surrounding countries.”
September 13 – Reuters (Barbara Erling): “Six kilometres from the Russian border in northern Poland, office administrator Agnieszka Jedruszak is digging a trench. Driven by fear of war with Russia, she wants to be able to defend her family, including her 13-year-old son. Thousands of Poles like Jedruszak are signing up for voluntary military training as Poland's army seeks to fill its ranks with professional and voluntary personnel amid escalating concerns over Russia's military aggression.”
September 15 – Financial Times (Raphael Minder): “The Polish government is increasing its cyber security budget to a record €1bn this year, after Russian sabotage attempts targeted hospitals and urban water supplies. Dariusz Standerski, deputy minister for digital affairs, told the Financial Times that Poland was facing between 20 and 50 attempts to damage critical infrastructure every day…”
September 18 – Wall Street Journal (Brian Spegele): “China played down its rapidly rising military might for years. In the past few weeks, Beijing has broadcast a steady drumbeat of firepower displays and muscular rhetoric, carrying an unmistakable warning for the U.S. It began on Sept. 3, when Chinese leader Xi Jinping brandished his country’s full nuclear triad—the means to deliver nuclear weapons by land, sea and air—together for the first time at an extravagant parade of military hardware and personnel. Defense Minister Dong Jun followed up six days later with a warning to U.S. Defense Secretary Pete Hegseth that ‘acts of containment or deterrence against China will not succeed’… Then, on Friday, China’s navy went to the effort of announcing that its newest aircraft carrier, the Fujian, had sailed through the waters between China and Taiwan, the self-ruled island that Beijing claims as its own and has threatened to seize by force.”
September 17 – Bloomberg: “Chinese Defense Minister Dong Jun opened Beijing’s flagship Xiangshan security forum… repeating a warning against ‘external interference’ over Taiwan, while delivering a sharp critique of ‘bullying’ in a veiled swipe at Washington. Addressing an audience of international military officials, Dong reiterated Beijing’s opposition to what it considers attempts to formally separate the self-ruled democracy and positioned China as a force for stability. ‘We must keep in mind historical lessons, see through disguised hegemonic logic and bullying acts and stand against them,’ he said after blaming ‘hegemonic expansion’ as a root cause of World War II. ‘We will never allow any separatist attempts for Taiwan independence to succeed.’”
Ukraine Watch:
September 14 – Associated Press: “Ukrainian drones have struck one of Russia’s largest oil refineries, sparking a fire, Russian officials and Ukraine’s military said… The overnight strike on the Kirishi refinery, in Russia’s northwestern Leningrad region, follows weeks of Ukrainian attacks on Russian oil infrastructure that Kyiv says fuels Moscow’s war effort. The facility… produces close to 17.7 million metric tons per year (355,000 barrels per day) of crude, and is one of Russia’s top three by output.”
Middle East Watch:
September 19 – Reuters (Edmund Blair, Ali Sawafta, Tiffany Le and Milan Pavicic): “Israel's military said it had expanded operations in Gaza City on Friday and bombarded Hamas infrastructure, while displaced Palestinians traumatised by the advance said they had no means to flee. ‘The situation is really bad. All night long, the tank was firing shells,’ said Palestinian Toufic Abu Mouawad, who left a camp for the displaced with nowhere else to go… Israeli forces control Gaza City's eastern suburbs and in recent days have been pounding the Sheikh Radwan and Tel Al-Hawa areas, from where they would be positioned to advance on central and western areas, where most of the population is sheltering.”
AI Bubble/Arms Race Watch:
September 19 – Bloomberg (Ed Ludlow, Carmen Arroyo and Kurt Wagner): “Elon Musk’s artificial intelligence startup xAI has raised new funding at a $200 billion valuation, according to a person familiar with the deal, making it one of the world’s most valuable startups.”
September 17 – Axios (Megan Morrone): “There’s a 25% chance that the future of AI will go ‘really, really badly,’ Anthropic CEO Dario Amodei said at the Axios AI+ DC Summit… Amodei gave the percentage after being asked his ‘(p)doom number,’ which is the probability that things go south with AI — specifically that it destroys humanity. Amodei says getting real about potential concerns with AI is key to positive outcomes. ‘I really hate that term,’ Amodei told Axios co-founder and CEO Jim VandeHei when asked about his (p)doom number. Amodei also said there’s a ‘75% chance that things go really, really well.’”
September 18 – Bloomberg: “From Huawei Technologies Co. to Alibaba Group Holding Ltd., China’s biggest tech firms have vied with each other this month to tout their latest AI chip advancements. Their growing public swagger is gaining investors’ attention, igniting a $240 billion stock market rally. On Thursday, Huawei for the first time publicly laid out its three-year roadmap for chip development, boasting of super clusters’ and vastly faster AI chips intended to supplant restricted Nvidia Corp. accelerators. A day prior, state media showcased Alibaba’s growing footprint within the country’s No. 2 wireless operator. The twin developments follow a panoply of revelations about similar strides made by peers from Baidu Inc. to Cambricon Technologies Corp. over the past month or so.”
September 18 – Bloomberg: “Huawei Technologies Co. unveiled new technology from memory chips to AI accelerators Thursday, outlining publicly for the first time its multiyear plan to challenge Nvidia Corp.’s dominance in a growing market. The highlight of the company’s presentation… were new SuperPod cluster designs that will allow Huawei to link as many as 15,488 of its Ascend neural processing units for artificial intelligence and operate them as a coherent system…”
September 18 – Reuters (Eduardo Baptista): “Chinese AI developer DeepSeek said it spent $294,000 on training its R1 model, much lower than figures reported for U.S. rivals, in a paper that is likely to reignite debate over Beijing's place in the race to develop artificial intelligence. The rare update from the… company - the first estimate it has released of R1’s training costs - appeared in a peer-reviewed article in the academic journal Nature…”
September 15 – Bloomberg (Ryan Vlastelica): “Alphabet… joined an elite group of companies valued at more than $3 trillion, the latest sign of improving investor sentiment toward the Google parent. Shares rose as much as 4.8%..., resulting in a market capitalization of just over $3 trillion. The stock has soared more than 70% from its April low… Alphabet joins a short list of companies valued at more than $3 trillion, with Nvidia Corp., Microsoft Corp. and Apple Inc. the only other publicly traded stocks above that level.”
September 17 – Bloomberg (Janice Huang and Edwin Chan): “Companies in China’s technology sector have been raising billions in capital to advance their artificial intelligence capabilities and other digital infrastructure. Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Baidu Inc. have led the flurry of bond issuances, procuring more than $5 billion in September alone.”
September 16 – Bloomberg (Charlotte Yang): “A blistering rally in Chinese technology shares accelerated on Wednesday as renewed bets on artificial intelligence sent a key gauge to the highest in nearly four years. The Hang Seng Tech Index, which tracks the largest tech firms listed in Hong Kong, rose 4.2% to close at its highest level since November 2021. Search engine operator Baidu Inc led gains with a 16% jump…”
Bubble and Mania Watch:
September 16 – Bloomberg (Laura Noonan): “Regulation and compliance have driven an unprecedented wall of US retirement money into private assets, a new report by Bloomberg Intelligence shows, casting new light on the real-world risks from finance’s continued push into areas beyond the traditional oversight of regulators. The top 20 US pension funds alone hold about half a trillion dollars of private market exposure, the analysts found, with some having doubled their allocations to unlisted investments over the past decade. Exposures across the broader $43.4 trillion of US retirement assets are also rising…”
September 18 – Bloomberg (Silas Brown and Esteban Duarte): “Apollo Global Management Inc. is set to use a rare structure to raise $10 billion from insurers…, in the latest illustration of the increasing ties between private capital and annuity providers. The… firm is employing a special purpose vehicle in order to sell highly rated debt against stakes in a range of its credit funds, said the people, who requested anonymity as the matter is private. These include direct lending, asset-based finance, hybrid capital and investment-grade credit. The potential deal, among the largest ever of its kind, is at an early stage…”
Inflation Watch:
September 17 – CBS News (Megan Cerullo): “Homeowners insurance rates are rising across the U.S., driven by climate change, rising cost of building materials and surging home prices. Almost half of property insurance policy holders in the U.S. said their premiums rose over the past year, the highest rate of increases in more than a decade, according to… J.D. Power. Average homeowners insurance costs have risen nearly 70% over the past five years, according to data from ICE Mortgage Technology. On average, single-family homeowners with a mortgage now pay $2,370 a year for their property policy. In 2025, homeowners insurance costs rose have risen most sharply in California, where premiums in Los Angeles were up 19.5% compared to a year ago…”
September 14 – Financial Times (Claire Boston): “As homeowners insurance premiums hit record highs, homebuyers are growing increasingly concerned about their ability to afford them. The average single-family homeowner is now paying almost $2,370 a year for property insurance, according to… ICE Mortgage Technology, up 70% in the last 5.5 years. Insurance premiums are one of the fastest-growing costs of homeownership, outpacing jumps in home prices, mortgage rates, and property taxes. Most homebuyers expect the problem to get worse. A Realtor.com survey of recent and prospective homebuyers found that 75% are worried they may be unable to afford insurance in the future, and nearly 90% are bracing for higher prices.”
September 17 – Financial Times (Martha Muir): “Soaring US electricity prices are sparking fears of an affordability crisis, defying Donald Trump’s pledge to halve consumers’ power bills within a year of the president returning to office. Prices hit record highs in 2025, with the average residential cost of electricity up 7% since last June and commercial rates 5% higher… The price jumps will have a political impact, analysts have said… ‘This is going to become one of the defining political issues of our time,’ said Charles Hua, executive director of PowerLines, an energy affordability advocacy group.”
September 18 – Bloomberg (Emma Sanchez): “Anger over rising energy costs will eventually force states to allow more natural gas infrastructure to be built in the US, according to one of the nation’s largest producers of the fuel. ‘We’ve never produced more energy than we’re producing now, but Americans’ energy bills are up over 35%,’ EQT Corp. Chief Executive Officer Toby Rice said… ‘That’s the catalyst that’s going to get people asking questions.’”
September 15 – Wall Street Journal (Liz Young): “Shoe prices are expected to rise further as footwear companies burn through stockpiles of inventory they rushed in before tariffs raised import costs, an industry group warns. U.S. consumer prices overall rose 2.9% in August from a year earlier, the largest increase since the start of the year. Footwear prices increased at a slower 1.4% rate annually…, while women’s footwear prices climbed 2.8%. Matt Priest, chief executive of Footwear Distributors and Retailers of America…, said companies are beginning to pass along the cost of tariffs paid on recent shipments. ‘Women’s shoes are more fashion-oriented,’ Priest said… ‘Our ability to front-load women’s product based on fashion trends was limited, and we are seeing that those increases start to hit consumers first.’”
September 15 – Wall Street Journal (Editorial Board): “President Trump’s tariffs are coursing through the American (and world) economy, even if their macro effects are taking time to show up in the national statistics. Consider a case study in the daily institution of millions that is morning coffee. This summer Mr. Trump hit Brazil with a 50% tariff… Brazil is the world’s biggest coffee producer, and its beans are in more than one of every three cups of joe brewed in the U.S…. The price of a pound of unroasted Brazilian beans has jumped to more than $6 from $4.50, says Dan Hunnewell, the owner of Coffee Bros., a specialty supplier in New York.”
