by Kim | Oct 6, 2025
The key events shaping the w/c 6 October 2025: US Govt shutdown progress, FOMC Minutes & Fed speeches, ECB Minutes, RBNZ Decision
Recap from last week: The Week Without US Non-Farm Payrolls
Despite the absence of key U.S. government labor market data (due to the shutdown), other reports provided a clear flavor of current U.S. labor market conditions. This composite “shadow jobs report” data broadly validated the Fed’s recent shift to its labor-focused risk narrative, reinforcing concerns over rising downside risks to the U.S. labor market. At the same time, the various PMI reports for Sep showed diverging views over the growth momentum backdrop for the U.S. into the final month of Q3.
Insights from the various labor market reports reinforce the case that softer, more subdued US labor market conditions continued into Sep. The JOLTS report for Aug and the ADP payrolls report for Sep showed the economy remained in a low-hiring, weaker labor demand environment. The ADP report, factoring in its latest benchmark revision, showed private payrolls contracted by 32k in Sep – following a path of slowing payroll growth in the YTD. From the JOLTS report, the implied net employment change (hires less separations) has remained low at near near-stalled pace for the last three months and slowed to +15k at the end of Aug. This was the result of a further fall in hiring, but also a further fall in separations. The hiring rate fell to 3.2%, just above the pandemic low of 3.1%. The job openings rate (labor demand) remained unchanged at a 4.3% rate in Aug, and remains below the 12-month average of 4.5%. Separations fell due to decreases in both layoffs and quits this month. The layoff rate remained unchanged at 1.1% around its 12-month average. The quits rate fell back to 1.9% – the equal low for this cycle – likely reflecting eroding confidence in labor market conditions and job availability.
This sentiment was reinforced in the Conference Board Consumer Sentiment report for Sep. The headline consumer confidence reading fell again in Sep. The present situation component “registered its largest drop in a year”, driven in part by another fall in consumers’ assessments of current job availability, falling for the ninth month running and reaching a new multi-year low. Consumers’ views of the labor market continued to weaken in Sep, with those saying jobs were “plentiful” falling from 30.2% in Aug to 26.9% in Sep. The proportion of consumers who said “jobs were hard to get” remained unchanged at 19.1%.
Corporate sentiment around labor demand also remained cautious in Sep. The Challenger Job Cut Announcement survey showed that announced job cuts eased over the month to 54k from 85k in Aug. However, the YTD view of the total of planned layoffs is now the highest since 2020 at 946k planned layoffs – led by government, technology, and retail sectors. Crucially, seasonal hiring announcements are subdued (lowest YTD since 2009), signalling risk management by employers.
This backdrop of notable and elevated layoff announcements in the YTD, together with the slower hiring environment, is consistent with the US unemployment rate edging higher. Using the Aug BLS data, the unemployment rate has increased by +0.3%pts since Jan 2025 to 4.32% in Aug. The total number of unemployed persons is now +535k higher than at the start of the year. The latest Chicago Fed estimate of the unemployment rate in Sep shows that the unemployment rate likely continued to edge higher to 4.34%.
The ISM and S&P PMI reports for September offered a final look at labor market conditions by sector. The ISM employment indexes remained in contraction across both manufacturing and services, signalling more widespread hiring caution through Q3. While the S&P PMI’s painted a firmer picture of the employment situation in Sep, it noted that services employment only saw a “marginal overall increase” due to “some reluctance amongst US service companies to add to their staffing levels”.
Broadly, the two PMI reports for Sep show a divergent view of US growth momentum at the end of Q3. The US ISM surveys showed a more subdued view of conditions, as pockets of strength in AI/infrastructure activity were offset by housing market stagnation. The ISM services and manufacturing PMIs languished at a stalled/neutral level of 50 and 49, respectively, at the end of Q3. Conversely, the US S&P PMIs reflected a more moderate but sustained pace of expansion through Q3, with services output remaining little changed at 54.2 and manufacturing edging down to a still positive 52 in Sep. The Atlanta Fed GDP nowcast for Q3 GDP growth remains at an elevated +3.8% annualized rate – and this incorporates the ISM manufacturing report for Sep.
Fed speeches didn’t add much to or change the outlook for the FOMC and the path of rates. In his speech during the week, Fed Vice Chair Jefferson noted that he supported a 25bps cut at the last meeting to “balance the risk of persistent above-target inflation and the risk of a deteriorating labor market”. He noted that this change “moved our policy rate closer to a more neutral stance while maintaining a balanced approach to promoting our dual-mandate objectives”. For now, markets are continuing to price in two rate cuts for the remainder of the year (source: CME Fedwatch).
The composite evidence from the JOLTS, ADP, and corporate sentiment reports shows that U.S. labor market conditions likely remained subdued in Sep. The data reflected stalled hiring momentum, ongoing risk management by employers (including elevated layoffs and subdued seasonal hiring), and eroding worker confidence. In the absence of official payroll data, this “shadow jobs report” confirms that the labor market fragility continued. This likely strengthens the view that if labor market conditions continue to deteriorate, the Fed has set the stage to follow through on the path of additional cuts signalled in its SEP.
