Weekly Market Commentary August 25th to August 29th 2025
It was a busy and important week for economic data to close out the month of August.
The first of several important releases was for New Home Sales in July, which declined by 0.6% and missed the estimate, while the prior month was revised up sharply. Sales are down by 8.2% from a year ago and economists expect the pace to remain sluggish as affordability remains a challenge.
Durable Goods Orders ex-transportation for July was considerably better than expected, increasing by 1.1%, while the prior month was revised up to 0.3%. Orders are up 3.8% from a year ago suggesting that businesses may be acclimating to tariff policy and improving investment.
Second quarter GDP was revised up to an annualized rate of 3.3% from 3.0%. The increase was driven by consumer spending (70% of GDP) that was 1.6%, up from 1.2%, and a sigh of relief as consumers continue to spend despite tariff uncertainty. Despite the bounce back in the quarter, most economists expect the pace of growth in the second half of the year to slow to around 1.5%.
The most anticipated data came out to end the week and was for Personal Consumption Expenditures (PCE) inflation. Core PCE, which strips out volatile food and energy prices, came in at forecast for M-o-M +0.3% and Y-o-Y +2.9%. It has ranged between 2.5% and 3.0% for the past year and a half and has been modestly higher since April, which has resulted in the Federal Reserve pausing rate cuts since December of 2024. Despite the Y-o-Y increase the current probability for a cut in September is 87%.
Equity markets declined to start the week but steadily increased to a new all-time high on Thursday, then pulled back a bit on Friday closing at 6,460, essentially flat for the week and up 9.8% YTD.
U.S. Treasury yields declined slightly from last week, with the 2-Year U.S. Treasury yield finishing at 3.62%, and the 10-Year closing at 4.23%.
For this upcoming week important economic indicators include the Institute of Supply Managers (ISM) Services and Manufacturing indexes as well as the Bureau of Labor Statistics payroll report for August.