Federal Reserve Watch:
September 18 – New York Times (Colby Smith): “For the Federal Reserve, there are no good options. Its chair, Jerome H. Powell, made that clear on Wednesday, shortly after the central bank cut interest rates for the first time this year. ‘There are no risk-free paths now,’ said Mr. Powell. ‘It’s not incredibly obvious what to do.’ The comment was in reference to the tough bind that the Fed now finds itself in at a time when inflation is moving further away from the central bank’s 2% target and the labor market is looking much more wobbly. The Fed cannot address both issues simultaneously, and trying to resolve one typically jeopardizes the other. ‘Our tools can’t do two things at once,’ added Mr. Powell.”
September 17 – Financial Times (Claire Jones and Kate Duguid): “The Federal Open Market Committee lowered the benchmark federal funds target range to 4% to 4.25%... Economic projections released alongside the Fed decision showed most of the central bank’s top leaders anticipated at least two further quarter-point reductions by the end of this year, marking a dovish shift from the last set of forecasts in June. Wednesday’s rate cut was the first since December and came as the central bank signaled it viewed a deteriorating labour market as a more immediate risk than a rise in inflation... ‘The labour market has softened. The case for there being a persistent inflation outbreak is less,’ Fed chair Jay Powell said…, pointing to data showing hiring had fallen sharply in recent months even as the jobless rate had remained low. He added that the move was a ‘risk management cut’.”
September 17 – Reuters (Dan Burns): “There was no widespread support for a larger, half-percentage-point interest rate cut at the Federal Reserve meeting this week, Fed Chair Jerome Powell said… ‘There wasn’t widespread support at all for a 50 bps cut today,’ Powell told reporters… ‘You know ... we’ve done very large rate hikes and very large rate cuts in the last five years, and you tend to do those at a time when you feel that policy is out of place and needs to move quickly to a new place.’”
September 18 – Associated Press (Christopher Rugaber): “The Federal Reserve’s nearly unanimous decision… to reduce its key interest rate was seen by many observers as a quiet show of unity and independence amid President Donald Trump’s relentless pressure for steeper cuts and his unprecedented effort to fire a top Fed official. Many Fed-watchers expected a contentious two-day meeting this week, with the economy’s future uncertain and a Trump appointee hastily added to the board just hours before the meeting began. The White House has also floated several members of the Fed’s governing board as potential replacements for the current chair, Jerome Powell, when his term ends in May, creating incentives for those officials to push for the deep rate cuts Trump has demanded.”
September 17 – Reuters (Ann Saphir): “If President Donald Trump hoped that putting a close ally at the Federal Reserve would grab headlines, White House economic adviser Stephen Miran’s dissent and way-below consensus interest rate projection on Wednesday delivered. If the hope was to have someone on the inside to get the Fed to lower interest rates as sharply as Trump wants, Miran’s lone dissent was evidence the gambit had failed, at least for now… And on his second day at the central bank, he cast the one vote in favor of a half-of-a-percentage-point rate cut… But his support for a bigger cut and his submission of a rate-path view that showed he believes another 1.25 percentage points of cuts are warranted by year-end - far more than any other policymaker - fell on deaf ears.”
September 15 – CNBC (Erin Doherty): “The Senate… confirmed President Donald Trump’s pick to join the Federal Reserve, Stephen Miran, just one day before the central bank meets to consider whether to cut interest rates. Miran’s fast-tracked confirmation by a vote of 48-47 late Monday… The vote largely fell along party lines… Miran has said that once he is confirmed, he plans to take an unpaid leave of absence from his job as chair of the White House Council of Economic Advisors. But he has so far stopped short of agreeing to resign altogether from the political appointment.”
September 15 – Associated Press (Christopher Rugaber): “An appeals court ruled… Lisa Cook can remain a Federal Reserve governor, rebuffing President Donald Trump’s efforts to remove her just ahead of a key vote on interest rates. The Trump administration is expected to quickly turn to the Supreme Court in a last-ditch bid to unseat Cook… And Cook’s lawsuit seeking to permanently block her firing must still make its way through the courts. The White House campaign to unseat Cook marks an unprecedented bid to reshape the Fed’s seven-member governing board, which was designed to be largely independent from day-to-day politics. No president has fired a sitting Fed governor in the agency’s 112-year history.”
September 13 – Wall Street Journal (Nick Timiraos): “Federal Reserve governor Lisa Cook… described one of the properties at the heart of those allegations as a vacation home or second home on at least two documents. Copies of the documents… could counter the Trump administration’s claim that Cook knowingly misrepresented her occupancy status… One document, a letter from the Bank-Fund Staff Federal Credit Union that is dated May 28, 2021, details the estimated costs associated with obtaining a mortgage for the purchase of an Atlanta condominium. The ‘property use’ field is listed as ‘vacation home’ on a preliminary loan estimate.”
September 15 – Reuters: “The property tax authority in Ann Arbor, Michigan, said that Federal Reserve Governor Lisa Cook hasn’t broken rules for tax breaks on a home there that Cook declared her primary residence. The finding… could boost Cook’s defense against efforts by the Trump administration to remove her from the Federal Reserve board. Ann Arbor has ‘no reason to believe’ that Cook violated property tax rules, City Assessor Jerry Markey told Reuters.”
September 17 – Bloomberg (Chris Anstey): “Former Treasury Secretary Lawrence Summers said Federal Reserve policy is leaning toward being too slack, emphasizing that the US economy’s biggest risks lie in inflation rather than the job market. ‘My own guess is that policy is currently a little looser — looking at all financial conditions — than people view it as being,’ Summers said… ‘The balance of risks is a bit more tilted towards inflation rather than unemployment’… ‘The biggest risk in this situation is being that we lose contact with our 2% inflation target and become a country with an inflation psychology,’ said Summers…”
U.S. Economic Bubble Watch:
September 16 – Associated Press (Anne D’Innocenzio): “Shoppers increased their spending at a better-than-expected pace in August from July... Retail sales rose 0.6% last month from July, when sales were up a revised 0.6%... In June, retail sales rose 0.9%... Excluding auto sales… retail sales rose 0.7% in August. Sales at auto vehicle and parts dealers rose 0.5%. The data showed solid spending across various other outlets. Business at electronics and appliance stores was up 0.3%, while online retailers saw a 2% increase. Business at clothing and accessories retailers rose 1%. And business at restaurants, the lone services component within the Census Bureau report and a barometer of discretionary spending, rose 0.7%.”
September 18 – Associated Press (Matt Ott): “The number of Americans applying for jobless aid last week retreated significantly after surging to a nearly four-year high a week earlier. U.S. filings… for the week ending Sept. 13 fell by 33,000 to 231,000… That’s less than the 241,000 analysts surveyed by the data firm FactSet had forecast. The previous week, applications surged to 264,000, their highest level since the week of Oct. 23, 2021… The total number of Americans collecting unemployment benefits for the previous week of Sept. 6 fell by 7,000 to 1.92 million.”
September 16 – Reuters (Lucia Mutikani): “U.S. factory production unexpectedly increased in August amid a rebound in the output of motor vehicles and some nondurable goods, though tariffs continued to cast a shadow over the manufacturing sector. Manufacturing output rose 0.2% last month after a downwardly revised 0.1% fall in July…”
September 17 – CNBC (Diana Olick): “Mortgage rates last week dropped to the lowest level since October of last year. That caused a massive run on refinances, as consumers seek more savings in an uncertain economy. Applications to refinance a home loan jumped 58% last week compared with the previous week and were 70% higher than the same week one year ago… Refinance applications were particularly strong for adjustable-rate mortgages. The ARM share of activity increased to 12.9% of total applications, its highest level since 2008… Applications for a mortgage to purchase a home rose 3% for the week and were 20% higher than the same week one year ago.”
September 17 – Reuters (Lucia Mutikani): “U.S. single-family homebuilding plunged to a near 2-1/2-year low in August amid a glut of unsold new houses, suggesting the housing market could remain an economic headwind this quarter. The report… also showed permits for future single-family home construction dropped last month to the lowest level in more than two years. Some economists said the decline was necessary to manage new housing inventory, currently near levels last seen in late 2007… Single-family housing starts, which account for the bulk of homebuilding, fell 7.0% to a seasonally adjusted annual rate of 890,000 units last month… That was the lowest level since April 2023.”
September 16 – Bloomberg (Michael Sasso): “Sentiment among US homebuilders remained at one of its lowest levels in years this month, underscoring the deep freeze in the housing market despite a recent drop in mortgage rates. An index of market conditions from the National Association of Home Builders and Wells Fargo was unchanged at 32 in September… Among the index’s components, a gauge of present sales stayed at 34, while an index of prospective buyer traffic dipped slightly. Meantime, the measure of sales expectations in the next six months climbed to the highest level since March…”
September 16 – Reuters (Nupur Anand): “Some U.S. consumers are showing increased signs of stress as inflation and higher interest rates are affecting affordability and leading to financial strain on borrowers, credit scoring company Fair Isaac Corporation, widely known as FICO, said… The overall national FICO score has dipped slightly by about 2 points. About 38.1% of the population scored between 600 and 749 points in 2021, while only 33.8% of the population ranked in these middle ranges in 2025. Gen Z adults in the U.S. - those currently in their teens and 20s - have seen the sharpest decrease in their scores, driven by student loan pressure.”
September 16 – Wall Street Journal (Jeanne Whalen): “There are two economies in the U.S. right now, and they are moving in different directions. For high earners and many older Americans, the economy looks robust. They are still spending like gangbusters, and their 401(k) accounts and homes have soared in value. They nabbed 3% mortgages when rates were low… For many others, momentum has stalled or reversed. The big wage growth experienced by low-income workers during the pandemic has petered out. Those workers are curbing their spending and in some cases are struggling to find jobs. Unemployment for Black Americans and many young people has jumped. Home prices and rents have risen sharply, making housing increasingly unaffordable.”
September 16 – Bloomberg (Jonnelle Marte): “Wealthy consumers continue to account for a growing share of US consumer spending, highlighting the lopsided strength of the economy as a slowdown in hiring and wariness among other income cohorts raise fears of a slowdown. Consumers in the top 10% of the income distribution accounted for 49.2% of total spending in the second quarter, up from 48.5% in the first quarter, reaching the highest level in data going back to 1989, according to… Moody’s Analytics.”
September 15 – Wall Street Journal (Paul Kiernan): “Anyone who surveys the public, from marketers to pollsters, struggles nowadays to get people to answer their questions. That phenomenon afflicts crucial government data, making it harder for policymakers and investors to know the true state of the economy. Falling survey participation is an important reason the flagship jobs report released every month by the Bureau of Labor Statistics, part of the Labor Department, has undergone such big revisions recently.”
