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UK Wage Growth Sparks Inflation Concerns and GBP/USD Rally: What It Means for BoE Policy

UK Wage Growth Strengthens Inflation Outlook, Delays BoE Policy Easing; GBP/USD Rises

September 16, 2025 — By Bob Mason

UK labor market data shows strong wage gains. The data makes inflation worries grow and slows any change in BoE rates. At the same time, traders drive the British pound higher against the US dollar.

Rising Wages and Steady Unemployment Signal Inflation Risks

The Office for National Statistics shows that wages grew by 4.7% over the three months ending in July. The rate edged up from 4.6% in June. These numbers add to a strong labor market. They may lead to more spending, which can push prices up.

Unemployment stayed at 4.7% in July. The result helps explain the overall health of the labor market. However, fewer people worked on a payrolled basis. In July, the count dropped by 6,000. Compared to July 2024, the loss was 142,000. Early numbers for August show a fall of 8,000 payrolled workers.

The report shows that job vacancies have fallen month after month for 38 months in a row. Between June and August 2025, vacancies dropped by 10,000. Fewer claimants made requests in July. Yet, the total claim numbers stay lower than last year. They stand at 1.686 million.

Implications for Bank of England Policy

This data puts the Bank of England in a hard spot. Wage gains and steady jobs keep consumer faith high. High spending can push demand and prices up.

Inflation numbers from earlier this month add to this view. In July, the annual headline rate climbed from 3.6% to 3.8%. Core inflation also stood at 3.8%. Both rates sit above the Bank’s 2% target. Markets now see less chance for a rate cut soon.

Economists at ING note that August inflation data may show a small drop in basic price moves. Yet, strong labor figures point to a steady policy stance. The next BoE meeting comes on Thursday, September 18. —

Currency Market Reaction: GBP/USD Rises on Hawkish Sentiment

The strong labor data gave the British pound a lift. The GBP/USD rate rose from a low near $1.35920 to a high at $1.36275. It then fell a bit. In the morning session on September 16, GBP/USD stayed near $1.36249. This gain of 0.19% marks the day.

Investors now expect that the Bank of England will hold its current stance. The steady wage growth and weighty inflation data push them toward a firm tone at the BoE.

Looking Ahead: Inflation Data and Economic Indicators in Focus

Market watchers will soon see the UK inflation report due on September 17. Analysts expect headline inflation to remain near 3.8% while core inflation may slip to 3.6%. If inflation falls more than most expect, some may hope for a rate cut in November. Such a change could put pressure on the pound.

UK retail sales data on September 19 will also show more about how consumers spend in this price environment.

Summary

• UK wages grew 4.7% in the three months ending in July, up from 4.6% in June.
• Unemployment held at 4.7%.
• The number of payrolled employees fell month over month, and job vacancies have dropped for 38 consecutive months.
• Inflation remains above the Bank of England’s target, both in headline and core measures.
• Fewer market views see a near-term policy change at the BoE because of strong labor data.
• GBP/USD rose to about $1.3625 on a firm market tone.
• Upcoming inflation and retail sales data may shift views on future policy.

Policymakers and investors now await new inflation numbers and other signs of economic direction. They watch all moves closely as the Bank of England plans its next rate decision.

Bob Mason is a financial journalist with over 28 years of experience. He covers global markets, including currencies, commodities, and equities, with a focus on European and Asian economies.

Stay tuned to FXEmpire for the latest updates on global macroeconomic trends, central bank decisions, and currency forecasts.

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China’s Economic Struggles: Trade Talks Intensify Amidst Rising Unemployment and Urgent Need for Policy Support

China Growth Wobbles as Trade Talks and Policy Support Take Center Stage

By Bob Mason
Published: September 16, 2025, 01:23 GMT+00:00

China’s economy shows weakness amid tough trade talks and domestic tests. New data and market signs report lower growth, higher costs, and weaker spending. This news brings more calls for clear fiscal actions to support the world’s second-largest economy.

Economic Growth Hits Speed Bumps

China’s industrial output grew 5.2% in August compared to last year. This growth falls from July’s 5.7% mark and a high of 7.7% in March. Tariffs and soft demand work together to slow down manufacturing. Lower output growth makes firms worry about profit ties and may slow the whole economy.

Margin Squeezes and Rising Unemployment

Surveys from the manufacturing and services groups show sharp changes. Rising costs force private companies to cut prices and thin their profit margins. To handle these costs, many companies cut jobs. This push raised the unemployment rate from 5.2% in July to 5.3% in August.

Young workers suffer most in this struggle. Youth unemployment climbed from 14.5% in June to 17.8% in July. This gap adds to job challenges and demands clear policies to boost new work chances.

