UN General Assembly, US PCE, GDP Higher

Market Recap: 22-26 September 2025

Financial Markets

US Stock Market

This week the main US stock market indices were more muted, with the S&P500 and the NASDAQ 100 losing 0.3% and 0.5%, respectively. The small cap index (Russel 2000) fell 0.8% as it hit the historic maximum. Trading volumes were slightly higher than average, especially on the tech sector.

COMMODITIES

Precious metals continued climbing. Gold and silver gained 2.0% and 6.9%, respectively. Gold is at a new all-time high of 3758$. Silver continues strong and will likely have some resistance around 48$, the historic maximum.

WTI crude oil rose to 65$/bbl. In the short term, the trading range should be 60-67$ and in the medium term 55-77$/bbl

Bitcoin fell ~5% to 109k$. The all-time-high (119k) should be resistance on the way up, but if bitcoin falls, 100k$ and 93k$ should act as supports for the cryptocurrency.

US DOLLAR, MONEY SUPPLY

The relative strength of the US dollar (DXY) was up to 98.2. The EUR/USD is around 1.170$, the GBP/USD is at 1.340$, and the USD/JPY is at 149.47 JPY.

US M2 money supply at the date of 25th August 2025 was up by 0.36%, 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 15th 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 rose slightly this week. Yields now sit at 3.643% for the 2-year and 4.174% 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 up slightly but closed the week at ~15.3, 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 we had the United Nation’s general assembly. Trump used the yearly foreign policy address to castigate foreign allies for supposedly ruining their countries with unchecked migration, fueling foreign conflicts with purchases of Russian energy, and ignoring his own peacemaking efforts. He addressed the most pressing foreign conflicts — the wars in Ukraine and Gaza — only in passing, instead reserving most of his speech to bemoan efforts to combat climate change, tout his own approach to world issues and take swipes at his predecessor (he used former President Joe Biden’s name six times in the speech). “I’m really good at this stuff. Your countries are going to hell,” he said at one point while talking about migration, a sentiment that neatly summed up the thesis of his speech.

On the economic front, the US PCE price index went up 0.3% month-over-month in August 2025, after a 0.2% gain in July, in line with market expectations. Prices for goods rose 0.1%, rebounding from a 0.1% fall in the previous month and services cost rose 0.3%, the same as in July.

The US economy (GDP) expanded an annualized 3.8% in Q2 2025, much higher than 3.3% in the second estimate, and marking the strongest performance since Q3 2023. The stronger-than-anticipated figure primarily reflected an upward revision to consumer spending. PCE rose 2.5% (vs 1.6% in the second estimate), led by a bigger revision for services (2.6% vs 1.2%) while spending on goods remained robust (2.2% vs 2.4%).

Similarly to the previous week, the movements in the markets were not overly reactive and equity markets in general look like they are reaching a top. A slight correction (up to 10%) wouldn’t be a surprise. However, although expensive, equities seem stable, and we cannot foresee what catalyst may change the narrative in the short term. Thus, a continuing drift upwards wouldn’t be surprising either. 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!!!