China Watch:
September 14 – Reuters (Kevin Yao, Joe Cash and Yukun Zhang): “China’s factory output and retail sales reported their weakest growth since last year in August, keeping pressure on Beijing to roll out more stimulus to fend off a sharp slowdown in the world's second-largest economy… Industrial output grew 5.2% year-on-year…, the lowest reading since August 2024 and weaker than a 5.7% rise in July… Retail sales… expanded 3.4% in August, the slowest pace since November 2024, and cooling from a 3.7% rise in the previous month. They missed a forecast gain of 3.9%.”
September 14 – Reuters (Liangping Gao, Yukun Zhang and Ryan Woo): “China’s new home prices fell again in August, extending a prolonged slump in prices as persistently weak demand in the pivotal housing sector remains a drag on economic growth. Prices slipped 0.3% in August from the previous month… On an annual basis, new home prices dropped 2.5% in August, narrowing from a 2.8% decline in July… Of the 70 cities surveyed, 57 reported month-on-month declines, and 65 recorded year-on-year falls. Resale prices also weakened. Prices in tier-one cities fell 3.5% year-on-year, while tier-two dropped 5.2% and tier-three prices were down 6.0%. Separate data showed property investment slumped 12.9% year-on-year in January–August…”
Central Banker Watch:
September 17 – Reuters (Balazs Koranyi): “Curtailing the U.S. Federal Reserve’s independence could backfire and actually push up borrowing costs while also tempting other governments to meddle in central banking, Bundesbank President Joachim Nagel warned… ‘If the Fed’s independence were to be permanently undermined politically, the consequences would be serious,’ Nagel said… ‘This would endanger the economic and financial stability and prosperity of the U.S…. There were indications that the attacks on the Fed contributed to a steeper U.S. yield curve on corresponding trading days: lower yields at the short end and higher yields at the long end… This shows that the financial markets certainly understand the importance of central bank independence.’”
September 18 – Financial Times (Sam Fleming and Ian Smith): “The Bank of England kept interest rates at 4%... and slowed the pace of reductions to its balance sheet, as it blamed the UK’s Labour government for contributing to recent increases in inflation. The seven-to-two decision to hold rates steady was in line with market expectations, as was the bank’s decision to dial back its quantitative tightening bond-selling programme from £100bn to £70bn to curb rising bond yields. The bank’s Monetary Policy Committee also signalled it would not hurry to cut interest rates again, signalling concern about continuing inflationary pressures.”
September 18 – Financial Times (Martin Arnold and Lee Harris): “The Bank of England is hardening its approach to the use of complex offshore financing by UK life insurers to lower capital requirements on the pension portfolios they are taking on from companies. Vicky White, the BoE’s director of prudential policy, used a speech… to give the clearest signal yet that the central bank plans to curb the industry’s use of offshore reinsurance deals. In these ‘funded reinsurance’ deals, both insurance liabilities and the assets backing them are ceded to a reinsurer, often in a foreign jurisdiction such as Bermuda.”
France/Europe Watch:
September 18 – Wall Street Journal (Stacy Meichtry): “Hundreds of thousands of protesters poured into the streets across France on Thursday, piling pressure on President Emmanuel Macron and his newly appointed prime minister to abandon any austerity measures aimed at repairing the country’s depleted public finances. A day of mostly peaceful protests turned violent as night fell and protesters clashed with police in Place de la Nation in Paris. Protesters hurled projectiles at columns of police. Officers clad in riot gear released tear gas before charging at crowds that refused to disperse.”
September 17 – Associated Press (Sylvie Corbet): “A ballooning deficit. A fractious Parliament. Unrest on the streets. The challenges facing Sébastien Lecornu, France’s fourth prime minister in a year, are daunting and defeated his immediate predecessors. So he’s trying a different tack. To ease tensions, Lecornu has scrapped proposals to axe two public holidays and trimmed lifetime benefits for former government ministers… French politics have been in turmoil since Macron called early parliamentary elections in June last year which resulted in a deeply fragmented legislature. One major challenge looms: addressing France’s budget crisis, a deeply divisive issue in Parliament.”
September 18 – New York Times (Liz Alderman): “As the French took to the streets… in another mass protest against a government austerity plan, one phrase was on everybody’s lips: Tax the rich. With a budget crisis looming, lawmakers with the power to bring down President Emmanuel Macron’s third government in a year are demanding that the very wealthy pay more to help fix France’s finances… But the tax plan, which would place a new 2% levy on assets above 100 million euros, is roiling an already fragmented political landscape.”
September 16 – Financial Times (Ian Johnston and Leila Abboud): “After years in the political wilderness, France’s centre-left Socialists have returned as power brokers who will determine the fate of both Emmanuel Macron’s new prime minister and several of his business-friendly reforms… Lecornu needs them to abstain in a vote on the 2026 budget to avoid the fate of his two predecessors… But Socialist party chief Olivier Faure said little progress was made during the meeting with Lecornu. ‘On the day before a major social movement, the message we needed to convey was that French women and men must see their lives change,’ he said… ‘If they are heard, then we will not vote down the government. If they are not, then we will.’”
Japan Watch:
September 16 – Reuters (Makiko Yamazaki): “Japan’s exports fell for a fourth straight month in August…, as elevated U.S. tariffs took a deeper toll on the country’s automotive and other manufacturing sectors. ‘Japanese automakers are still mostly absorbing the tariff costs by cutting export prices to maintain U.S. sales volumes,’ said Saisuke Sakai, chief Japan economist at Mizuho Research.”
Social, Political, Environmental, Cybersecurity Instability Watch:
September 14 – Financial Times (Amy Mackinnon): “Utah governor Spencer Cox said social media had played a ‘direct role’ in fueling political violence in the US, as the country grapples with the fatal shooting of conservative activist Charlie Kirk at a college in the state last week. ‘I believe that social media has played a direct role in every single assassination and assassination attempt that we have seen over the last five, six years,’ Cox said… Cox, a Republican, has spoken out strongly against social media companies in the wake of the killing and has likened the addictive nature of their algorithms to drugs. ‘It took us a decade to realise how evil these algorithms are,’ he said.”
September 16 – Reuters (Jason Lange): “Roughly two out of three Americans believe that the harsh rhetoric used in talking about politics is encouraging violence, according to a Reuters/Ipsos poll conducted in the days following the killing of conservative political activist Charlie Kirk. The three-day poll… revealed a nation unnerved by partisan divisions and worried over a spike in political violence that has also included the June slayings of a Democratic Minnesota lawmaker and her husband.”
September 17 – Bloomberg (Olivia Rudgard): “Global water supplies are becoming less reliable, leading to dangerous floods, droughts and threats to agriculture, the United Nation’s weather agency said in a new report. A record hot year driven by climate change contributed to unpredictable river flows and rainfall in 2024, according to the World Meteorological Organization’s fourth annual report on water resources. Last year almost two-thirds of global river basins had water levels either significantly above or significantly below normal values. ‘The water cycle is increasingly difficult to predict,’ said Stefan Uhlenbrook, the WMO’s director of hydrology and an author of the report. ‘It is more erratic.’”
Geopolitical Watch:
September 17 – New York Times (Steven Lee Myers): “In the week since Charlie Kirk’s assassination, Russia, Iran and China have spread thousands of false or incendiary claims about what happened to the conservative activist, in an effort to stoke political divisions or to portray the United States as a dysfunctional country. Official state media in the three countries mentioned Mr. Kirk 6,200 times from Sept. 10 to Sept. 17, framing the killing as a conspiracy…. The findings underscored remarks made last week by Gov. Spencer Cox of Utah… ‘What we are seeing is our adversaries want violence,’ Mr. Cox said... ‘We have bots from Russia, China, all over the world, that are trying to instill disinformation and encourage violence.’”
The S&P500 gained 1.2% (up 13.3% y-t-d), and the Dow added 1.0% (up 8.9%). The Utilities slipped 0.6% (up 10.6%). The Banks jumped 2.1% (up 21.3%), and the Broker/Dealers increased 0.9% (up 31.7%). The Transports were little changed (down 1.8%). The S&P 400 Midcaps were about unchanged (up 5.2%), and the small cap Russell 2000 jumped 2.2% (up 9.8%). The Nasdaq100 advanced 2.2% (up 17.2%). The Semiconductors surged 3.8% (up 25.1%). The Biotechs rallied 3.0% (up 8.6%). With bullion jumping $42, the HUI gold index rose 3.3% (up 109.6%).
Three-month Treasury bill rates ended the week at 3.87%. Two-year government yields added two bps to 3.57% (down 67bps y-t-d). Five-year T-note yields increased four bps higher to 3.68% (down 71bps). Ten-year Treasury yields rose six bps to 4.13% (down 44bps). Long bond yields jumped six bps to 4.75% (down 4bps). Benchmark Fannie Mae MBS yields gained five bps to 5.12% (down 73bps).
Italian 10-year yields added a basis point to 3.53% (up 1bp y-t-d). Greek 10-year yields increased two bps to 3.39% (up 18bps). Spain's 10-year yields added one basis point to 3.30% (up 23bps). German bund yields rose three bps to 2.75% (up 38bps). French yields gained five bps to 3.55% (up 36bps). The French to German 10-year bond spread widened about two to 80 bps. U.K. 10-year gilt yields increased four bps to 4.72% (up 15bps). U.K.'s FTSE equities index declined 0.7% (up 12.8% y-t-d).
Japan's Nikkei 225 Equities Index added 0.6% (up 12.9% y-t-d). Japanese 10-year "JGB" yields jumped five bps to 1.65% (up 54bps y-t-d). France's CAC40 increased 0.4% (up 6.4%). The German DAX equities index slipped 0.2% (up 18.7%). Spain's IBEX 35 equities index dipped 0.3% (up 31.6%). Italy's FTSE MIB index declined 0.6% (up 23.8%). EM equities were mixed. Brazil's Bovespa index rallied 2.5% (up 21.3%), while Mexico's Bolsa index declined 1.0% (up 23.6%). South Korea's Kospi gained 1.5% (up 43.6%). India's Sensex equities index rose 0.9% (up 5.2%). China's Shanghai Exchange Index retreated 1.3% (up 14.0%). Turkey's Borsa Istanbul National 100 index surged 8.9% (up 14.9%).
Federal Reserve Credit increased $2.6 billion last week at $6.559 TN. Fed Credit was down $2.330 TN from the June 22, 2022, peak. Over the past 314 weeks, Fed Credit expanded $2.833 TN, or 76%. Fed Credit inflated $3.748 TN, or 133%, over the past 671 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt dropped another $21.2 billion last week to $3.120 TN - the low back to November 2016. "Custody holdings" were down $195 billion y-o-y, or 5.9%.
Total money market fund assets (MMFA) declined $19.5 billion to $7.283 TN. MMFA were up $1.003 TN, or 15.9%, y-o-y - and have ballooned a historic $2.700 TN, or 58.9%, since October 26, 2022.
Total Commercial Paper dropped $18.3 billion to $1.383 TN. CP has expanded $295 billion y-t-d and $192 billion, or 16.1%, y-o-y.