Consumption Slumps Amid Economic Pressures

Higher unemployment and dropping house prices work to slow private spending. Retail sales growth fell from 6.4% in March to 3.4% in August. With less money in hand, consumers spend less and feel less sure.

This trend puts Beijing’s 5% GDP goal at risk. Falling house prices hurt consumer trust. Policy moves to steady the housing market and spur job creation, especially for young workers, are now vital.

Urgent Calls for Targeted Fiscal Stimulus

Experts at Goldman Sachs ask for more focused easing measures. They point to weak local demand and ongoing soft areas in the labor and property sectors. Floods in early August, limits on construction ahead of a military parade, a falling property market, and strict moves against price fights add pressure to the economy.

Trade Talks Under Pressure

China faces these issues as trade talks happen in Madrid. The United States, European Union, and Mexico press hard on tariffs. Such moves may slow down China’s export boost. For example, Mexico plans to place a 50% tariff on auto imports. This change adds to the hurdles for Chinese sellers.

US Treasury Secretary Scott Bessent mentioned that the US-China tariff break could stretch 90 more days before the November 10 end date. He noted the firmness of Chinese negotiators. At the same time, China’s trade chief Li Chenggang showed progress on a TikTok agreement yet said China stands firm on its business interests.

A high-level call between US President Trump and Chinese President Xi Jinping set for September 19 may shift talks. A key point is whether Beijing will cut down on Russian oil buys in return for tariff help. This idea came after a Shanghai Cooperation Organization meet. Even if Beijing keeps its foreign view strong, a little opening in stance is not ruled out.

Policy Initiatives and Market Response

Inside the country, China moves to boost the service scene and fix market gaps. President Xi Jinping wrote an article urging efforts to join the national market, stop low-price fights, close old factories, and fix tax and loan laws. These shifts aim to clear up market issues, fuel fair fights, and push a spending-based growth plan.

Even with these tests, Chinese stock markets show strength. The CSI 300 and Shanghai Composite indices have both risen about 15%, following a rise similar to the Nasdaq Composite. The Hang Seng Index has soared by 31.8% this year, showing high interest in China stocks.

Trade tensions, a weak housing scene, and soft demand still trouble investors. Continued tariff fights and a slower economy may cause more job cuts and less spending. This trend could weigh on risk assets soon.

Looking Ahead

As China deals with these hard tests, policy makers feel pressure to add fiscal and monetary support while handling trade ties in a changing worldwide scene. The results from trade talks, efforts to steady the housing market, and steps to boost work and spending will shape China’s pace in the months to come.

The situation remains a key watch for global markets and policy makers. Observers keep a close eye on shifts in trade rules and Beijing’s home reforms in the days ahead.

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China’s Retail Sales Disappoint: Economic Growth Concerns Impact Currency and Markets

China Retail Sales Miss Forecast, Growth Concerns Resurface; AUD/USD and Hang Seng Retreat

By Bob Mason
Updated: September 15, 2025, 02:55 GMT

In August 2025, China’s retail sales did not meet the forecast. Sales grew by 3.4% year-on-year in August. The expected growth was 3.8%, and July had seen a rise of 3.7%. This gap in consumer spending adds worry about the strength of China’s economy.

Unemployment rose in June, moving from 5.2% in July to 5.3%. The rise in joblessness makes the labor market seem weaker. This trend may lower consumer trust and spending, which are key to the economy.

Housing prices have dropped for four months in a row. Used home prices fell 0.58% from the previous month, a larger drop than in July. New home sales also fell. Year-on-year, house prices decreased by 2.5% in August. Although this is a slight improvement from July’s 2.8% drop, it still worries market watchers. Stocks in the real estate field felt the impact, with the Hang Seng Mainland Properties Index falling by 1.25% during early trading on Monday.

Industrial output grew at 5.2% year-on-year in August. This is slower than July’s 5.7% and below the expected 5.8%. Export performance also slowed, dropping from 7.2% in July to 4.4% in August amid tariff effects.

Investors acted quickly on the news. The Hang Seng Index fell to 26,420 on September 15 before a small recovery to 26,450. The Australian dollar went down against the US dollar; AUD/USD dropped from 0.66584 to 0.66551, then bounced back slightly to 0.66552. US-China trade tensions add to the doubt. Trade talks picked up briskly in Madrid. The talks cover tariffs and issues including TikTok’s future. This situation adds more uncertainty for investors.

Looking ahead, China faces hard challenges in reaching its 5% GDP growth target for 2025. Weak consumption, a stressed labor market, and lower exports all work against this goal. Market watchers now keep a close eye on policy steps in housing, spending, and jobs. At the same time, the path of US-China trade talks stays key. Progress on tariffs may bring needed support to local markets while rising disputes may worsen the challenges.

