Asset Management: Monthly Macro Insights - September 2025
The Goldilocks scenario comes under pressure
Investors entered the second half of 2025 hoping for a favourable combination of moderating inflation, resilient growth and gradual monetary easing. However, this balance is becoming increasingly fragile. The boost provided by front-loading ahead of tariff increases is fading, and global trade and industrial activity have started to lose momentum despite some resilience in technology-related investment.
China faces growing uncertainty
China has benefited from stronger global capital expenditure and trade rerouting, which helped cushion the decline in exports to the United States. However, recent support measures aimed at stimulating domestic demand appear to be losing effectiveness. Economic indicators continue to point to weakness, particularly in the property sector, where falling home prices and subdued investment continue to weigh on confidence. While further monetary easing remains possible, policymakers are proceeding cautiously as equity markets have risen faster than the underlying economy.
The Fed confronts a difficult trade-off
In the United States, the Federal Reserve is increasingly caught between weakening labour market conditions and persistent inflationary pressures. Hiring has slowed, unemployment has risen and labour demand continues to soften, strengthening the case for monetary easing. At the same time, core inflation remains above target, wage pressures have reaccelerated and the effects of recent tariffs are expected to feed through to consumer prices in the coming months.
Inflation remains at the centre of the debate
The key question for policymakers is whether slowing growth will outweigh renewed inflation pressures. While a weaker economy could justify further rate cuts, elevated inflation and rising inflation expectations complicate the outlook. As a result, monetary policy is likely to remain a central source of uncertainty for investors in the months ahead.
