Monthly Report: September 2025

United States

Macro-wise, the main event this month was the Federal Reserve’s rate cut. Data-wise, we saw a range of economic releases that were generally supportive. Retail sales rose 0.6% (vs. 0.4% expected), GDP expanded 3.8% quarter-on-quarter (vs. 3.3% expected), personal income increased 0.4% month-on-month (vs. 0.3% forecast), and personal spending grew 0.6% (double the 0.3% expected).

On the other hand, unemployment ticked up to 4.3% after remaining between 4.1% and 4.2% throughout the year. Most notably, non-farm payrolls were revised downward by 911,000 jobs, the largest such revision in at least 25 years. This, combined with recent weak payroll prints, underscores loosening labor market conditions. 

Inflation data were mixed: core inflation remained steady at 0.3% month-on-month and 3.1% year-on-year, while headline inflation increased to 0.4% (vs. 0.3% expected) month-on-month and 2.9% (vs. 2.8% expected) year-on-year. Meanwhile, producer prices (PPI) actually fell 0.1% for the month, reversing the prior increase and surprising the forecast of 0.4%.

The most important chart for housing remains the Mortgage rate, where we saw the biggest monthly decline for the year. This marked the 3rd consecutive month of a drop in rates. 30-year and 15-year rates collapsed by more than 30 bps over the course of September 

As anticipated, the latest decline in rates has bolstered the US housing market, with prices rallying, sales increasing, and inventory levels declining. 

Existing home sales decreased by 0.2% month-over-month to 4 million in August, maintaining the growth seen in the previous month and surpassing the market consensus of 3.96 million sales. Additionally, the median price rose by 2% annually, and housing inventory dropped by 1.3% month-on-month. 

For new homes, sales rallied by 20.5% from the previous month to an annualized rate of 800k, the highest level since 2021. Promotional offers and discounts were listed as the main reasons for this surge. Median prices for new homes also rallied by 4.7% month-on-month. 

United Kingdom 

The Bank of England once again kept rates unchanged at 4%, as expected. Data-wise, this month was relatively uneventful, with all the main releases remaining constant and within expectations. Unemployment remained stable at 4.7% (for the 3rd consecutive month) while inflation also remained stable at 3.8% year-on-year, and in line with forecasts. GDP remained constant with 0% growth vs. the 0.1% expected. The Services PMI came out at 51.9, softer than the 53.6 expected, while the Manufacturing PMI continued its descent, printing at 46.2 compared to the 47.5, and remained well away from stabilizing. Overall, this is an outlier compared to other European countries in recent years.

The Housing market appears to be resilient, with prices continuing to rise according to most indices; however, sentiment-related metrics appear more cautious.

The Halifax House Price Index in the UK rose 0.3% month-on-month, beating the 0.1% forecast. The Index rose by 2.2% year-on-year, easing from the 2.5% increase in July and marking the softest increase since June 2024. The average property value increased to £299,331, a record high. 

The RICS Market Survey showed the balance dropping to -19% for August, a decrease from the -13% recorded in July and -7% in June. This is the weakest reading in almost two years and represents a significant miss of the -10% market expectation. This also marks the 5th consecutive negative reading. The concentrated bearishness seemed to be around the next 3-4 months.  

The UK Nationwide Price Index grew 0.5% month-on-month for Sep 2025, beating consensus for a 0.2% gain and rebounding from a 0.1% drop in the previous period.

China

Macro-wise, we remain very balanced in China. Industrial production rose by 5.2% year-on-year, beating the 5.2% forecast. Retail sales, on the other hand, grew by 3.5% year-on-year, a miss from the 5% expected. The main reason has been the reduction in government subsidies. Manufacturing PMIs are on the rise, printing 49.8 and 51.2, compared to the expected 49.9 and 50.8. Finally, inflation was down by 0.4% year-over-year, missing the expected 0.1% decrease.  

China’s new home prices were down by 2.5% year-on-year for August, continuing their trend for shallower yearly declines – last month’s reading was a 3.2%. This now marks the 26th consecutive month of year-on-year declines in house prices. This also marks another 0.3% month-on-month reduction, the third consecutive month. 

The outlook for housing remains cloudy, as property investments remain in contraction territory, and there aren’t many new projects being initiated. New changes aimed at tackling purchase restrictions could provide some support, but given similar previous efforts, this will likely be short-lived. 

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References

(n.d.). US Treasuries Yield Curve. US Treasuries Yield Curve. https://www.ustreasuryyieldcurve.com/

(n.d.). CME FedWatch Tool. CME Group. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

(n.d.).Trading Economics. Trading Economics. https://tradingeconomics.com/united-states/nahb-housing-market-index 

(n.d.).Goldman Sachs. Goldman Sachs. https://www.goldmansachs.com/ 

(n.d.).Bloomberg. Bloomberg. https://www.bloomberg.com 

(n.d.). FRED. Federal Reserve Economic Data. https://fred.stlouisfed.org/

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