Freddie Mac 30-year fixed mortgage rates dropped nine bps to a one-year low of 6.26% (up 17bps y-o-y). Fifteen-year rates fell nine bps to 5.41% (up 26bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates down seven bps to a 20-month low of 6.53% (down 13bps).
Currency Watch:
For the week, the U.S. Dollar Index was little changed at 97.644 (down 10.0% y-t-d). On the upside, the Brazilian real increased 0.6%, the Canadian dollar 0.4%, the South African rand 0.3%, the Mexican peso 0.2%, the Swiss franc 0.1%, and the euro 0.1%. On the downside, the New Zealand dollar declined 1.6%, the Swedish krona 1.0%, the Norwegian krone 0.8%, the Australian dollar 0.8%, the British pound 0.6%, the South Korean won 0.3%, the Japanese yen 0.2%, and the Singapore dollar 0.1%. The Chinese (onshore) renminbi increased 0.1% versus the dollar (up 2.54% y-t-d).
Commodities Watch:
September 17 – Bloomberg (Javier Blas): “The big question troubling the energy market now is why China is stockpiling so much oil. In problem-solving, the principle of Occam’s razor recommends searching for the simplest explanation. So perhaps the answer is as straightforward as ‘because it’s cheap.’ Still, the conspiracy theorist in me says there’s more to it. China has purchased more than 150 million barrels — costing about $10 billion at current prices — above its actual use so far this year. For a country that buys more electric vehicles than anywhere else, that demands dissecting.”
The Bloomberg Commodities Index declined 0.8% (up 4.3% y-t-d). Spot Gold advanced 1.2% to a record $3,685 (up 40.4%). Silver jumped 2.1% to $43.0841 (up 49.1%). WTI crude was unchanged at $62.68 (down 13%). Gasoline slipped 0.7% (down 3%), and Natural Gas fell 1.8% to $2.888 (down 20%). Copper declined 0.5% (up 15%). Wheat rallied 3.9% (down 5%), and Corn jumped 6.3% (down 8%). Bitcoin declined $460, or 0.4%, to $115,600 (up 23.4%).
Market Instability Watch:
September 15 – Bloomberg (Bastian Benrath-Wright): “Recent gains in financial markets don’t adequately reflect dangers looming from higher sovereign debt and disrupted world trade, the Bank for International Settlements warned. Investors in both stocks and credit, cheered by prospects of government spending and lower borrowing costs, have driven buoyancy that might paint a brighter picture for the world than warranted, the Basel-based institution said. ‘This very sanguine assessment seems to be disregarding some of the very real challenges in the real economy,’ Hyun Song Shin, head of the BIS’s monetary and economic department, told reporters. Markets are ‘vulnerable to repricing from bad news,’ he added… Shin echoed earlier warnings by his institution that national borrowing burdens seen around the world are reaching levels that are at the limits of sustainability. ‘Historical experience shows that market stress can emerge long before debt levels exceed textbook definitions,’ he said.”
September 16 – Bloomberg (Alexandra Harris): “A key interest rate for the US financial system jumped to the highest level this year — exceeding the Federal Reserve’s target range for its own benchmark — as dwindling liquidity is exacerbated by Treasury auction settlements and quarterly corporate tax payments this week. The Secured Overnight Financing Rate… rose to 4.51% as of Sept. 15 from 4.42% the prior session… That’s the biggest increase in the fixing since Dec. 31.”
September 13 – Financial Times (Leila Abboud, Delphine Strauss and Janina Conboye): “French debt has surged, deficits are widening and two prime ministers have fallen trying to fix it… Last year’s budget shortfall hit 5.8%, the highest of all Eurozone countries. François Bayrou, the second premier this year to walk the plank over deficit plans, attempted a €44bn fiscal package that will now certainly have to be scaled back by his successor.”
September 18 – Bloomberg: “Just as China’s long bull run for bonds is fading, the nation’s banks have loaded up on government debt at the fastest pace since 2019. In each of the past two months, commercial banks such as China Construction Bank Corp. raised their overall central and local government debt holdings by more than 20% year-over-year, reaching 72 trillion yuan ($10 trillion) by August, according to central bank data. It comes at a risky time… China had about 9 trillion yuan of government debt at the end of July, and commercial banks held about 70% of such debt in the interbank market, data from the central bank and ChinaBond showed. That demand, to some extent, ensures that China can effectively carry out a proactive fiscal policy and keep financing costs low.”
September 15 – Bloomberg (Yiqin Shen, Lu Wang and Justina Lee): “Gary Garland is putting his money where his advice is. The 58-year-old wealth adviser just bought $450,000 of structured products, investing a big chunk of his cash alongside that of his clients… ‘I love them,’ says Garland, the founder of Integrated Wealth Solutions... Garland is one of a growing number of US financial advisers touting structured products to their wealthy clients, and those rich investors are lapping them up. America’s market for the hybrid instruments, which combine the properties of a bond and derivative, ballooned to be worth a record $194 billion last year. It’s on course to top that in 2025.”
Global Credit and Financial Bubble Watch:
September 14 – CNBC (Jeff Huang): “Buy now, pay later plans offer an attractive alternative to credit cards for consumers: They allow purchases to be split into short-term, typically interest-free installments. ‘Credit isn’t new. Credit’s been around for thousands of years and credit cards aren’t new. But they’ve had a hard time adapting to consumer needs,’ said Michael Linford, chief operating officer of Affirm. ‘I think the thing that we’re seeing in the industry right now is widespread adoption of alternatives to credit cards.’ An estimated 86.5 million Americans used buy now, pay later loans in 2024, according to eMarketer, and that number could rise to 91.5 million in 2025. A recent LendingTree survey found that nearly half of Americans have used a buy now, pay later service… at least once, including 11% who have used the service at least six times.”
September 16 – Bloomberg (Mark Cudmore): “The balance sheet of China’s central bank is bigger than ever before, in dollar terms. In contrast, those of the Fed, ECB and BOJ have all reduced by trillions of dollars since their pandemic peaks. As of the end of August, the Fed’s balance sheet was $6.6 trillion, having fallen $40 billion from the prior month. The equivalent figures for the PBOC are $6.5 trillion, after a $120 billion increase. Assume the same rates of change again this month, the PBOC will overtake its American rival for the first time since March 2020.”
September 15 – Bloomberg (Spencer Soper): “Joseph Asia faced a dilemma. Tariffs imposed on his Chinese-grown, kosher frozen vegetables were jacking up his costs by about $2,000 for every shipping container entering the US. But the Brooklyn owner of Pardes Farms Inc. didn’t want to raise prices. So to help cover the tariffs and avoid a cash crunch, Asia swallowed hard and took out a $200,000 credit line charging 20%-plus interest. He has plenty of company. Slope Inc., the JPMorgan…-backed lending startup that arranged the short-term financing, says applications for its credit lines surged 730% year over year in August… In recent years, a flock of lending startups including Slope, Clearco and Wayflyer has emerged that cater to small- and medium-sized businesses.”
September 14 – CNBC (Editorial Board): “Subprime auto lender Tricolor Holdings filed for Chapter 7 bankruptcy last week, and the collateral damage could strike banks and trading houses. Investors have poured into risky consumer and corporate debt in a hunt for higher yields. Could Tricolor be a canary in a subprime debt mine? Tricolor caught investors and creditors off guard when it said… it is liquidating after 18 years in business. The… firm specialized in lending to car buyers with no credit history or Social Security number, including undocumented migrants in the Southwest. Its business grew amid the Biden-era surge in migration and auto prices. The company made loans by drawing on a line of credit from banks. It then packaged the loans and sold them to investors as asset-backed securities (ABS).”
September 16 – Bloomberg (Dorothy Ma): “Private equity firms are doubling down on pouring funds into struggling companies but only a handful of them see meaningful or lasting improvement in their credit quality, according to S&P Global Ratings. The sponsors have injected more than $2.5 billion in total capital into at least 165 distressed portfolio companies in the middle market over the past five years…”
Trump Administration Watch:
September 18 – Axios (Zachary Basu and Sara Fischer): “Trump-friendly billionaires are consolidating control over American media, steering legacy brands and social platforms in a new conservative direction. The media landscape of 2016 is unrecognizable. Once dominated by critics of President Trump, today’s fragmented ecosystem is increasingly controlled — or threatened — by forces aligned with the White House. ABC pulled Jimmy Kimmel off air ‘indefinitely’… The extraordinary move came after Federal Communications Commission chair Brendan Carr warned ABC that it could face fines or license revocations if it did not ‘operate in the public interest.’ Trump celebrated Kimmel's removal — just as he did CBS's decision to cancel Stephen Colbert’s show — and called for NBC to take action against remaining late-night hosts Seth Meyers and Jimmy Fallon. The media’s MAGA makeover is unfolding on two fronts — high-profile acquisitions that give Trump allies control of marquee platforms, and quieter rebrands that soften once-critical coverage or policies.”
September 18 – Axios (Neil Irwin): “The communications out of the Federal Reserve on Wednesday show the present and potential future of American monetary policy in vivid contrast. Current leaders of the central bank view the U.S. economy as in basically sound shape, experiencing some labor market softness that is nothing a few modest interest rate cuts can't solve. They emphasize sober consensus-building and moving gradually and predictably. Barely two days into his time as a Fed governor, Trump appointee Stephen Miran wants a substantial resetting of rates lower. His past comments and writings also suggest an eagerness for much more sweeping change in the institution. As the president installs other appointees at the Fed — including a new chair eight months from now — it is an early glimpse of major change coming to the institution with which Wall Street has a long love/hate relationship.”
September 17 – Wall Street Journal (Chip Cutter): “Corporate leaders regularly praise the Trump administration and its policies in public. Behind closed doors, their mood is darker. At a meeting of CEOs and other executives on Wednesday convened by the Yale School of Management, dozens of America’s business leaders sounded off on their concerns about tariffs, immigration, foreign policy matters and what many described as an increasingly chaotic, hard-to-navigate business environment. ‘They’re being extorted and bullied individually, but in private discourse, they’re really upset,’ said Jeffrey Sonnenfeld, a Yale management professor who organized the event, referring to recent deals that give the U.S. government a cut of certain Nvidia chip sales and a ‘golden share’ in U.S. Steel.”
September 14 – Bloomberg (María Paula Mijares Torres): “President Donald Trump predicted a ‘big cut’ from the Federal Reserve this week ahead of a pivotal meeting at which the central bank’s governors are expected to ease policy for the first time in nine months. ‘I think you have a big cut,’ Trump told reporters… ‘It’s perfect for cutting’.”
September 18 – Financial Times (Brian Spegele): “The Trump administration is drawing up plans to use tariff revenue to fund a programme to support US farmers as they head into harvest facing falling export sales and rising input costs, agriculture secretary Brooke Rollins said. ‘There may be circumstances under which we will be very seriously looking to and announcing a package soon,’ Rollins told the Financial Times... ‘We are reviewing markets every day.’ She added that financing the bailout through ‘tariff income that is now coming into America’ was ‘absolutely a potential’.”
