Lido Market Updates

15 September 2025

Monday Market Minute | 09.15.2025

By Candice Richardson, CFA, Investments & Analytics
Sergio Dueñas, CFA, Investments & Analytics
As of 9.12.25 | Source: Factset
As of 9.12.25 | Source: Factset

Market Update 

U.S. equities ended the week higher last week as the most recent inflation report came mostly in line with expectations, giving the Federal Reserve room to cut rates at its FOMC meeting this week. The inflation report reaffirmed the narrative of fairly steady inflation, with Core CPI remaining unchanged year-over-year at 3.1%. On the other hand, labor market data released last week continue to suggest labor market weakening. Initial jobless claims increased more than anticipated, continuing the upward trend we’ve seen lately. Additionally, the BLS’s preliminary annual revision to nonfarm payrolls showed that job growth was 911k lower than originally reported. Given the fact that the downside risks to employment have been rising while inflation remains mostly stable, it is widely expected that the Federal Reserve will resume monetary policy easing this week. Markets are for now expecting 3 rate cuts by year-end, beginning with a 25bp cut at this week’s FOMC meeting on Wednesday. This week we also have retail sales which will give us insight into the resilience of the consumer.

 

August CPI Inflation

August Core inflation rose in line with expectations, with Core CPI up 0.3% for the month which leaves the annual rate unchanged at 3.1% year-over-year (YoY). Headline CPI increased 0.38% for the month (2.9% YoY), slightly above estimates as both the food (+0.5%) and energy (+0.7%) component rose more than expected. The report shows renewed firmness in core services after earlier softness, while core goods rose on vehicle prices. Services strength came from firmer than expected shelter prices, with owners’ equivalent rent (OER) increasing 0.38% MoM while rent increased 0.3%. Travel related costs also increased with airfares (+5.9%) and lodging (+2.3%) experiencing strong monthly gains while medical care services declined by 0.1% after prior gains in June and July. Core goods were lifted by higher vehicle prices with new vehicles rising +0.3% while used vehicles rose +1.0%, while other goods rose just 0.13%.

Tariff pass-through remains gradual but should add upward pressure in the months ahead, reinforcing the risk of firmer inflation. Despite firms trying to limit tariff pass through as much as possible, in the most recent earnings calls 56% of companies that discussed their tariff mitigation measures cited price increases as one strategy. Still, August’s report was overall not hotter than feared, allowing the Fed to stay focused on labor market cooling.

 

Jobless Claims

Initial jobless claims for the week ending September 6th increased significantly, from 236k to 263k. While much of the rise in claims came from Texas which may be related to the flooding in July, the overall trend for the past two months has been a steady increase in claims. Continuing jobless claims remained unchanged at 1.939 million, however they have significantly increased since April and so far the 2025 average of continuing claims is above the 2024 average, reinforcing the notion of weak hiring activity. Jobless claims, combined with the most recent jobs report and the subsequent downward revisions for previous months are likely enough weak labor market data points for the Fed to justify cutting rates this week.

 

Consumer Sentiment

US consumer sentiment fell in September to its lowest level since May, with the University of Michigan index dropping to 55.4, well below most forecasts. The decline reflects mounting concerns over job security and persistent price pressures, as consumers now expect inflation of 4.8% over the next year and 3.9% over the next five to ten years, the latter marking the second consecutive monthly increase. Tariffs are also weighing heavily on sentiment, with about 60% of respondents mentioning them unprompted. The survey showed the current conditions gauge declined to 61.2 this month from 61.7 in August, while the expectations index fell to 51.8 from 55.9.

 

 

Sources:  

https://www.dol.gov/ui/data.pdf

https://fred.stlouisfed.org/series/CCSA

https://fred.stlouisfed.org/series/ICSA

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

https://www.bloomberg.com/news/articles/2025-09-12/us-consumer-sentiment-falls-to-lowest-since-may-on-job-worries?cmpid=eveus&utm_medium=email&utm_source=newsletter&utm_term=250912&utm_campaign=eveus

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