Global Equities Extend Record Streak

For the week ending 12 September 2025

As of midday, global equities are trading near record levels, with the S&P 500, Nasdaq 100, Nikkei 225 and FTSE 100 indices all reaching record highs this week while hopes for rate cuts from the US Federal Reserve fueled a rally in small cap equites. The yield on the US 10-year note was little changed on the week at 4.06% after probing the 4% level on Thursday. The price of a barrel of West Texas Intermediate crude oil rose $1.50 to $63.30. Volatility, as measured by futures contracts on the Cboe Volatility Index (VIX), fell to 15.55 from 17.2 last Friday.

MACRO NEWS

Yields brush 4% after jobless claims jump

Markets have increased their focus on the labor market, while they have resigned themselves to inflation remaining elevated in the coming months while tariff passthroughs work their way through the economy. Last week’s soft US employment report was followed by a sizable downward revision of 911,000 to nonfarm payrolls over the period from April 2024 through March 2025. On Thursday, weekly jobless claims jumped to 263,000 — the highest level since October 2021 — helping fuel the continued rally in US Treasuries. However, analysts noted that the weekly data included Labor Day, so the rise may be a quirk of seasonal adjustments, and that much of the gain was concentrated within Texas. Next Thursday’s data will be closely watched for signs that the labor market is rapidly deteriorating. With the FOMC set to meet on Wednesday, a 25 basis point cut is fully expected.

Bessent interviews three for Fed chair

CNBC reported Thursday that US Treasury Secretary Scott Bessent interviewed former Fed Governor Kevin Warsh, former Governor Lawrence Lindsey and former St. Louis Fed President James Bullard this week to succeed Jerome Powell as Fed chair when his term expires next May. Bessent expects to add one or two names to the shortlist of potential replacements, the network reported. Also this week, Bessent charged the Fed with “mission creep,” saying the central bank is one of the foremost drivers of inequality in the US and that to regain its independence, the Fed must stop serving the needs of the wealthy. Next Thursday, Bessent will meet with Chinese officials in Madrid to continue trade talks and discuss other matters. The meeting is said to be intended to pave the way for a meeting between US President Donald Trump and Chinese President Xi Jinping later this year.

French government falls; new PM appointed

As expected, François Bayrou lost a confidence motion on Monday amid his government’s continued inability to pass a 2026 budget in France’s fractured National Assembly. Bayrou was quickly replaced by Sébastien Lecornu, a close ally of President Emmanuel Macron who previously served as defense minister. Upon taking office, Lecornu promised a more creative, technical and serious approach to budget negotiations. If he fails, fresh parliamentary elections are likely. French 10-year bond yields held steady at around 80 basis points over comparable German bund yields, as Bayrou’s ouster was widely anticipated. French yields briefly rose above Italian yields earlier in the week.

Japan’s PM falls on his sword

Under pressure from Liberal Democratic Party leaders, Japanese prime minister Shigeru Ishida resigned this week, taking responsibility for the party’s loss of both houses of Japan’s parliament. A vote to elect a new party president — who will then likely become prime minister — is scheduled for 4 October. The frontrunners are Shinjiro Koizumi, the son of a former prime minister, and Sanae Takaichi, the runner up to Ishiba in last year’s leadership race. Takaichi favors more expansionary fiscal and monetary policies than Koizumi, so her election could potentially lead to stronger equities, a weaker yen and a steeper yield curve than under her rival.

QUICK HITS

US CPI rose 0.4% month-over-month in August and 2.9% year-over-year as tariff pressures continue percolating through the economy. The core rate rose 0.3% month-over-month and held steady at 3.1% year-over-year. Producer prices unexpectedly fell 0.1% month-over-month in August while rising a smaller-than-expected 2.6% year over year.

Q2 GDP in Japan rose a much stronger-than-expected annualized rate of 2.2%.

The European Central Bank held its policy rate steady at 2% on Thursday and said that risks to the economic outlook are balanced. President Christine Lagarde indicated that the disinflationary process is over, likely signaling an end to the bank’s easing cycle.

According to the US Federal Reserve, US household net worth rose $7.086 trillion in Q2, to a record $176.29 trillion.

The average 30-year mortgage rate in the US fell to 6.35% this week, the lowest in 11 months.

In an attempt to force Moscow into peace talks with Ukraine, the US will pressure G7 countries to hit India and China with a sharp increase in tariffs for buying Russian oil, the Financial Times reported on Friday. President Trump said Friday morning that his patience with Russian President Vladimir Putin is “running out fast.”

Argentina’s markets tumbled on Monday after President Javier Milei’s party suffered a setback in a provincial election that raised questions about support for his pro-market overhauls.

Stephen Miran’s nomination for a seat on the Federal Reserve Board was advanced by the Senate Banking Committee on Wednesday by a vote of 13-11. A full Senate vote is scheduled for Monday. If confirmed, Miran will be in place for the FOMC meeting on Tuesday and Wednesday next week.

Isreal attempted to kill the political leadership of Hamas in airstrikes on a house in Doha, Qatar on Tuesday; though five lower-level ranking members were killed, the leaders were spared. The attack has further increased tensions between Israel and the Gulf states. Qatar’s prime minister will meet with President Trump on Friday to discuss the strike.

A district court judge temporarily blocked President Trump from firing Fed Governor Lisa Cook, allowing her to remain on the Fed board. Trump has appealed the ruling.

Median household income in the US rose to $83,730 in 2024, the US Census Bureau reported Tuesday, a gain of $1,040 from 2023.

The US Supreme Court announced this week that it will hear the Trump tariff case on a fast-tracked schedule. Oral arguments are scheduled for early November.

Mexico is set to raise tariffs on cars and 1,400 other categories of goods imported from China and other Asian nations to rates as high as 50%.

The US Treasury sold $58 billion 3-year notes, $39 billion 10-year notes and $22 billion 30-year bonds this week. Demand was robust for the shorter-dated maturities and solid for the 30-years, which were auctioned as yields were at their lows for the week, modestly limiting their appeal.   

This week, President Trump and Indian Prime Minister Narendra Modi each committed to resuming trade negotiations, signaling a potential thaw in US-India relations.

Fitch Ratings nudged up its world growth outlook for 2025. Fitch now forecasts global growth to be 2.4% in 2025, 0.2% higher than its June forecast but still lower than last year’s  2.9%.

THE WEEK AHEAD

Monday: No major releases

Tuesday: UK unemployment; eurozone industrial production; Canadian CPI; US retail sales

Wednesday: UK CPI, eurozone CPI, Canada BOC meeting; US FOMC meeting

Thursday: UK BOE meeting; US jobless claims

Friday: Japan BOJ meeting, CPI; UK retail sales; Canada retail sales

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Past performance is no guarantee of future results.

Sources: MFS research, Wall Street Journal, Financial Times, Reuters, Bloomberg News, FactSet Research.