In the last two weeks, shifting economic signals have shaped the outlook, with the Fed cutting interest rates and pointing to further rate cuts, mortgage rates sliding, and consumer sentiment weakening despite solid retail sales. At the same time, global markets and tech giants marked major milestones, from record equity highs in Japan to breakthroughs in AI and autonomous vehicles. Let’s dive in!
- Fed Rate Cuts: The Federal Reserve lowered rates by 0.25% to 4.00%-4.25% and signaled two additional rate cuts in 2025. It also raised its GDP growth forecast while maintaining inflation and unemployment projections steady.
- Mortgage Rates Drop: The average 30-year fixed mortgage rate fell 12 basis points to 6.13%, the lowest since late 2022, ahead of an anticipated Federal Reserve rate cut. Historical trends suggest long-term rates may remain stable despite potential short-term volatility.
- August 2025 Inflation: The consumer price index rose 2.9% year-over-year in August 2025, driven by higher food, electricity, and physical goods prices. Tariffs on imports, especially on clothing and furniture, contributed to rising costs, while the Federal Reserve plans rate cuts despite inflation risks.
- Retail Sales Growth: U.S. retail sales rose 0.6% month-on-month in August, exceeding expectations and matching July’s revised growth. Online sales contributed to this increase, amid consumer concerns over inflation and a weakening labor market.
- Consumer Sentiment Decline: In September, U.S. consumer sentiment fell to its lowest level since May, dropping 4.8% to 55.4 amid tariff-driven price increases and growing economic concerns. Inflation expectations remain elevated, and spending on tariff-affected goods is expected to decrease.
- Japanese Market Highs: Japan’s Nikkei 225 surpassed 45,000 for the first time amid positive U.S.-China trade talks in Spain. Other Asian markets also rallied following announcements of a TikTok divestment deal.
- Alphabet Joins $3 Trillion Club: Alphabet reached a $3 trillion market cap, joining Apple, Microsoft, and Nvidia. This milestone followed a favorable antitrust ruling that boosted shares, marking a 30% gain year-to-date and highlighting Alphabet’s growth two decades after Google’s IPO.
- Gemini App Growth: Gemini’s Nano Banana AI model has driven a 45% month-over-month download increase, reaching 12.6 million downloads in September and the No. 1 spot on the U.S. App Store, surpassing ChatGPT. Consumer spending also surged, with $1.6 million generated in August alone.
- Waymo Robotaxi Expansion: Waymo received a permit to test its robotaxis at San Francisco International Airport, starting with employee rides before expanding to the public. This follows similar permits at Phoenix and San Jose airports, advancing Waymo’s autonomous ride-hail services in key US markets.
Over the next two weeks, markets will closely watch the release of September jobs data and the latest inflation reports, both critical for shaping expectations around the Fed’s path forward. Geopolitically, attention will center on developments in U.S. trade relations and ongoing Middle East tensions, while Washington prepares for another round of budget negotiations.
Footnotes
SFM Market Commentary: 9/26/25
In the last two weeks, shifting economic signals have shaped the outlook, with the Fed cutting interest rates and pointing to further rate cuts, mortgage rates sliding, and consumer sentiment weakening despite solid retail sales. At the same time, global markets and tech giants marked major milestones, from record equity highs in Japan to breakthroughs in AI and autonomous vehicles. Let’s dive in!
Over the next two weeks, markets will closely watch the release of September jobs data and the latest inflation reports, both critical for shaping expectations around the Fed’s path forward. Geopolitically, attention will center on developments in U.S. trade relations and ongoing Middle East tensions, while Washington prepares for another round of budget negotiations.
Footnotes