September 17 – Bloomberg (Anthony Cormier and Zachary R Mider): “US Treasury Secretary Scott Bessent once agreed to occupy two different houses as his ‘principal residence’ at the same time, mortgage documents show — the same kind of contradictory pledges that President Donald Trump has been using to try to oust Federal Reserve Governor Lisa Cook. Bessent’s conflicting agreements obligated him to occupy homes in New York and Massachusetts as his main residence at the same time in 2007. But there’s no sign of any wrongdoing on his part, mortgage experts say. Rather, his case demonstrates that an incongruity in home-loan filings isn’t necessarily proof of fraud.”
September 16 – Wall Street Journal (Matt Grossman): “In her first public comments since President Trump fired her, the former head of the government agency that measures inflation and job growth called her dismissal ‘a dangerous step’ for the economy. Erika McEntarfer was fired Aug. 1 from the Bureau of Labor Statistics after Trump complained about massive downward revisions to the number of jobs created... The president accused her of manipulating the data to make him look bad… McEntarfer pointed to what she called ‘not a good list’ of other countries where statisticians have been pushed out over disappointing statistics, including Argentina, Greece and Turkey. ‘The resulting loss of trust in economic statistics led these countries to worsening economic crises, higher inflation and higher borrowing costs,’ she said.”
September 14 – Financial Times (Stefania Palma and Philip Stafford): “The head of Wall Street’s top watchdog is moving to scrap the aggressive enforcement agenda pursued under former US president Joe Biden, pledging to give businesses notice of any technical violations before regulators ‘bash down their door’. Paul Atkins, who this year was appointed chair of the Securities and Exchange Commission by President Donald Trump, told the Financial Times… the agency was geared to go after ‘crooks’… But he added there were ‘other gradations of that where you have to give people notice’. ‘You can’t just suddenly come and bash down their door and say ‘uh-uh we caught you, you’re doing something and it’s a technical violation’.”
September 15 – Associated Press (Aamer Madhani and Regina Garcia Cano): “President Donald Trump said the U.S. military… again targeted a boat allegedly carrying drugs from Venezuela, killing three aboard the vessel, and hinted that the military targeting of cartels could be further expanded. ‘The Strike occurred while these confirmed narcoterrorists from Venezuela were in International Waters transporting illegal narcotics (A DEADLY WEAPON POISONING AMERICANS!) headed to the U.S., Trump said… ‘These extremely violent drug trafficking cartels POSE A THREAT to U.S. National Security, Foreign Policy, and vital U.S. Interests.’”
September 15 – Reuters (Johann M Cherian, Lewis Krauskopf and Douglas Gillison): “U.S. companies should be allowed to report earnings every six months instead of on a quarterly basis, President Donald Trump said…, announcing what could prove to be a major shift for corporate America. The president said… that change… would cut costs and discourage shortsightedness on the part of publicly traded companies. The U.S. Securities and Exchange Commission said it was making Trump's proposal a priority.”
September 15 – New York Times (Eric Lipton, David Yaffe-Bellany, Bradley Hope, Tripp Mickle and Paul Mozur): “This summer, Steve Witkoff, President Trump’s Middle East envoy, paid a visit to the coast of Sardinia, a stretch of the Mediterranean Sea crowded with super yachts. On one of those extravagant vessels, Mr. Witkoff sat down with a member of the ultrarich ruling family of the United Arab Emirates. He was meeting Sheikh Tahnoon bin Zayed Al Nahyan, a trim figure in dark glasses who controls $1.5 trillion of the Emiratis’ sovereign wealth. It was the latest engagement in a consequential alliance. Over the past few months, Mr. Witkoff and Sheikh Tahnoon had become both diplomatic allies and business partners, testing the limits of ethics rules while enriching the president, his family and his inner circle, according to an investigation by The New York Times. At the heart of their relationship are two multibillion-dollar deals. One involved a crypto company founded by the Witkoff and the Trump families that benefited both financially. The other involved a sale of valuable computer chips that benefited the Emirates economically.”
China Trade War Watch:
September 17 – Financial Times (Zijing Wu, Cheng Leng and Tim Bradshaw): “China’s internet regulator has banned the country’s biggest technology companies from buying Nvidia’s artificial intelligence chips, as Beijing steps up efforts to boost its domestic industry and compete with the US. The Cyberspace Administration of China (CAC) told companies, including ByteDance and Alibaba, this week to end their testing and orders of the RTX Pro 6000D, Nvidia’s tailor-made product for the country… Several companies had indicated they would order tens of thousands of the RTX Pro 6000D, and had started testing and verification work with Nvidia’s server suppliers… After receiving the CAC order, the companies told their suppliers to stop the work…”
September 16 – New York Times (Daisuke Wakabayashi and Keith Bradsher): “The trade war this year between China and the United States started with a bang, a fast-and-furious escalation of tariffs to astronomical levels. In the ensuing months, both countries showed a willingness to pull back and not shut down trade between the world’s largest economies. But they have made little discernible progress in resolving their differences on trade. On Monday, after a fourth round of talks, U.S. Treasury Secretary Scott Bessent said that the two sides would talk about trade again in about a month. While other countries have scrambled to meet President Trump’s demands to strike deals for reduced tariffs, China has kept to its own timetable.”
September 15 – New York Times (Alan Rappeport): “On a windy September morning, Josh and Jordan Gackle huddled to discuss the looming crisis facing their North Dakota soybean farm. For the first time in the history of their 76-year-old operation, their biggest customer — China — had stopped buying soybeans. Their 2,300-acre soybean farm is projected to lose $400,000 in 2025. Soybeans that would normally be harvested and exported to Asia are now set to pile up in large steel bins. Since President Trump imposed tariffs on Chinese goods in February, Beijing has retaliated by halting all purchases of American soybeans. That decision has had devastating repercussions for farmers in North Dakota, which exported more than 70% of its soybeans to China before Trump unveiled the new tariffs this year.”
September 16 – Financial Times (Ryan McMorrow, Hannah Murphy, Zijing Wu and Demetri Sevastopulo): “Beijing has said the US spin-off of TikTok to be sold to American investors in a deal orchestrated by President Donald Trump will use parent company ByteDance’s Chinese algorithm. Wang Jingtao, deputy head of China’s powerful cyber security regulator, …said US and Chinese officials had agreed a framework that included ‘licensing the algorithm and other intellectual property rights’. He said ByteDance would ‘entrust the operation of TikTok’s US user data and content security’, without elaborating.”
September 16 – Politico (Camille Gus, Antonia Zimmermann, Victor Jack and Gabriel Gavin): “The EU plans to propose sanctions on more Chinese companies linked to the Kremlin’s war effort this week, as part of a diplomatic charm offensive to persuade U.S. President Donald Trump to finally press Russia to end the war in Ukraine. Over the weekend, Trump said he would join the EU in ratcheting up sanctions against Russian President Vladimir Putin, but only if NATO countries cut all oil imports from Russia and imposed tariffs of between 50% and 100% on China.”
September 14 – Financial Times (Camilla Hodgson and Nian Liu): “Chinese export restrictions on germanium, a metal crucial for the defence industry, have created a ‘desperate’ supply crunch and pushed prices to their highest level in at least 14 years, traders say. Germanium is essential to the production of thermal imaging systems used in military equipment, including fighter jets. But its production is heavily dominated by China and companies do not typically hold large stockpiles.”
Trade War Watch:
September 14 – Financial Times (Rana Foroohar): “America seems to have no friends these days, only frenemies. That’s not a reflection on the rest of the world, but rather on the Trump administration. In the current age of great power conflict, the US desperately needs solid allies to help it reindustrialise and counter both China’s economic and political influence and Russia’s growing aggression in Europe… Consider the recent US-Japan investment ‘alliance’, in which one of America’s greatest allies in Asia will have to accept 15% tariffs in exchange for the privilege of pouring $550bn into the US economy. Even after recouping its investment, it will reap just 10% of the ultimate gains. Then there were the US Immigration and Customs Enforcement raids on a Hyundai factory in Georgia…”
September 16 – Financial Times (Christian Davies, Song Jung-a and Aime Williams): “South Korea and the US are struggling to finalise the terms of their trade deal, as Seoul resists pressure from Washington to allow Donald Trump to decide where billions of dollars of its capital should be invested in the US. Seoul’s trade minister Yeo Han-koo is in Washington for talks…, more than two months after the sides announced that South Korea would make $350bn in American investments in exchange for the US reducing its threatened tariffs from 25% to 15%. ‘The devil is in the details. We are in tense negotiations over the details,’ Yeo said… The South Korean government had balked at Washington’s insistence that it follow Japan’s lead in letting Trump decide where hundreds of billions of dollars’ worth of its capital was invested…”
September 18 – Wall Street Journal (Santiago Pérez and Vipal Monga): “President Trump’s trade war almost broke Mexico and Canada’s relationship. Now they are trying to repair the damage ahead of tough negotiations with the U.S. Canadian Prime Minister Mark Carney is expected to meet Thursday afternoon with Mexican President Claudia Sheinbaum at the ornate National Palace in Mexico City, where the two leaders are expected to agree on a strategic partnership to bolster security and trade cooperation. Their goal: preserve North America’s deep economic ties in key sectors such as the automotive industry as Trump tries to remake trade across the world.”
Constitution Watch:
September 16 – Wall Street Journal (Editorial Board): “Is a basic understanding of the First Amendment too much to expect from the nation’s Attorney General? Progressives have spent years trying to create and define a category called ‘hate speech.’ This misunderstanding of the First Amendment seems to have infiltrated the D.C. water supply because AG Pam Bondi repeated it Monday in the wake of Charlie Kirk’s assassination. Discussing Kirk’s work on college campuses, Ms. Bondi mentioned the ‘disgusting’ antisemitism on display at many universities, and so far so good. But wait. ‘There’s free speech and then there’s hate speech, and there is no place—especially now, especially after what happened to Charlie, in our society,’ the country’s top law enforcer told a podcast. ‘We will absolutely target you, go after you, if you are targeting anyone with hate speech.’ Kirk would want a word. ‘My position is that even hate speech should be completely and totally allowed in our country. The most disgusting speech should absolutely be protected,’ he once told a crowd.”
September 18 – Axios (Josephine Walker): “Former President Obama condemned ABC for pulling Jimmy Kimmel off the air…, calling it ‘government coercion’ by a Trump administration official. Obama, who infrequently wades into political fights, joined other high-profile personalities in accusing the administration of hypocrisy for threatening broadcasters after the MAGA movement spent years railing against ‘cancel culture’ and "censorship.’ ‘After years of complaining about cancel culture, the current administration has taken it to a new and dangerous level by routinely threatening regulatory action against media companies unless they muzzle or fire reporters and commentators it doesn’t like,’ Obama said… ‘This is precisely the kind of government coercion that the First Amendment was designed to prevent — and media companies need to start standing up rather than capitulating to it,’ he added.”