Outside of the US, the RBA stayed on hold as expected, with concerns that the decline in underlying inflation in Australia has slowed. The Board cited this inflation concern amid a more positive backdrop for the economy, noting signs that private demand is recovering and labor market conditions remain stable. The RBA Governor will appear before the Senate Economics Committee later this week.
Outlook for the week ahead: US Govt shutdown progress, FOMC Minutes & Fed speeches, ECB Minutes, RBNZ Decision
The “shadow jobs report” of the past week reinforced the FOMC’s shift toward incorporating labor-focused risk. However, with the official employment data still pending and mixed signals on growth momentum persisting, the market’s scrutiny of policy communication remains high.
Progress on resolving the US government shutdown will be in focus this week. An update on the schedule of backdated releases is likely to be announced once a resolution has been reached and the Federal government resumes operations.
For now, it will be a quiet data week. Consequently, the focus shifts almost entirely to central bank communication: the FOMC minutes, Fed speeches, the ECB minutes, and the RBNZ meeting are all scheduled this week.
Key factors & events to watch this week:
US Federal Reserve
- FOMC Minutes of the 17 Sep meeting will reflect the decision to restart the rate-cutting cycle – citing the shift in the balance of risks, now that downside risks to employment have risen. The key will be discussion around the path/outlook for policy rates, especially around balancing the ‘data dependent’ approach with an acknowledgement that this cut would be part of a series of rate cuts over the rest of the year, towards neutral.
- There will be a number of Fed speeches this week, including Fed Chair Powell. The comments by the Fed Chair are currently scheduled as “welcoming remarks”. The new Fed Governor Miran will also take part in several discussions on 7 Oct.
Canada Labor Market Survey – Sep
- The Canadian labor market report for Sep is expected to show employment growth stabilized at +2.8k in Sep after falling -65k in Aug.
- The unemployment rate is still expected to tick higher to 7.2% in Sep from 7.1% in Aug.
The latest ECB meeting minutes will be released this week.
The RBNZ will meet this week, and markets are expecting a 25bps cut.
This week, the US Treasury will auction and settle approx. $511bn in ST Bills, raising approx. $31bn in new money. The US Treasury will also auction the 3-year and 10-year Notes and the 30-year Bond this week – all will settle on 15 Oct.
QT this week: Approx $13bn in ST Bills will mature on the Fed balance sheet and will be reinvested.
Next Monday 13 Oct will be a US holiday – Columbus Day.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Sep 29, 2025
The key events shaping the w/c 29 September 2025: US Govt shutdown risks, US labor market data Sep, ISM PMIs, Fed speeches, Euro area CPI, RBA Meeting
Recap from last week: US Growth Backdrop Firms
Last week, US data pointed to a more resilient growth backdrop emerging. Key growth, spending, and income indicators showed stronger-than-expected momentum in Q2, a pace that appears to be carrying through so far into Q3. Amid this stronger growth, inflation remained persistent but stable. Fed speeches through the week reflected diverging views of the near-term path of policy rates—ranging from calls for heavy front-loaded rate cuts to offset labor market weakness, to more caution on the pace of cuts due to elevated inflation. Despite the positive economic data, markets continued to price in a series of rate cuts this year. This tension between resilient growth and market rate cut expectations sets the stage for the important labor market data this week. With labor market softening being the key driver for the Fed’s recent shift in its balance of risks, the Sep jobs report may be central to either validating the Fed’s labor-focused risk narrative or shifting toward a stronger growth outlook.
One of the most important takeaways from the data last week was the emergence of a surprisingly solid US growth backdrop. It’s important to note that there are still distortions in the GDP data from tariff front-running – and this is evident in the offsetting swings in inventories and net exports between Q1 and Q2. However, US Q2 GDP growth was revised notably higher from +3.3% to +3.8% annualized – led by a larger upward revision to personal consumption expenditure and, to a lesser extent, fixed investment spending. Some context: while PCE growth was revised higher to +0.6% in Q2, this was offsetting some of the notable weakness in Q1 PCE growth of +0.1% – the slowest quarterly spending growth of the last two years. The overall higher-than-expected growth in Q2 resulted in the annual year-over-year rate increasing to +2.1% – still well above the most recent Fed projection for year-end year-over-year growth of +1.6%.
Other data this week suggested that this growth momentum has carried through into Q3. The latest Atlanta Fed GDP nowcast shifted higher by the end of the week to a +3.9% annualized pace so far in Q3, up from +3.4% at the start of the week. One of the key contributors was the higher-than-expected growth in personal spending in Aug of +0.6%, which appears to have firmed around this pace over the last three months. This was supported by consistent growth in personal disposable income, as well as another fall in the personal saving/surplus measure. Firmer inflation did moderate growth in spending and income in real terms, though. The positive contribution from net exports also increased as the preliminary goods trade deficit narrowed in Aug. Some of the offsetting effects were a smaller, but still positive, contribution from non-residential fixed investment and the change in private inventories.
The latest prelim US S&P PMI for Sep also indicated that growth momentum remained positive going into the final month of Q3. While both manufacturing and services PMIs moderated in Sep, the levels remained at a solid pace of expansion. There were some words of caution in the report: while this has been the strongest of the quarters so far this year, activity did decelerate into quarter-end. Comments noted a slowdown in hiring, and waning demand became more widely reported.
