Labor Market: Initial Claims Fall After Spike

Last week's initial unemployment claims for the week ending September 13 showed a significant decrease, falling by 33,000 to 231,000.¹ This follows a substantial spike in the prior week to a nearly four-year high of 264,000, which some reports suggest was partly due to an unusual surge in filings in a few states.² The decline in claims is a welcome sign, tempering some of the recent concerns about a rapidly deteriorating job market. The 4-week moving average, which smooths out weekly volatility, also slightly decreased to 240,000.³ Overall, the labor market remains a key focus for investors and policymakers alike as they weigh the potential for a recession against the ongoing battle with inflation.

Real Estate: Mortgage Rates Continue to Decline

For the fifth consecutive week, the 30-year fixed mortgage rate has fallen, with the average rate now at 6.26%.⁴ This marks a notable decrease from the 6.91% rate seen at the beginning of the year. The consistent decline in borrowing costs is a positive development for the housing market, potentially providing a much-needed boost to demand after a prolonged period of high interest rates. This trend is likely influenced by market expectations of future Federal Reserve policy and a general move toward lower long-term yields.

Global Economy: Chinese Exports Slowdown

Economic data from China for August shows a modest decline in exports. While the overall trade balance remains positive, the slight contraction in exports may be an early signal of softening global demand or, more pointedly, the impact of ongoing geopolitical tensions and tariffs.⁵ Specifically, trade with the United States has seen a decrease, likely due in part to existing tariffs and shifting global supply chains. As the world's second-largest economy and a key driver of global growth, China's trade performance is closely watched for its implications on supply chains and international economic health.

Domestic Outlook: Key Data Releases This Week

Investors are on high alert for two major economic data releases this week:

• Q2 GDP Second Estimate: A new estimate for U.S. second-quarter GDP is scheduled for release on Tuesday. The current estimate is a modest 1.8% annualized growth, which, while positive, underscores the sluggish pace of economic expansion.⁶ Any significant revision—up or down—could have a material impact on market sentiment and future policy expectations.
• August PCE Inflation: The Federal Reserve's preferred measure of inflation, the Personal Consumption Expenditures (PCE) price index for August, is due out on Friday.⁷ Analysts are closely watching this report for signs that inflation is continuing its downward trend toward the Fed's 2% target. An unexpected increase in this metric could increase the pressure on the Fed to maintain a restrictive monetary policy stance.

Cryptocurrency: Volatility and Leverage Liquidations

The crypto market experienced a significant downturn in recent days, triggered by one of the largest waves of leverage liquidations on record.⁸ Highly leveraged "long" positions were wiped out as prices for major cryptocurrencies like Bitcoin and Ethereum fell, creating a cascading effect of selloffs. This volatility highlights the inherent risks of a market where a significant portion of activity is fueled by high-risk, speculative bets. The recent decline serves as a stark reminder of the interconnectedness of the crypto ecosystem and the potential for rapid, outsized price movements.

Activist Government: A New Role in Business

The U.S. government is increasingly taking on an activist investor role in major business deals, moving beyond traditional antitrust or regulatory oversight. This week saw two notable examples:

• ByteDance/TikTok: The government is actively negotiating a deal with China's ByteDance to spin off the U.S. version of TikTok to U.S. investors. This move, driven by national security concerns, is intended to ensure that American user data and the platform's content algorithm are not subject to foreign influence.⁹
• Lithium Americas Corp.: The Department of Energy is seeking a 10% stake in Lithium Americas Corp. as part of a loan negotiation. This is part of a broader push to secure a domestic supply chain for critical minerals, particularly those vital for electric vehicle batteries.¹⁰ By taking an equity stake, the government is not only providing financing but also gaining a direct vested interest in the success and strategic direction of the company, further blurring the lines between public and private enterprise.

Footnotes

¹ The U.S. Department of Labor, "Unemployment Insurance Weekly Claims Report."

² Source: U.S. Department of Labor.

³ The 4-week moving average is used to provide a clearer picture of the trend by smoothing out week-to-week volatility.

⁴ Source: Freddie Mac, Primary Mortgage Market Survey; YCharts

⁵ Source: General Administration of Customs of China.

⁶ Source: U.S. Bureau of Economic Analysis (BEA).

⁷ Source: U.S. Bureau of Economic Analysis (BEA).

⁸ Source: CryptoQuant, Glassnode.

⁹ Source: The Washington Post, September 23, 2025.

¹⁰ Source: U.S. Department of Energy (DOE) Loan Programs Office.

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Researched and compiled with the assistance of Gemini 2.5.. This newsletter represents our opined general assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future performance or results. The opinions and statements expressed are intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities or investment strategies to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. This material may contain estimates and forward-looking statements, which may include forecasts and do not represent a guarantee of future performance. This information is not intended to be complete or exhaustive and no representations or warranties, either express or implied, are made regarding the accuracy or completeness of the information contained herein. The opinions expressed are as of September 23, 2025, and are subject to change without notice. Investing involves risks. Past performance is not a reliable indicator of current or future results, and index returns do not account for fees. It is not possible to invest directly in an index.

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