Supported by the recent decline in interest rates, US mortgage applications rose 9.2% last week vs. the year-ago level, according to data from the Mortgage Bankers Association (MBA). The latest update continues to show a stronger trend this year vs. 2024. “The downward rate movement spurred the strongest week of borrower demand since 2022, with both purchase and refinance applications moving higher,” said Joel Kan, MBA’s vice president and deputy chief economist.
Tilting portfolios toward global equities ex-US continues to post solid results for investment strategies this year, based on a set of ETFs through Tuesday’s close (Sep. 9). Leadership has switched back in favor of American shares in recent months, but so far foreign stocks remain well ahead of US stocks for the year-to-date comparison.
US employers added 911,000 fewer jobs during the 12 months through March, according to preliminary data from the Labor Department. The annual revision shows that the jobs market had been growing at a slower pace than previously estimated. “The slower job creation implies income growth was also on a softer footing even prior to the recent rise in policy uncertainty and economic slowdown we’ve seen since the spring,” said Oren Klachkin, market economist at Nationwide Financial. “This should give the Fed more impetus to restart its cutting cycle.”
The Federal Reserve is widely expected to cut interest rates at next week’s policy meeting on Sep. 17. Will Thursday’s report on consumer inflation in August play along?
The NFIB Small Business Optimism Index ticked up in August, above the 52-year average level. “Optimism increased slightly in August with more owners reporting stronger sales expectations and improved earnings,” said NFIB Chief Economist Bill Dunkelberg. “While owners have cited an improvement in overall business health, labor quality remained the top issue on Main Street.”
If global markets flatlined at current prices through New Year’s Eve, the results would go into the history books indicating a solid, widespread bull run for 2025. The question is whether the priced-for-perfection state of affairs will endure through the fourth quarter?
US non-farm payrolls posted a weak increase in August, well below expectations. The tepid rise fueled concerns that the economy is slowing and so the Federal Reserve is likely to cut interest rates at its Sep. 17 monetary policy meeting. “The job market is stalling short of the runway,” said Daniel Zhao, chief economist at jobs site Glassdoor. “The labor market is losing lift, and August’s report, along with downward revisions, suggests we’re heading into turbulence without the soft landing achieved.”
● The Fractured Age: How the Return of Geopolitics Will Splinter the Global Economy
Neil Shearing
Interview with author via Financial Times
It’s a widely held assumption that US President Donald Trump has put globalization into reverse. But Neil Shearing, group chief economist at Capital Economics and author of The Fractured Age: How the Return of Geopolitics Will Splinter the Global Economy, tells the FT’s world trade editor Peter Foster that Trump’s policies are a symptom and not the cause of the global trading system unravelling. They discuss how economic rivalry between the US and China is reshaping world trade – and where it might lead.
The short answer: Yes, it appears to be. The somewhat longer answer: Yes, but (you knew this was coming) a number of indicators have been advising no less over the summer, and yet the market has continued to climb. Short-term timing decisions, in other words, remain as fraught as ever. But let’s press on anyway and consider some of the clues that imply the market is toppy.
Hiring at US companies slowed to 73,000 in August, below expectations. “The year started with strong job growth, but that momentum has been whipsawed by uncertainty,” said Dr. Nela Richardson, chief economist, ADP. “A variety of things could explain the hiring slowdown, including labor shortages, skittish consumers, and AI disruptions.”