Initial claims remained on a more positive path this week. The recent spike in initial claims has now been fully reversed, with claims coming back down to 218k in the prior week. However, continuing claims remained at 1.92m – suggesting little shift in the picture of hiring growth.
Amid this stronger-than-expected growth backdrop, US inflation remained steady, albeit elevated. Headline PCE increased to +2.7% over the year, while core PCE inflation increased to +2.9% over the year in Aug, both increasing in line with expectations. A look at the underlying components, however, revealed shifting dynamics. Core goods prices fell this month by -0.1%, but remained +1.1% ahead of a year ago. This was offset by a continued increase in core services inflation, which increased to +0.34% in Aug and to +3.5% over the year. But while core PCE inflation was steady in Aug, other measures of the underlying trend of inflation increased this month. The Dallas Fed trimmed mean increased to +0.2% in Aug from +0.1% in Jul, lifting the 12-month rate to +2.8% – suggesting that, after excluding the outliers, inflation still increased in the core of the distribution. The Cleveland Fed median inflation rate also edged slightly higher over the month to +0.24% in Aug, while the 12-month rate stayed at 3.3%. Overall, the picture suggests that inflation has remained relatively steady in Aug.
Unsurprisingly, speeches from Fed officials last week reflected the divergent range of views on the near-term path of policy rates. The speech by Fed Chair Powell did not add any further information to FOMC guidance on policy rates. However, his rhetoric was balanced, emphasizing that there is “no risk-free path” due to the two-sided risks of higher inflation and weaker employment. He maintained his commitment to a data-dependent path, but still did not push back on the market pricing of two further rate cuts this year. In contrast, Vice Chair for Supervision Bowman spoke about her views on front-loading rate cuts, risks to the outlook tilted more to the labor market, and importantly, seeing this cut in Sep as a part of a series of rate cuts to bring the policy rate back to neutral.
Despite the good news on the growth front this past week, along with news of steady inflation, markets continued to price in a series of rate cuts for the remainder of the year, given the weakness in the labor market (source: CME Fed Watch).
Outlook for the week ahead: US Govt shutdown risks, US labor market data, ISM PMIs, Fed speeches, Euro area CPI, RBA meeting
Against a backdrop of better-than-expected growth data and firm, but steady inflation, our focus this week shifts to the US labor market. Given the Fed’s recent communication emphasizing the rising downside risks to employment, the Sep jobs report will be important for validating or shifting the emerging growth narrative and the near-term path of policy rates.
There is also a risk of a US government shutdown early this week as a key funding Bill is yet to be finalised with a 30 Sep deadline. A shutdown could affect US data releases this week, depending on how negotiations progress.
Key factors & events to watch this week:
US Labor Market Data – Sep.
Weakening in the US labor market conditions has been the key driver of the recent US Fed policy shift. Data and revisions have shown a notable slowdown in payroll growth so far in 2025, and benchmark revisions suggest that this weakness may have been more persistent over the last year. Recently, the Fed Chair noted that the ‘break-even’ payrolls growth (the minimum to keep unemployment steady) may have slowed to +50k, reflecting an unusual situation where there is a ‘curious kind of balance’ resulting from the marked slowdown in labor demand and labor supply. Data this week could be important to either confirm that weakness is persisting, adding further weight to rate cut calls, or shift to more stable conditions amid some better-than-expected growth conditions.
- US non-farm payrolls are expected to increase by 51k in Sep, up from 22k in Aug. Revisions to the prior months will be important.
- The unemployment rate is expected to be unchanged at 4.3%.
- Average weekly hours are expected to be unchanged at 34.2 hours.
- JOLTS for Aug are expected to show Job Openings falling slightly to 7.15m in Aug from 7.18m in Jul.
- Challenger Job Cut Announcements for Sep are expected to be little changed after increasing to 86k in Aug.
- Initial claims for the week ending 27 Sep are expected to increase to 229k, from 218k in the prior week.
US Growth Momentum into Sep.
Further US survey data for private sector activity will provide an early insight into growth momentum in the manufacturing and services sectors in Sep. The ISM PMIs and Factory Orders (shipments) will feed into a further update on the Atlanta Fed GDP Nowcast for Q3 growth.
- Both the US ISM Manufacturing and Services PMIs for Sep are expected to remain fairly stable, and little changed at 49.1 and 52, respectively. Important highlights will be new orders/demand, changes in pricing, labor market conditions, and commentary around tariff impacts and uncertainty.
- The final S&P manufacturing and services PMIs for Sep will be released.
- US Factory Orders for Aug are expected to increase by +0.9% after falling by -1.3% in Jul.
US Fed Speeches.
There will again be a notable number of Fed speeches this week, with the focus remaining on views for the near-term path of policy. Governor Waller is scheduled to speak this week on ‘Payments’ – but may also cover the economic outlook. Vice Chair Jefferson will give two speeches this week on the Monetary Policy Framework and the US economic outlook.
Global Central Banks and Data Highlights.
- The RBA will meet this week and is expected to keep policy settings unchanged. The rise in the monthly CPI for Aug, released last week, raises some caution over the persistence of inflation and what it means in terms of an upside surprise in the RBA’s preferred quarterly CPI release. This may be an important point for Governor Bullock to cover in her outlook and whether there has been a change in the RBA’s view of the policy path. So far (at 29 Sep), markets have pushed a further rate cut out into late Q1 2026.