September 18 – Axios (Courtenay Brown): “President Trump’s economic agenda collided with the Supreme Court Thursday, as Trump asked the justices to let him fire Fed governor Lisa Cook and the court scheduled arguments on a challenge to his trade agenda. The outcome of both cases has major implications for the future of the economy and administration policy. A federal appellate court struck down tariffs late last month after they were imposed by Trump under the International Emergency Economic Powers Act. The court argued the import taxes were an overreach of power… Earlier this month, the high court agreed to put the case on a fast track and promptly hear the case, which it will now do Nov. 5.”
September 15 – Bloomberg (Josh Wingrove): “Vice President JD Vance pledged to investigate left-leaning organizations following the killing of Charlie Kirk, amplifying efforts to memorialize the conservative activist and laying the groundwork for federally scrutinizing political opponents that some administration officials and supporters have blamed in part for his death… ‘We have to talk about this incredibly destructive movement of left-wing extremism that has grown up over the last few years and I believe is part of the reason why Charlie was killed by an assassin’s bullet. We’re going to talk about how to dismantle that,’ Vance said... ‘We’re going to go after the NGO network that foments, facilitates and engages in violence,’ he later added, referring to non-governmental organizations.”
Budget Watch:
September 19 – Bloomberg (Erik Wasson): “Congress moved closer to an Oct. 1 government shutdown as Senate Democrats and Republicans on Friday each blocked the other party’s rival plans to provide temporary funding. Democrats are demanding a boost to health care spending while Republicans refuse to go along and back a simple bill to keep the lights on through Nov. 21. Resolving the conflict is complicated by the Senate’s plan to take a week-long break as the Oct. 1 funding lapse nears. The Senate could return to Washington as late as Sept. 29. The House plans to stay on recess until after Oct. 1.”
September 17 – Wall Street Journal (Lindsay Wise, Siobhan Hughes and Katy Stech Ferek): “America is headed toward a government shutdown in two weeks unless lawmakers reach a spending deal. On Capitol Hill, Republican and Democratic leaders are busy arguing over who should pick up the phone first. ‘What have we heard from them? Crickets! Nothing!’ complained Senate Minority Leader Chuck Schumer… ‘They seem like they’re kind of having this meltdown over the fact that we’re not talking to them,’ said Senate Majority Leader John Thune (R., S.D.)… On Wednesday, Thune told reporters that he had met with Schumer on the floor last week to discuss nominations and that the Democrat ‘couldn’t get out of that meeting fast enough—he headed for the exits.’ Each party claims it is the other one that is driving the country to a disastrous shutdown.”
U.S./Russia/China/Europe/Iran Watch:
September 13 – BBC (Stuart Lau): “More Nato countries will move troops and fighter jets eastwards after more than a dozen drones entered Polish airspace on Wednesday. Denmark, France and Germany have joined a new mission to bolster the military alliance's eastern flank. Other Nato allies are expected to take part later. Tensions have been high across Europe since Poland accused Russia of an unprecedented incursion. Some of the 19 drones that entered Polish territory were shot down, while others crashed into fields and even a house in eastern Poland. Warsaw said the incursion was deliberate, but Moscow downplayed the incident, saying it had ‘no plans to target’ facilities in Poland.”
September 16 – Reuters (Andrew Osborn and Mark Trevelyan): “Russia and Belarus are rehearsing the launch of Russian tactical nuclear weapons as part of joint war games, Belarusian leader Alexander Lukashenko said… State media quoted the Belarusian chief of staff as saying that the exercises also featured Russia’s Oreshnik hypersonic missile, which it test-fired last year in the war with Ukraine. Russia and Belarus are ending five days of war games codenamed Zapad (West) in a show of force they say is to test combat readiness but which has unnerved some surrounding countries.”
September 13 – Reuters (Barbara Erling): “Six kilometres from the Russian border in northern Poland, office administrator Agnieszka Jedruszak is digging a trench. Driven by fear of war with Russia, she wants to be able to defend her family, including her 13-year-old son. Thousands of Poles like Jedruszak are signing up for voluntary military training as Poland's army seeks to fill its ranks with professional and voluntary personnel amid escalating concerns over Russia's military aggression.”
September 15 – Financial Times (Raphael Minder): “The Polish government is increasing its cyber security budget to a record €1bn this year, after Russian sabotage attempts targeted hospitals and urban water supplies. Dariusz Standerski, deputy minister for digital affairs, told the Financial Times that Poland was facing between 20 and 50 attempts to damage critical infrastructure every day…”
September 18 – Wall Street Journal (Brian Spegele): “China played down its rapidly rising military might for years. In the past few weeks, Beijing has broadcast a steady drumbeat of firepower displays and muscular rhetoric, carrying an unmistakable warning for the U.S. It began on Sept. 3, when Chinese leader Xi Jinping brandished his country’s full nuclear triad—the means to deliver nuclear weapons by land, sea and air—together for the first time at an extravagant parade of military hardware and personnel. Defense Minister Dong Jun followed up six days later with a warning to U.S. Defense Secretary Pete Hegseth that ‘acts of containment or deterrence against China will not succeed’… Then, on Friday, China’s navy went to the effort of announcing that its newest aircraft carrier, the Fujian, had sailed through the waters between China and Taiwan, the self-ruled island that Beijing claims as its own and has threatened to seize by force.”
September 17 – Bloomberg: “Chinese Defense Minister Dong Jun opened Beijing’s flagship Xiangshan security forum… repeating a warning against ‘external interference’ over Taiwan, while delivering a sharp critique of ‘bullying’ in a veiled swipe at Washington. Addressing an audience of international military officials, Dong reiterated Beijing’s opposition to what it considers attempts to formally separate the self-ruled democracy and positioned China as a force for stability. ‘We must keep in mind historical lessons, see through disguised hegemonic logic and bullying acts and stand against them,’ he said after blaming ‘hegemonic expansion’ as a root cause of World War II. ‘We will never allow any separatist attempts for Taiwan independence to succeed.’”
Ukraine Watch:
September 14 – Associated Press: “Ukrainian drones have struck one of Russia’s largest oil refineries, sparking a fire, Russian officials and Ukraine’s military said… The overnight strike on the Kirishi refinery, in Russia’s northwestern Leningrad region, follows weeks of Ukrainian attacks on Russian oil infrastructure that Kyiv says fuels Moscow’s war effort. The facility… produces close to 17.7 million metric tons per year (355,000 barrels per day) of crude, and is one of Russia’s top three by output.”
Middle East Watch:
September 19 – Reuters (Edmund Blair, Ali Sawafta, Tiffany Le and Milan Pavicic): “Israel's military said it had expanded operations in Gaza City on Friday and bombarded Hamas infrastructure, while displaced Palestinians traumatised by the advance said they had no means to flee. ‘The situation is really bad. All night long, the tank was firing shells,’ said Palestinian Toufic Abu Mouawad, who left a camp for the displaced with nowhere else to go… Israeli forces control Gaza City's eastern suburbs and in recent days have been pounding the Sheikh Radwan and Tel Al-Hawa areas, from where they would be positioned to advance on central and western areas, where most of the population is sheltering.”
AI Bubble/Arms Race Watch:
September 19 – Bloomberg (Ed Ludlow, Carmen Arroyo and Kurt Wagner): “Elon Musk’s artificial intelligence startup xAI has raised new funding at a $200 billion valuation, according to a person familiar with the deal, making it one of the world’s most valuable startups.”
September 17 – Axios (Megan Morrone): “There’s a 25% chance that the future of AI will go ‘really, really badly,’ Anthropic CEO Dario Amodei said at the Axios AI+ DC Summit… Amodei gave the percentage after being asked his ‘(p)doom number,’ which is the probability that things go south with AI — specifically that it destroys humanity. Amodei says getting real about potential concerns with AI is key to positive outcomes. ‘I really hate that term,’ Amodei told Axios co-founder and CEO Jim VandeHei when asked about his (p)doom number. Amodei also said there’s a ‘75% chance that things go really, really well.’”
September 18 – Bloomberg: “From Huawei Technologies Co. to Alibaba Group Holding Ltd., China’s biggest tech firms have vied with each other this month to tout their latest AI chip advancements. Their growing public swagger is gaining investors’ attention, igniting a $240 billion stock market rally. On Thursday, Huawei for the first time publicly laid out its three-year roadmap for chip development, boasting of super clusters’ and vastly faster AI chips intended to supplant restricted Nvidia Corp. accelerators. A day prior, state media showcased Alibaba’s growing footprint within the country’s No. 2 wireless operator. The twin developments follow a panoply of revelations about similar strides made by peers from Baidu Inc. to Cambricon Technologies Corp. over the past month or so.”
September 18 – Bloomberg: “Huawei Technologies Co. unveiled new technology from memory chips to AI accelerators Thursday, outlining publicly for the first time its multiyear plan to challenge Nvidia Corp.’s dominance in a growing market. The highlight of the company’s presentation… were new SuperPod cluster designs that will allow Huawei to link as many as 15,488 of its Ascend neural processing units for artificial intelligence and operate them as a coherent system…”
September 18 – Reuters (Eduardo Baptista): “Chinese AI developer DeepSeek said it spent $294,000 on training its R1 model, much lower than figures reported for U.S. rivals, in a paper that is likely to reignite debate over Beijing's place in the race to develop artificial intelligence. The rare update from the… company - the first estimate it has released of R1’s training costs - appeared in a peer-reviewed article in the academic journal Nature…”
September 15 – Bloomberg (Ryan Vlastelica): “Alphabet… joined an elite group of companies valued at more than $3 trillion, the latest sign of improving investor sentiment toward the Google parent. Shares rose as much as 4.8%..., resulting in a market capitalization of just over $3 trillion. The stock has soared more than 70% from its April low… Alphabet joins a short list of companies valued at more than $3 trillion, with Nvidia Corp., Microsoft Corp. and Apple Inc. the only other publicly traded stocks above that level.”
September 17 – Bloomberg (Janice Huang and Edwin Chan): “Companies in China’s technology sector have been raising billions in capital to advance their artificial intelligence capabilities and other digital infrastructure. Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Baidu Inc. have led the flurry of bond issuances, procuring more than $5 billion in September alone.”
