The FED Forecasts A New Series of Rate Cuts

Market Recap: 15-19 September 2025

Financial Markets

US Stock Market

This week the main US stock market indices were positive, with the S&P500 and the NASDAQ 100 gaining 1.2% and 2.2%, respectively. The small cap index (Russel 2000) climbed 2.3% and is at the historic maximum. Trading volumes were slightly higher than average.

COMMODITIES

Precious metals got a boost this week. Gold and silver gained 1.1% and 2.1%, respectively. Gold is at a new all-time high of 3684$. Silver continues strong and might have hit resistance around 43$.

WTI crude oil fell to 62.4$/bbl. In the short term, the trading range should be 60-67$ and in the medium term 55-77$/bbl

Bitcoin changed little and now sits around 115 800 USD. The all-time-high (119k) should be resistance on the way up, but if bitcoin falls, 100k$ and 93k$ should act as supports for the cryptocurrency.

US DOLLAR, MONEY SUPPLY

The relative strength of the US dollar (DXY) was unchanged, at ~97.6. The EUR/USD is around 1.175$, the GBP/USD is at 1.347$, and the USD/JPY is at 147.96 JPY.

US M2 money supply at the date of 28th July 2025 was up by 0.43%, showing a continuous increase in the money supply since December 2023. Banks didn’t stop lending so far – if the money supply was going down, it would be a warning sign for the economy and equities.

The national financial conditions index (NFCI) released on 8th September 2025 loosened by 1.02%. Note that this indicator is delayed by two weeks. Positive numbers in the NFCI mean tighter financial conditions, while negative numbers indicate looser financial conditions.

BONDS AND OPTIONS

US bond yields were little changed this week. Yields now sit at 3.574% for the 2-year and 4.133% for the 10-year. The yield curve has uninverted since a year ago, likely as a consequence of low growth, low inflation, and short-term interest rate cuts. Long-term growth and inflation expectations are at ~4.7%.

The VIX was little changed and is now at ~15.5, showing investor complacency and optimism. The overall market remains quite expensive and options premiums are not very attractive at this moment – option sellers need to be patient and particularly selective regarding which contracts to sell.

Comment Section

This week the main highlight was the FOMC meeting and FED rate cut. The FED expects that any tariff-induced inflation is of temporary nature and is slowly growing more worried about the labor market. The Federal Reserve cut the federal funds rate by 25bps in September 2025, bringing it to the 4.00%–4.25% range, in line with expectations. It is the first reduction in borrowing costs since December. Newly appointed Governor Stephen Miran stood alone in voting against the 25bps move, favoring a half-point cut instead. The central bank also released new economic projections. The Fed expects to lower rates by another 50bps by the end of 2025, and a quarter point in 2026, slightly more than expected in June.

Movements in the markets were not overly reactive and stocks continue rising slowly. Although expensive, equities seem stable, and we cannot foresee what catalyst may change the narrative in the short term. So, this is the time to keep looking for opportunities and avoid the overly expensive and hyped tech stocks! And maybe keep some cash for maneuvering in the case of a correction.

Have a nice weekend, and good luck!!!