- Euro area CPI – prelim for Sep is expected to increase to +2.2% in Sep from +2% in Aug, with core CPI remaining unchanged at +2.3% over the year in Sep.
- Other notable speeches this week will include BoJ Governor Ueda. There will also be an election for the next leader of the Japanese LDP on 4 Oct.
Finally, the full suite of S&P Global PMIs will be released this week for Sep – providing a global view of activity through to the end of Q3.
This week, the US Treasury will auction and settle approx. $755bn in ST Bills, Notes, Bonds, and TIPS, raising approx. $108bn in new money.
QT this week: Approx $29bn in ST Bills, Notes, and Bonds will mature on the Fed balance sheet and will be reinvested. Approx $5bn in Notes and Bonds will mature on the Fed balance sheet and will be redeemed/roll off the balance sheet.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Sep 22, 2025
The key events shaping the week ahead: US PCE Inflation, Fed speeches including Fed Chair Powell, S&P Prelim PMIs September
Recap from last week: Central Banks & Signalling
Central bank decisions last week were largely as expected. The decision by the Fed to cut rates was well telegraphed, led by rising downside risks to the labor market. The central bank decisions outside of the US, the BoC and BoE, also reflected concern over weakness in domestic growth and labor market outlooks. The exception was the BoJ, which, despite remaining on hold, maintained a bias towards policy normalization.
The FOMC cut the FFR by 25bps as expected. There was one dissenting vote – Governor Miran, who preferred a 50bps cut at this meeting. As outlined at Jackson Hole, the reason for the Fed cut was due to the shift in the balance of risks.
Accordingly, we judged it appropriate at this meeting to take another step toward a more neutral policy stance. Source: FOMC Decision 17 Sep 2025
In the context of the Fed’s dual mandate, near-term risks to inflation are tilted to the upside, while risks to employment are tilted to the downside. Though the balance between the two risks is not yet at parity, Fed Chair Powell stressed that it was the faster deterioration in labor market conditions that necessitated the rate cut. The Committee acknowledged this change by removing the word “solid” from its characterization of the labor market, with Powell noting, “overall, the marked slowing in both the supply of and demand for workers is unusual.”
On inflation, the FOMC decision reflected the view that the impulse from tariffs would be “relatively short-lived, and a one-time shift in the price level.” This framing is consistent with the sentiment of Governors Waller and Bowman, and as signalled by Powell’s shift at Jackson Hole. This provides the rationale to ‘look through’ current firm readings on inflation. However, the SEP hinted at persistence, reflecting expectations that inflation will ease more slowly into next year. Powell indicated that while short-term inflation expectations had moved up, “beyond the next year or so,” measures of long-term inflation expectations remain consistent with the 2% inflation target.
The main focus of the decision shifted to the nuance in the guidance regarding the path of the FFR. The main question was over whether this cut was the start of a series of rate cuts to bring the policy rate to neutral rather than just one cut ‘toward neutral”. The FOMC seems to have retained optionality here – possibly a necessary approach for navigating the tension in its dual mandate.
Guidance clearly reflected a shift in the Fed bias toward cutting, though it was tempered by Chair Powell reinforcing that “policy is not a preset path” and that the Fed remained data dependent. In the press conference, Powell even agreed that this could be viewed as a risk management cut – especially given that participants had still upgraded median growth and inflation outlooks for both this year and next. But then later, Powell also acknowledged that a single 25bps cut wouldn’t make a huge difference to the economy – instead suggesting that the signalling of the path of rates was more important. The SEP reflected that shift in the trajectory of the near-term policy rates amid labor market risks (more cuts this year); however, the longer-term destination for the FFR remained unchanged/anchored at 3%.
Powell will be speaking again this week and may elaborate further on the decision and outlook. For now, if the economy falters or labor market conditions continue to weaken, then the Fed has clearly signalled its willingness to cut in a series of cuts, aligned with market expectations. The longer run projections remain unchanged.
US data last week reflected the mixed picture on the economy as presented by the Fed Chair. However, retail spending growth firmed more than expected in Aug, while measures of residential housing activity were weaker than expected. The latest Atlanta Fed GDP nowcast remained at an elevated pace of +3.3% so far in Q3. In a tentative positive sign for the labor market, there was a further moderation in the level of continuing claims, now down to 1.92m (edging lower and not worsening), while the spike in initial claims in the prior week was reversed.
The Fed wasn’t alone in recognizing a shift in its domestic risk balance. Its most exposed trade partner, Canada, was responding to the external threat of tariff-driven growth and labor market weakness, leading the BoC to cut rates by 25bps. Since Jul, the balance of risks had shifted. The labour market had weakened further with job losses concentrated in trade-sensitive industries, employment growth had slowed in the rest of the economy, and the unemployment rate had increased to 7.1%. At the same time, upward pressure on underlying inflation had diminished. The decision to remove retaliatory tariffs also reduced the upside risk to domestic inflation. While guidance remained suspended, the decision noted a “clear consensus to lower our policy rate for the first time since Mar”.