September 16 – Bloomberg (Charlotte Yang): “A blistering rally in Chinese technology shares accelerated on Wednesday as renewed bets on artificial intelligence sent a key gauge to the highest in nearly four years. The Hang Seng Tech Index, which tracks the largest tech firms listed in Hong Kong, rose 4.2% to close at its highest level since November 2021. Search engine operator Baidu Inc led gains with a 16% jump…”
Bubble and Mania Watch:
September 16 – Bloomberg (Laura Noonan): “Regulation and compliance have driven an unprecedented wall of US retirement money into private assets, a new report by Bloomberg Intelligence shows, casting new light on the real-world risks from finance’s continued push into areas beyond the traditional oversight of regulators. The top 20 US pension funds alone hold about half a trillion dollars of private market exposure, the analysts found, with some having doubled their allocations to unlisted investments over the past decade. Exposures across the broader $43.4 trillion of US retirement assets are also rising…”
September 18 – Bloomberg (Silas Brown and Esteban Duarte): “Apollo Global Management Inc. is set to use a rare structure to raise $10 billion from insurers…, in the latest illustration of the increasing ties between private capital and annuity providers. The… firm is employing a special purpose vehicle in order to sell highly rated debt against stakes in a range of its credit funds, said the people, who requested anonymity as the matter is private. These include direct lending, asset-based finance, hybrid capital and investment-grade credit. The potential deal, among the largest ever of its kind, is at an early stage…”
Inflation Watch:
September 17 – CBS News (Megan Cerullo): “Homeowners insurance rates are rising across the U.S., driven by climate change, rising cost of building materials and surging home prices. Almost half of property insurance policy holders in the U.S. said their premiums rose over the past year, the highest rate of increases in more than a decade, according to… J.D. Power. Average homeowners insurance costs have risen nearly 70% over the past five years, according to data from ICE Mortgage Technology. On average, single-family homeowners with a mortgage now pay $2,370 a year for their property policy. In 2025, homeowners insurance costs rose have risen most sharply in California, where premiums in Los Angeles were up 19.5% compared to a year ago…”
September 14 – Financial Times (Claire Boston): “As homeowners insurance premiums hit record highs, homebuyers are growing increasingly concerned about their ability to afford them. The average single-family homeowner is now paying almost $2,370 a year for property insurance, according to… ICE Mortgage Technology, up 70% in the last 5.5 years. Insurance premiums are one of the fastest-growing costs of homeownership, outpacing jumps in home prices, mortgage rates, and property taxes. Most homebuyers expect the problem to get worse. A Realtor.com survey of recent and prospective homebuyers found that 75% are worried they may be unable to afford insurance in the future, and nearly 90% are bracing for higher prices.”
September 17 – Financial Times (Martha Muir): “Soaring US electricity prices are sparking fears of an affordability crisis, defying Donald Trump’s pledge to halve consumers’ power bills within a year of the president returning to office. Prices hit record highs in 2025, with the average residential cost of electricity up 7% since last June and commercial rates 5% higher… The price jumps will have a political impact, analysts have said… ‘This is going to become one of the defining political issues of our time,’ said Charles Hua, executive director of PowerLines, an energy affordability advocacy group.”
September 18 – Bloomberg (Emma Sanchez): “Anger over rising energy costs will eventually force states to allow more natural gas infrastructure to be built in the US, according to one of the nation’s largest producers of the fuel. ‘We’ve never produced more energy than we’re producing now, but Americans’ energy bills are up over 35%,’ EQT Corp. Chief Executive Officer Toby Rice said… ‘That’s the catalyst that’s going to get people asking questions.’”
September 15 – Wall Street Journal (Liz Young): “Shoe prices are expected to rise further as footwear companies burn through stockpiles of inventory they rushed in before tariffs raised import costs, an industry group warns. U.S. consumer prices overall rose 2.9% in August from a year earlier, the largest increase since the start of the year. Footwear prices increased at a slower 1.4% rate annually…, while women’s footwear prices climbed 2.8%. Matt Priest, chief executive of Footwear Distributors and Retailers of America…, said companies are beginning to pass along the cost of tariffs paid on recent shipments. ‘Women’s shoes are more fashion-oriented,’ Priest said… ‘Our ability to front-load women’s product based on fashion trends was limited, and we are seeing that those increases start to hit consumers first.’”
September 15 – Wall Street Journal (Editorial Board): “President Trump’s tariffs are coursing through the American (and world) economy, even if their macro effects are taking time to show up in the national statistics. Consider a case study in the daily institution of millions that is morning coffee. This summer Mr. Trump hit Brazil with a 50% tariff… Brazil is the world’s biggest coffee producer, and its beans are in more than one of every three cups of joe brewed in the U.S…. The price of a pound of unroasted Brazilian beans has jumped to more than $6 from $4.50, says Dan Hunnewell, the owner of Coffee Bros., a specialty supplier in New York.”
Federal Reserve Watch:
September 18 – New York Times (Colby Smith): “For the Federal Reserve, there are no good options. Its chair, Jerome H. Powell, made that clear on Wednesday, shortly after the central bank cut interest rates for the first time this year. ‘There are no risk-free paths now,’ said Mr. Powell. ‘It’s not incredibly obvious what to do.’ The comment was in reference to the tough bind that the Fed now finds itself in at a time when inflation is moving further away from the central bank’s 2% target and the labor market is looking much more wobbly. The Fed cannot address both issues simultaneously, and trying to resolve one typically jeopardizes the other. ‘Our tools can’t do two things at once,’ added Mr. Powell.”
September 17 – Financial Times (Claire Jones and Kate Duguid): “The Federal Open Market Committee lowered the benchmark federal funds target range to 4% to 4.25%... Economic projections released alongside the Fed decision showed most of the central bank’s top leaders anticipated at least two further quarter-point reductions by the end of this year, marking a dovish shift from the last set of forecasts in June. Wednesday’s rate cut was the first since December and came as the central bank signaled it viewed a deteriorating labour market as a more immediate risk than a rise in inflation... ‘The labour market has softened. The case for there being a persistent inflation outbreak is less,’ Fed chair Jay Powell said…, pointing to data showing hiring had fallen sharply in recent months even as the jobless rate had remained low. He added that the move was a ‘risk management cut’.”
September 17 – Reuters (Dan Burns): “There was no widespread support for a larger, half-percentage-point interest rate cut at the Federal Reserve meeting this week, Fed Chair Jerome Powell said… ‘There wasn’t widespread support at all for a 50 bps cut today,’ Powell told reporters… ‘You know ... we’ve done very large rate hikes and very large rate cuts in the last five years, and you tend to do those at a time when you feel that policy is out of place and needs to move quickly to a new place.’”
September 18 – Associated Press (Christopher Rugaber): “The Federal Reserve’s nearly unanimous decision… to reduce its key interest rate was seen by many observers as a quiet show of unity and independence amid President Donald Trump’s relentless pressure for steeper cuts and his unprecedented effort to fire a top Fed official. Many Fed-watchers expected a contentious two-day meeting this week, with the economy’s future uncertain and a Trump appointee hastily added to the board just hours before the meeting began. The White House has also floated several members of the Fed’s governing board as potential replacements for the current chair, Jerome Powell, when his term ends in May, creating incentives for those officials to push for the deep rate cuts Trump has demanded.”
September 17 – Reuters (Ann Saphir): “If President Donald Trump hoped that putting a close ally at the Federal Reserve would grab headlines, White House economic adviser Stephen Miran’s dissent and way-below consensus interest rate projection on Wednesday delivered. If the hope was to have someone on the inside to get the Fed to lower interest rates as sharply as Trump wants, Miran’s lone dissent was evidence the gambit had failed, at least for now… And on his second day at the central bank, he cast the one vote in favor of a half-of-a-percentage-point rate cut… But his support for a bigger cut and his submission of a rate-path view that showed he believes another 1.25 percentage points of cuts are warranted by year-end - far more than any other policymaker - fell on deaf ears.”
September 15 – CNBC (Erin Doherty): “The Senate… confirmed President Donald Trump’s pick to join the Federal Reserve, Stephen Miran, just one day before the central bank meets to consider whether to cut interest rates. Miran’s fast-tracked confirmation by a vote of 48-47 late Monday… The vote largely fell along party lines… Miran has said that once he is confirmed, he plans to take an unpaid leave of absence from his job as chair of the White House Council of Economic Advisors. But he has so far stopped short of agreeing to resign altogether from the political appointment.”
September 15 – Associated Press (Christopher Rugaber): “An appeals court ruled… Lisa Cook can remain a Federal Reserve governor, rebuffing President Donald Trump’s efforts to remove her just ahead of a key vote on interest rates. The Trump administration is expected to quickly turn to the Supreme Court in a last-ditch bid to unseat Cook… And Cook’s lawsuit seeking to permanently block her firing must still make its way through the courts. The White House campaign to unseat Cook marks an unprecedented bid to reshape the Fed’s seven-member governing board, which was designed to be largely independent from day-to-day politics. No president has fired a sitting Fed governor in the agency’s 112-year history.”
September 13 – Wall Street Journal (Nick Timiraos): “Federal Reserve governor Lisa Cook… described one of the properties at the heart of those allegations as a vacation home or second home on at least two documents. Copies of the documents… could counter the Trump administration’s claim that Cook knowingly misrepresented her occupancy status… One document, a letter from the Bank-Fund Staff Federal Credit Union that is dated May 28, 2021, details the estimated costs associated with obtaining a mortgage for the purchase of an Atlanta condominium. The ‘property use’ field is listed as ‘vacation home’ on a preliminary loan estimate.”
September 15 – Reuters: “The property tax authority in Ann Arbor, Michigan, said that Federal Reserve Governor Lisa Cook hasn’t broken rules for tax breaks on a home there that Cook declared her primary residence. The finding… could boost Cook’s defense against efforts by the Trump administration to remove her from the Federal Reserve board. Ann Arbor has ‘no reason to believe’ that Cook violated property tax rules, City Assessor Jerry Markey told Reuters.”
September 17 – Bloomberg (Chris Anstey): “Former Treasury Secretary Lawrence Summers said Federal Reserve policy is leaning toward being too slack, emphasizing that the US economy’s biggest risks lie in inflation rather than the job market. ‘My own guess is that policy is currently a little looser — looking at all financial conditions — than people view it as being,’ Summers said… ‘The balance of risks is a bit more tilted towards inflation rather than unemployment’… ‘The biggest risk in this situation is being that we lose contact with our 2% inflation target and become a country with an inflation psychology,’ said Summers…”
U.S. Economic Bubble Watch:
September 16 – Associated Press (Anne D’Innocenzio): “Shoppers increased their spending at a better-than-expected pace in August from July... Retail sales rose 0.6% last month from July, when sales were up a revised 0.6%... In June, retail sales rose 0.9%... Excluding auto sales… retail sales rose 0.7% in August. Sales at auto vehicle and parts dealers rose 0.5%. The data showed solid spending across various other outlets. Business at electronics and appliance stores was up 0.3%, while online retailers saw a 2% increase. Business at clothing and accessories retailers rose 1%. And business at restaurants, the lone services component within the Census Bureau report and a barometer of discretionary spending, rose 0.7%.”
September 18 – Associated Press (Matt Ott): “The number of Americans applying for jobless aid last week retreated significantly after surging to a nearly four-year high a week earlier. U.S. filings… for the week ending Sept. 13 fell by 33,000 to 231,000… That’s less than the 241,000 analysts surveyed by the data firm FactSet had forecast. The previous week, applications surged to 264,000, their highest level since the week of Oct. 23, 2021… The total number of Americans collecting unemployment benefits for the previous week of Sept. 6 fell by 7,000 to 1.92 million.”
September 16 – Reuters (Lucia Mutikani): “U.S. factory production unexpectedly increased in August amid a rebound in the output of motor vehicles and some nondurable goods, though tariffs continued to cast a shadow over the manufacturing sector. Manufacturing output rose 0.2% last month after a downwardly revised 0.1% fall in July…”
September 17 – CNBC (Diana Olick): “Mortgage rates last week dropped to the lowest level since October of last year. That caused a massive run on refinances, as consumers seek more savings in an uncertain economy. Applications to refinance a home loan jumped 58% last week compared with the previous week and were 70% higher than the same week one year ago… Refinance applications were particularly strong for adjustable-rate mortgages. The ARM share of activity increased to 12.9% of total applications, its highest level since 2008… Applications for a mortgage to purchase a home rose 3% for the week and were 20% higher than the same week one year ago.”
