Weekly Market Update (Aug 24, 2025)
- Market Hedwig
- Aug 23
- 2 min read
HIGHLIGHTS
The Jackson Hole meeting has cleared the market’s low bar of dovishness. The pace and depth of the rate cuts would depend on the economic data, especially the labour market.
Fed: Market interpreted Powell’s speech as a 25bps cut in September. He mentioned the downside risk of employment and the effect of tariffs, which would likely be a one-time price shift rather than a lasting one.
Europe: European yields have increased recently, exceeding the shift implied by macro factors in other asset prices. It suggests the limits to the selloff’s durability. After all, the impact of geopolitics on European rates is ambiguous.
Tariffs: The EU-US joint statement set tariffs on some specific goods at a favorable rate strategically. A tariff cap of 15% is applied on EU pharmaceuticals, lumber and semiconductors, and more progress is being made on the rate reduction on EU auto.
MARKETS
21,496.54 | -0.58% | |
S&P 500 | 6,466.91 | +0.27% |
Dow | 45,631.74 | +1.53% |
10-Year | 4.26% | -7bps |
Brent | 66.77 | +1.40% |
DXY | 97.73 | -0.11% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
Goldman Sachs: Industrials and Health Care are the most overweight sectors in the recent quarter. More institutional investors have also increased their exposure to the Financial sector. It is noteworthy that most funds, especially mutual funds, are reducing exposure in Magnificent 7.
UBS: Despite global equities hitting record highs, retail sentiment has cooled. Bullish sentiment is down to just under 30%. Institutional positioning also appears cautious.
Fixed Income
Goldman Sachs: Foreign demand for US Treasuries is declining. Dealer inventories have been more volatile while holdings are higher. Historically, dealer accumulation reflected available capacity and sufficient attractiveness of US Treasuries at current spread level.
Standard Chartered: We see the current price of inflation-protected bonds as attractive to hedge against inflation risk. Short-duration high-yield bonds are tools to earn attractive yields when yield premiums are low.
Economy
UBS: We expect the US effective tariff rate to settle near 15% by mid-2026. Although the effects of tariffs are slow to be reflected, it is estimated that the GDP growth will be reduced by 1% and CPI will increase by 1%.
Morgan Stanley: The last time capex is that concentrated was during shale revolution. Technology improvements accelerated gains in well productivity and hence led to overcapacity. For GenAI, we may be on the path to potential excess capacity, and the direction of overall market hinges on that.
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DISCLOSURE
This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.
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