The BoE stayed on hold at this meeting. This was a 7-2 decision in favour of a hold; two members voted for a 25bps cut. The BoE stayed on hold in line with its guide for a gradual and careful approach to reducing restrictiveness of policy – balancing still upside inflation risks with subdued growth, a loosening labour market, and a margin of slack emerging in the economy. The decision noted that “upside risks around medium-term inflationary pressures remain prominent in the Committee’s assessment of the outlook”. The two dissenters highlighted weakness in domestic demand and emerging slack, together with recent developments pointing to downward risks to global growth. They argued that a less restrictive policy was required to insure against an increased risk of recession, below-target inflation, and a further deterioration in supply capacity.
Finally, the BoJ kept its policy rate on hold as expected. The normalization bias remained in place, signalled by two developments. First, the BoJ announced that it would continue to normalize its balance sheet by commencing sales of its ETF holdings, at a pace that would “avoid introducing destabilising effects on markets”. Second, the 7-2 vote to hold was a surprise, with two members preferring a rate hike at this meeting. Governor Ueda did not guide on expectations of a hike at the Oct meeting, instead noting that the BoJ will still assess the impact of tariffs on the economy.
Outlook for the week ahead: US PCE Inflation, Fed speeches including Fed Chair Powell, S&P Prelim PMIs September
With questions over the persistence of inflation, the degree of weakening in labor market conditions, and the near-term path of policy rates, US data will remain firmly in focus. This week will remain US-centric with the Fed-preferred PCE inflation date for Aug, key spending and activity data, and a notable number of Fed speeches, including Fed Chair Powell.
The latest preliminary S&P PMIs for Sept will be released this week, providing a further update on the broader global growth momentum into the final month of Q3.
Key factors & events to watch this week:
US PCE inflation and the tariff narrative.
This week, the Fed-preferred PCE inflation gauge will be released for Aug, with markets already anticipating inflation measures to be little changed, but remain firm over the year. For now, we can continue tracking tariff and non-tariff effects on inflation. Last week’s import price data still suggests that tariffs are, on aggregate, being absorbed by US importers/firms, as well as by US consumers.
- Headline PCE inflation is expected to increase by +0.2% over the month in Aug, the same pace as in Jul. The annual rate is expected to increase by +2.7% in Aug, up from +2.6% over the year in Jul. The latest SEP sees the median headline PCE inflation rate ending the year at +3%.
- Core PCE is expected to increase by +0.2% over the month in Aug, down from +0.3% in Jul. The annual rate is expected to be unchanged at +2.9%. The latest SEP sees the median core PCE inflation rate ending the year at +3.1%.
Manufacturing and labor market pressure points.
While there is little specific labor market data this week, there will be several activity releases and the regular initial claims data to track momentum in activity.
- Activity surveys for Sept: The prelim S&P PMIs across manufacturing and services, as well as several other regional manufacturing surveys, will offer the latest view of any changes in growth momentum, forward-looking expectations, hiring sentiment, and pricing.
- Durable goods orders for Aug are expected to fall by -0.4%, after a -2.8% fall in Jul.
- Labor: Initial and Continuing Jobless Claims provide a high-frequency check on the labor market. Initial claims are expected to remain firm at 240k, up from 231k in the prior week. Last week, continuing claims continued to edge lower to 1.92m.
Q2 GDP growth and tracking of Q3 consumer spending, income, and sentiment.
- The second estimate for US Q2 GDP growth will be released, and is expected to confirm growth of +3.3% annualized in Q2.
- The prelim advanced economic indicators for Aug will be released, providing an important first view of the goods trade balance for the month, which will be an important input for the Q3 growth tracking. Last month, the goods trade balance (deficit) widened back out to -$103.9bn.
- PCE personal spending is expected to increase by +0.5% in Aug, after a similar +0.5% increase in Jul.
- PCE personal income is expected to increase by +0.3% in Aug, slowing slightly from +0.4% in Jul.
- US housing: New home sales are expected to remain little changed in Aug at a 0.65m annualized rate. Existing home sales are expected to ease slightly in Aug to 3.98m annualized, from 4.01m in Jul.
Unifying the US Fed’s messaging.
According to the calendars, there will be at least ten Fed officials speaking this week. There will be several speeches of note on the economic outlook, including Fed Chair Powell. We’ll be looking for any further color related to last week’s Fed decision to cut and the outlook for policy.
- US Fed Chair Powell is scheduled to speak on Tues, 23Sept, on the economic outlook.
- Newly appointed Fed Governor Miran will give a speech titled “Non-Monetary Forces and Appropriate Monetary Policy” at the Economic Club of NY on Mon. Miran was the dissenting vote at this last meeting, so he may provide further insight into that dissent.
- Vice Chair for Supervision Bowman will give several speeches throughout the week, including her views on the economic outlook.
S&P Global Prelim PMIs – September.
Finally, the prelim S&P PMIs for the key developed markets will be released this week.
This week, the US Treasury will auction and settle approx. $518bn in ST Bills and the 2-year FRN, with a net paydown of $16bn. This week, the US Treasury will also auction the 2-year, 5-year, and 7-year Notes – and will settle, together with the 20-year Bond and 10-year TIPS, on 30 Sep next week, together raising approx. $93bn in new money.