September 17 – Reuters (Lucia Mutikani): “U.S. single-family homebuilding plunged to a near 2-1/2-year low in August amid a glut of unsold new houses, suggesting the housing market could remain an economic headwind this quarter. The report… also showed permits for future single-family home construction dropped last month to the lowest level in more than two years. Some economists said the decline was necessary to manage new housing inventory, currently near levels last seen in late 2007… Single-family housing starts, which account for the bulk of homebuilding, fell 7.0% to a seasonally adjusted annual rate of 890,000 units last month… That was the lowest level since April 2023.”
September 16 – Bloomberg (Michael Sasso): “Sentiment among US homebuilders remained at one of its lowest levels in years this month, underscoring the deep freeze in the housing market despite a recent drop in mortgage rates. An index of market conditions from the National Association of Home Builders and Wells Fargo was unchanged at 32 in September… Among the index’s components, a gauge of present sales stayed at 34, while an index of prospective buyer traffic dipped slightly. Meantime, the measure of sales expectations in the next six months climbed to the highest level since March…”
September 16 – Reuters (Nupur Anand): “Some U.S. consumers are showing increased signs of stress as inflation and higher interest rates are affecting affordability and leading to financial strain on borrowers, credit scoring company Fair Isaac Corporation, widely known as FICO, said… The overall national FICO score has dipped slightly by about 2 points. About 38.1% of the population scored between 600 and 749 points in 2021, while only 33.8% of the population ranked in these middle ranges in 2025. Gen Z adults in the U.S. - those currently in their teens and 20s - have seen the sharpest decrease in their scores, driven by student loan pressure.”
September 16 – Wall Street Journal (Jeanne Whalen): “There are two economies in the U.S. right now, and they are moving in different directions. For high earners and many older Americans, the economy looks robust. They are still spending like gangbusters, and their 401(k) accounts and homes have soared in value. They nabbed 3% mortgages when rates were low… For many others, momentum has stalled or reversed. The big wage growth experienced by low-income workers during the pandemic has petered out. Those workers are curbing their spending and in some cases are struggling to find jobs. Unemployment for Black Americans and many young people has jumped. Home prices and rents have risen sharply, making housing increasingly unaffordable.”
September 16 – Bloomberg (Jonnelle Marte): “Wealthy consumers continue to account for a growing share of US consumer spending, highlighting the lopsided strength of the economy as a slowdown in hiring and wariness among other income cohorts raise fears of a slowdown. Consumers in the top 10% of the income distribution accounted for 49.2% of total spending in the second quarter, up from 48.5% in the first quarter, reaching the highest level in data going back to 1989, according to… Moody’s Analytics.”
September 15 – Wall Street Journal (Paul Kiernan): “Anyone who surveys the public, from marketers to pollsters, struggles nowadays to get people to answer their questions. That phenomenon afflicts crucial government data, making it harder for policymakers and investors to know the true state of the economy. Falling survey participation is an important reason the flagship jobs report released every month by the Bureau of Labor Statistics, part of the Labor Department, has undergone such big revisions recently.”
China Watch:
September 14 – Reuters (Kevin Yao, Joe Cash and Yukun Zhang): “China’s factory output and retail sales reported their weakest growth since last year in August, keeping pressure on Beijing to roll out more stimulus to fend off a sharp slowdown in the world's second-largest economy… Industrial output grew 5.2% year-on-year…, the lowest reading since August 2024 and weaker than a 5.7% rise in July… Retail sales… expanded 3.4% in August, the slowest pace since November 2024, and cooling from a 3.7% rise in the previous month. They missed a forecast gain of 3.9%.”
September 14 – Reuters (Liangping Gao, Yukun Zhang and Ryan Woo): “China’s new home prices fell again in August, extending a prolonged slump in prices as persistently weak demand in the pivotal housing sector remains a drag on economic growth. Prices slipped 0.3% in August from the previous month… On an annual basis, new home prices dropped 2.5% in August, narrowing from a 2.8% decline in July… Of the 70 cities surveyed, 57 reported month-on-month declines, and 65 recorded year-on-year falls. Resale prices also weakened. Prices in tier-one cities fell 3.5% year-on-year, while tier-two dropped 5.2% and tier-three prices were down 6.0%. Separate data showed property investment slumped 12.9% year-on-year in January–August…”
Central Banker Watch:
September 17 – Reuters (Balazs Koranyi): “Curtailing the U.S. Federal Reserve’s independence could backfire and actually push up borrowing costs while also tempting other governments to meddle in central banking, Bundesbank President Joachim Nagel warned… ‘If the Fed’s independence were to be permanently undermined politically, the consequences would be serious,’ Nagel said… ‘This would endanger the economic and financial stability and prosperity of the U.S…. There were indications that the attacks on the Fed contributed to a steeper U.S. yield curve on corresponding trading days: lower yields at the short end and higher yields at the long end… This shows that the financial markets certainly understand the importance of central bank independence.’”
September 18 – Financial Times (Sam Fleming and Ian Smith): “The Bank of England kept interest rates at 4%... and slowed the pace of reductions to its balance sheet, as it blamed the UK’s Labour government for contributing to recent increases in inflation. The seven-to-two decision to hold rates steady was in line with market expectations, as was the bank’s decision to dial back its quantitative tightening bond-selling programme from £100bn to £70bn to curb rising bond yields. The bank’s Monetary Policy Committee also signalled it would not hurry to cut interest rates again, signalling concern about continuing inflationary pressures.”
September 18 – Financial Times (Martin Arnold and Lee Harris): “The Bank of England is hardening its approach to the use of complex offshore financing by UK life insurers to lower capital requirements on the pension portfolios they are taking on from companies. Vicky White, the BoE’s director of prudential policy, used a speech… to give the clearest signal yet that the central bank plans to curb the industry’s use of offshore reinsurance deals. In these ‘funded reinsurance’ deals, both insurance liabilities and the assets backing them are ceded to a reinsurer, often in a foreign jurisdiction such as Bermuda.”
France/Europe Watch:
September 18 – Wall Street Journal (Stacy Meichtry): “Hundreds of thousands of protesters poured into the streets across France on Thursday, piling pressure on President Emmanuel Macron and his newly appointed prime minister to abandon any austerity measures aimed at repairing the country’s depleted public finances. A day of mostly peaceful protests turned violent as night fell and protesters clashed with police in Place de la Nation in Paris. Protesters hurled projectiles at columns of police. Officers clad in riot gear released tear gas before charging at crowds that refused to disperse.”
September 17 – Associated Press (Sylvie Corbet): “A ballooning deficit. A fractious Parliament. Unrest on the streets. The challenges facing Sébastien Lecornu, France’s fourth prime minister in a year, are daunting and defeated his immediate predecessors. So he’s trying a different tack. To ease tensions, Lecornu has scrapped proposals to axe two public holidays and trimmed lifetime benefits for former government ministers… French politics have been in turmoil since Macron called early parliamentary elections in June last year which resulted in a deeply fragmented legislature. One major challenge looms: addressing France’s budget crisis, a deeply divisive issue in Parliament.”
September 18 – New York Times (Liz Alderman): “As the French took to the streets… in another mass protest against a government austerity plan, one phrase was on everybody’s lips: Tax the rich. With a budget crisis looming, lawmakers with the power to bring down President Emmanuel Macron’s third government in a year are demanding that the very wealthy pay more to help fix France’s finances… But the tax plan, which would place a new 2% levy on assets above 100 million euros, is roiling an already fragmented political landscape.”
September 16 – Financial Times (Ian Johnston and Leila Abboud): “After years in the political wilderness, France’s centre-left Socialists have returned as power brokers who will determine the fate of both Emmanuel Macron’s new prime minister and several of his business-friendly reforms… Lecornu needs them to abstain in a vote on the 2026 budget to avoid the fate of his two predecessors… But Socialist party chief Olivier Faure said little progress was made during the meeting with Lecornu. ‘On the day before a major social movement, the message we needed to convey was that French women and men must see their lives change,’ he said… ‘If they are heard, then we will not vote down the government. If they are not, then we will.’”
Japan Watch:
September 16 – Reuters (Makiko Yamazaki): “Japan’s exports fell for a fourth straight month in August…, as elevated U.S. tariffs took a deeper toll on the country’s automotive and other manufacturing sectors. ‘Japanese automakers are still mostly absorbing the tariff costs by cutting export prices to maintain U.S. sales volumes,’ said Saisuke Sakai, chief Japan economist at Mizuho Research.”
Social, Political, Environmental, Cybersecurity Instability Watch:
September 14 – Financial Times (Amy Mackinnon): “Utah governor Spencer Cox said social media had played a ‘direct role’ in fueling political violence in the US, as the country grapples with the fatal shooting of conservative activist Charlie Kirk at a college in the state last week. ‘I believe that social media has played a direct role in every single assassination and assassination attempt that we have seen over the last five, six years,’ Cox said… Cox, a Republican, has spoken out strongly against social media companies in the wake of the killing and has likened the addictive nature of their algorithms to drugs. ‘It took us a decade to realise how evil these algorithms are,’ he said.”
September 16 – Reuters (Jason Lange): “Roughly two out of three Americans believe that the harsh rhetoric used in talking about politics is encouraging violence, according to a Reuters/Ipsos poll conducted in the days following the killing of conservative political activist Charlie Kirk. The three-day poll… revealed a nation unnerved by partisan divisions and worried over a spike in political violence that has also included the June slayings of a Democratic Minnesota lawmaker and her husband.”
September 17 – Bloomberg (Olivia Rudgard): “Global water supplies are becoming less reliable, leading to dangerous floods, droughts and threats to agriculture, the United Nation’s weather agency said in a new report. A record hot year driven by climate change contributed to unpredictable river flows and rainfall in 2024, according to the World Meteorological Organization’s fourth annual report on water resources. Last year almost two-thirds of global river basins had water levels either significantly above or significantly below normal values. ‘The water cycle is increasingly difficult to predict,’ said Stefan Uhlenbrook, the WMO’s director of hydrology and an author of the report. ‘It is more erratic.’”
Geopolitical Watch:
September 17 – New York Times (Steven Lee Myers): “In the week since Charlie Kirk’s assassination, Russia, Iran and China have spread thousands of false or incendiary claims about what happened to the conservative activist, in an effort to stoke political divisions or to portray the United States as a dysfunctional country. Official state media in the three countries mentioned Mr. Kirk 6,200 times from Sept. 10 to Sept. 17, framing the killing as a conspiracy…. The findings underscored remarks made last week by Gov. Spencer Cox of Utah… ‘What we are seeing is our adversaries want violence,’ Mr. Cox said... ‘We have bots from Russia, China, all over the world, that are trying to instill disinformation and encourage violence.’”