QT this week: Approx $10.5bn of ST Bills will mature on the Fed balance sheet and will be reinvested.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Sep 15, 2025
The key events shaping this week; Key central bank meetings, headlined by the FOMC, US retail sales, and global CPI reports.
Recap from last week: The Case for a Fed Cut
The latest U.S. inflation data is not likely to derail Fed Chair Powell’s signal to cut rates at this week’s FOMC meeting. While inflation remains firm and above target, the numbers were consistent with how Powell set up his shift at Jackson Hole, which was to now acknowledge that a “reasonable base case is that (tariff) effects will be relatively short-lived”. This has created the scope for the Fed to ‘look through’ tariff effects, especially as risks to the labor market have increased.
The latest CPI data still paints a picture of broadly steady inflation. This is despite some visible tariff effects, especially in core goods, and some other pockets of firmer inflation. The US headline CPI was higher than expected in Aug and increased to +2.9% from +2.7% in Jul. The monthly pace was higher than expected at +0.4% and has accelerated in each of the last three months. The 3-month annualized rate is now up to +3.5%. Food inflation was a notable increase this month and is back up to +3.2% over the year. Energy prices also firmed.
Importantly, the underlying core measures remained mostly steady. Core CPI came in as expected, remaining unchanged at +3.1% in Aug, despite a further increase in core goods inflation to +1.5% over the year. For context, annual core goods inflation (deflation) averaged -0.33% in the five years prior to the pandemic. The 3-month annualized rate for core goods inflation is now up to +2.8%, reflecting a consistent firming of monthly inflation over the last 3 months. Core services inflation saw little change versus the prior month, remaining +0.35% over the month, and stuck at an annual rate of +3.6% over the last five months. The 3-month annualized rate is now up to +3.9% reflecting some of the near-term firming.
The median and trimmed mean measures indicate that underlying inflation remained mostly steady in Aug. The trimmed mean, removing outliers, edged higher from +3.2% to +3.3% in Aug, suggesting only marginal broadening out of inflation pressures. The median, which is more robust to outliers, stayed unchanged at +3.6% over the year, also suggesting that despite the increase in the headline inflation rate, underlying pressures remained contained.
The PPI was the other important inflation release this week. The PPI measures the average change in the selling prices received by domestic producers for their output. The context for PPI is whether US producers were raising their selling prices due to rising input costs. Headline PPI did not accelerate this month after firming in Jul, and came in much lower than expected. Over the course of the year to date, there has not been a consistent firming in headline PPI, but rather, some pockets of inflation where you might expect to see tariff effects; final demand goods (ex-food & energy) prices are showing a more persistent inflation effect, rising to +2.9% over the year, and the 3-month annualized rate rising to +3.7%. Across services, trade services PPI moved down notably this month, contributing most to the fall in overall PPI services inflation. The fall in trade services PPI mostly reflected a margin squeeze for wholesalers across vehicles and machinery. This is a volatile measure, so we’ll have to see how this evolves.
Together, elements of the CPI and PPI indicate how the Fed-preferred PCE inflation measure is likely to evolve (due in several weeks). Core PCE inflation is expected to be unchanged at +2.9% in Aug, with the monthly rate slowing from +0.3% in Jul to +0.2% in Aug. This would still be below the current (June FOMC) median projection for core PCE of +3.1% over the year (end of 2025).
While the inflation data provides some room for the Fed to ease, other reports this week added further to the cautious labor market backdrop, possibly adding to the rationale for restarting rate cuts. The latest Conference Board employment trends index continued to fall in Aug, reaching its lowest level since 2021. The report highlighted that while the recent fall was in line with a “post-pandemic normalization”, the “degree of weakening in the August components is disconcerting”.
Initial claims spiked notably higher last week to 263k. It’s unclear whether this is renewed weakness, as most of the increase appears to be attributed to one state, and the report also reflects a shortened holiday week. Continuing claims have remained unchanged at 1.93m.
Finally, the BLS preliminary estimate of its non-farm employment benchmark revision for the year to Mar 2025 showed non-farm employment was revised lower by -911k or -0.6%. For comparison, the BLS notes that “the annual benchmark revisions over the last 10 years have an absolute average of 0.2 percent of total nonfarm employment”. This prelim estimate appears to be a larger-than-usual revision and suggests that the labor market may have been notably weaker than survey data had initially indicated.
Ahead of the FOMC this week, US data broadly show a labor market with rising downside risks existing alongside a persistent/steady, but perhaps manageable, inflation situation.
Outlook for the week ahead: Central bank meetings (FOMC, BoC, BoE, and BoJ), US retail sales, global inflation
This will be an important week of central bank meetings, notably the FOMC, together with a broader read on the US economic pulse, as well as global inflation reports.
Key factors & events to watch this week:
The FOMC meeting 16-17 Sept.
- While a 25bps cut is broadly anticipated, there will be several other important points to watch.
- The press conference/decision will be important for highlighting the degree to which the Committee aligns with Powell’s shift at Jackson Hole. Dissents may also feature. While the Fed Chair has signaled the rising downside risks to the labor market, it will be important to see how the FOMC guides its approach to balancing the risks to its dual mandate – keeping inflation expectations anchored (it’s still elevated and above target) while addressing the risks to the labor market. We’ll also watch how the Fed shifts its characterization of the economy, inflation, and the labor market.
- The latest SEP will be released – this will be important to signal changes in the path of rates, as well as growth, inflation, and unemployment projections.
- It’s reported that the US Senate is to vote on Stephen Miran’s nomination to the Board of Governors on Monday, in time for him to attend the Committee meeting this week. This may affect the dynamic and the discussion on the outlook.
Central bank decisions.
There will be several other central bank decisions of note this week.
- The BoC will meet this week, and there is some expectation of a 25bps rate cut, especially given the weakening in the last two labor market reports.
- The BoJ is expected to stay on hold.
- The BoE is also expected to stay on hold.
US data to provide broader input on the economic pulse.
US data this week will cover retail spending, factory output, import and export prices, and key housing reports. This will provide a more comprehensive update to the GDP growth run-rate so far in Q3.
- US retail sales are expected to slow to +0.2% from +0.5% in Jul. Last month, the retail control measure (which feeds into the GDP measure) increased by +0.5%.
- Industrial production is expected to be 0% after falling -0.1% in Jul.
- US export and import price indexes (exclude tariffs) for Aug may provide some insight into whether exporters to the US are, on aggregate, absorbing tariffs or not. The import price index excluding fuel imports will be the key measure to watch.
- Building permits are expected to edge higher to 1.37m (annualized) in Aug, from 1.36m in Jul.
- Housing starts (this gets booked into GDP) are expected to fall to 1.38m (annualized) in Aug, from 1.42m in Jul.
- Initial claims are expected to fall back to 240k last week after increasing to 263k in the prior week. Continuing claims have remained around 1.93m.
- There will also be several regional manufacturing surveys – the NY and Philadelphia Fed surveys, providing an early look at manufacturing conditions in Sept.
Global Inflation and Data.
Outside of the US, there will be several important CPI releases as well as the latest Aus labor market report.
- Canada’s core CPI measures are expected to be unchanged; median +3.1%, trimmed mean +3%.
- UK headline CPI is expected to be unchanged at +3.8%, while core CPI is expected to edge lower to +3.7% in Aug from +3.8% in Jul.
- The final Euro area CPI for Aug is expected to confirm headline inflation at +2.1% and core inflation at +2.3%.
- The BoJ preferred measure of core CPI ex fresh food is expected to slow to +2.7% in Aug from +3.1% in Jul.
- The Aus labor market report is expected to show continued modest employment growth of +21k, while the unemployment rate is expected to be unchanged at 4.2%.
This week, the US Treasury will auction and settle approx. $609bn in ST Bills, Notes, and Bonds, raising approx. $39bn in new money. The US Treasury will also auction the 10-year TIPS and 20-year Bond this week – both will settle on 30 Sep.
QT this week: Approx $7.4bn of ST Bills will mature on the Fed balance sheet and will be reinvested.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Kim | Sep 8, 2025
The key events shaping this week: US CPI & PPI (Aug), ECB monetary policy meeting
Recap from last week: Confirming Downside Labor Market Risks
Fed Chair Powell’s speech at Jackson Hole revealed the Fed Chair’s new calculus: a shift in the balance of risks. This is an important lens for assessing the implications of last week’s US labor market data. The Fed is no longer in a “wait and see” mode. The slowing payroll numbers—regardless of the nuance in the household survey—have tipped the balance of risks in the labor market. The Fed’s concern is now focused on the shifting trajectory of the labor market, and Powell has signalled that they will act to ensure a slowdown doesn’t become a more severe, self-reinforcing deterioration.
Importantly, the US payroll data for Aug likely confirmed for the FOMC that downside risks to employment are rising. Non-farm payroll growth of +22k was much lower than the +74k expected for Aug. The revisions to Jun and Jul were also a net negative -21k, confirming that payroll growth has remained slower than previously reported, with payrolls now contracting in Jun by -13k. A clearer trend has emerged after the revisions: that payroll growth has essentially stalled since Apr 2025.
Aggregate hours worked were little changed in Aug. However, the stronger increase in Jul was revised lower to +0.1% over the month. The trend in aggregate hours worked has slowed since May, but remains steady over the last two months. Average hourly earnings have also remained fairly steady at +0.3% over the month, versus +0.3% in Jul. Together, slower payroll growth, steady hours, and modest hourly earnings growth paint a picture of more modest, but still positive, nominal income growth over the last two months.
The view of employment and unemployment in the household survey shows a more mixed picture, and even some important pockets of underlying resilience. The household survey showed that unemployment across the broader labor market demographic of 16yrs+ edged higher from 4.25% in Jul to 4.32% in Aug – a YTD high for the unemployment rate, which has been on a rising trend since late 2022. Across this broader demographic, participation and the employment to population ratio have also moved more notably lower since Apr this year.
However, the core working age group of 25-54years is reflecting a surprising degree of resilience. The unemployment rate was little changed at 3.6% in Aug – marginally above where it was a year ago at 3.56%. This was in spite of the more notable increase in participation this month, back up to 83.7% and just below the peak of 83.9% recorded a year ago. Importantly, the employment situation remains steady with the employment to population ratio remaining at 80.7%, unchanged from the start of the year. A year ago, the employment-to-population ratio was 80.9%, which was the peak in this post-pandemic cycle. So employment levels among the core working age group are still elevated and point to a still solid underpinning for the labor market.
Other reports, though, provide a more cautious backdrop for the labor market. The JOLTS data reflected the step down in labor market conditions in Jun and, at least some stabilized conditions in Jul. The fall in job openings in Jul provides a concerning view for a continued moderation in labor demand. The Challenger Job Cut announcements increased in Aug, suggesting pressure on layoffs on the horizon. For now, most of these layoffs still reflect “DOGE” actions; however, “market and economic conditions” are the second-most cited reason for job cut announcements. At the same time, hiring announcements remained subdued.
While signals from the labor market have continued to highlight downside risks, the US S&P PMIs were a little more resilient in Aug. The S&P PMIs showed improved momentum in manufacturing activity while services activity continued to expand at a moderate pace, edging down slightly. However, risks remain elevated. The uptick in manufacturing activity was in part fuelled by inventory, and not purely a sign of rebounding demand growth. Risks around inflation remain elevated due to tariffs. Despite the strong output performance, business optimism for the year ahead fell to one of the lowest levels in three years, linked to uncertainty over demand caused by government policy, particularly tariffs.
The anecdotes from the Fed’s Beige Book reported little or no change in economic activity since the prior period. Consumer spending was flat. Most districts reported little or no net change in employment over the last six weeks, noting firms’ reluctance to hire due to weaker demand or uncertainty. Price growth was described as moderate or modest. However, “most Districts” reported that firms were expecting price increases to continue in the months ahead.
Overall, the broader growth backdrop eased somewhat last week amid some of the crosscurrents in Aug activity data. The Atlanta Fed GDP nowcast edged down to a +3% run rate so far in Q3 – still a robust pace of growth.
Against this backdrop, a clearer picture is emerging of a stalling labor market within an economy that is navigating significant uncertainty and an unpredictable policy landscape. While the stalled hiring has not yet resulted in a sharper rise in layoffs or unemployment, that risk may be increasing.
Outlook for the week ahead: US CPI & PPI for Aug, ECB Monetary Policy meeting
This leads us to the second part of the Fed Chair Powell’s new calculus: a greater willingness to “look through” persistent inflation. At Jackson Hole, Fed Chair Powell shifted further toward the view that tariff-led inflation could be “relatively short-lived,” as these effects pass through to consumer prices. This sets the scene for the week’s US CPI and PPI reports for Aug, which may offer more clarity around how much of this persistent inflation is genuinely due to tariffs working their way through the supply chain. There is, however, an argument that tariff-led inflation will take longer to flow through to consumer prices. The inflation data, when combined with the Aug labor market data, will provide a more complete view of the Fed’s task next week: a labor market with rising downside risks existing alongside a persistent, but perhaps manageable, inflation situation.
Key factors & events to watch this week:
US Inflation
US inflation data is broadly expected to remain little changed over the year. Together, the CPI & PPI reports will provide a read-through to the Fed-preferred PCE inflation measure for the FOMC meeting next week.
- The US PPI for Aug will be released ahead of the CPI this week. Headline PPI is expected to slow to +0.3% over the month from +0.9% in Jul. Annual headline PPI is expected to remain unchanged at +3.3%.
- Core PPI is also expected to slow to +0.3% over the month from +0.9% in Jul. Annual core PPI is expected to slow to +3.5% in Aug from +3.7% in Jul.
- Headline CPI is expected to increase to +0.3% in Aug, from +0.2% in Jul. Annual headline CPI is expected to edge higher from +2.7% in Jul to +2.85% in Aug.
- Core CPI is expected to increase by +0.3% in Aug, unchanged from the pace in Jul. Annual core CPI is also expected to remain at +3.1%.
US Labor Market
- We continue to track the evolution of initial claims and continuing claims data. Initial claims are expected to remain little changed at +234k this week, after rising to +237k in the last week of Aug. This is now back above the 12-week average. Continuing claims for the week ending 23 Aug were little changed at 1.94m.
- The Conference Board Employment Trends Index for Aug will provide further context for last week’s US labor market reports.
- The BLS will also release its preliminary benchmark revision to the Payrolls Survey.
US Fed Speeches
It is the blackout period for Fed speeches ahead of the FOMC meeting next week. The confirmation of Stephen Miran to the Board of Governors remains on the fast track, with further news on the appointment likely this week.
ECB Monetary Policy Meeting
- The ECB is expected to keep policy settings unchanged, with the Deposit Facility Rate at 2%.
- Last week, Euro area CPI for Aug came in slightly higher than expected at +2.1%, edging above the 2% target, while the monthly pace increased by +0.2% after 0% in Jul. Core CPI remained at +2.3% against expectations of a fall to +2.2%, as the monthly pace also jumped to +0.3% after falling in Jul. Euro area Q2 GDP growth was confirmed at +0.1%, slowing from +0.6% in Q1.
This week, the US Treasury will auction and settle approx. $490bn in ST Bills, raising approx. $36bn in new money. The US Treasury will also auction the 3-year and 10-year Notes and the 30-year Bond this week – all will settle next week.
QT this week: Approx $8.6bn of ST Bills will mature on the Fed balance sheet and will be reinvested.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