Investors and traders are urged to keep a careful view given the latest news and global developments.

About the Author

Bob Mason brings over 28 years of experience in the financial sector. He has worked with global rating agencies and multinational banks. His work centers on currencies, commodities, alternative asset classes, and equities, with a focus on markets in Europe and Asia.

For more updates on market trends, economic numbers, and policy changes, stay tuned to FXEmpire’s full coverage.

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Empowering Housing: CMHC’s Vision for Increased Bank Risk-Taking in Construction Financing

CMHC Head Emphasizes Continued Importance of Crown Corporation in Canadian Housing Sector

By Garry Marr | Published September 12, 2025

At a recent industry conference in Toronto, Coleen Volk, president and CEO of Canada Mortgage and Housing Corporation (CMHC), made a clear point. She stressed that the Crown corporation plays a key role in Canada’s housing challenges. Volk spoke at the Canadian Apartment Investment Conference. She linked private banks with new funds for residential building. At the same time, she reassured us that CMHC stands by the housing market by taking smart risks.

Welcoming More Risk from Banks in Housing Finance

Volk wants banks to take more risks when they finance housing projects. She said, “We would love to see the banks taking more risks,” during a one-on-one Q&A with Ana Bailão, an affordable housing advocate and former Toronto mayoral candidate.
Today, about 88 percent of housing projects rely on CMHC mortgage insurance. This data shows that banks are careful. Volk’s words show that CMHC hopes to share risk more evenly with private lenders. This change may bring new money to build homes.

Regulatory Environment and Risk Considerations

Volk explained that OSFI, the Office of the Superintendent of Financial Institutions, watches over CMHC. Recently, OSFI raised the capital rules for the corporation. Volk said, “We don’t want that to limit our ability to do good things in the marketplace.” Her words tied the need for balance between safe risk-taking and meeting housing needs.
CMHC sees that the nation does not build enough homes. Its chief economist linked this problem to only half the needed annual housing starts. New data showed that in the first half of 2025, housing starts across the country fell compared to 2024. Toronto, in particular, sees its housing starts drop to a three-decade low.

CMHC’s Role Amidst New Government Housing Initiatives

Volk spoke about Ottawa’s Build Canada Homes program. This new plan will boost federal activity in building affordable, or “deeply affordable,” homes. Volk compared it to the Canada Infrastructure Bank. She noted that Build Canada Homes will work mostly outside CMHC’s usual area.
She made clear that CMHC will keep its own affordable housing programs, some of which are 30 years old. Build Canada Homes will focus on larger affordable housing projects. Volk said, “If they are taking over things that we did, it would be from that end of the spectrum, the more affordable end.” Meanwhile, CMHC will handle market housing.

Continuing Support for Rental Apartment Construction

CMHC also backs its Apartment Construction Loan Program. This program gives developers low-cost funds to build rental apartments across Canada. Volk said, “We are really firing on all cylinders there.” She linked her optimism to a plan to double the funds for this initiative.
She challenged the notion of two separate markets for affordable and market housing. Her words tied the two segments together. Volk stressed that both CMHC and Build Canada Homes will serve similar clients in a mixed housing market.

Conclusion

Coleen Volk’s remarks at the conference tied CMHC’s role firmly to Canada’s housing market. Her words link private banks with new funding, while CMHC’s leadership keeps pushing for more housing supply. The message is clear. Despite tighter rules and a national housing shortage, CMHC will keep supporting both rental and affordable housing projects.

For further details, reach out to Garry Marr at gmarr@postmedia.com.

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UK Economy Stalls: BoE’s Rate-Cut Challenge and GBP/USD Response

UK Economy Loses Momentum, BoE Faces Tough Rate-Cut Dilemma; GBP/USD Dips

By Bob Mason | Updated: September 12, 2025, 06:20 GMT+00:00

Recent UK data shows growth slowing in July. The report forces the Bank of England to decide: keep high rates as inflation stays high, or ease policies amid weak growth. The GBP/USD pair fell a bit when the GDP figures were released.

UK GDP Growth Stalls in July

The UK economy slowed in July. In June, the economy grew by 0.4%, but in July the overall GDP stayed the same. The Office for National Statistics shows that the month ended with no growth.

Monthly, services output barely increased by 0.1% in July after a 0.3% gain in June. Production dropped by 0.9% in July after growing 0.7% in June. Manufacturing, a large part of production, fell by 1.3% in July after a 0.9% rise in June. These closer links between data points raise a worry about the UK’s economic strength.

Over the three months ending in July, GDP growth slowed to 0.2%, down from 0.3% for the three months ending in June. These changes show a broad slowdown.

Inflation Presents a Policy Puzzle for the Bank of England

The slowdown appears when inflation is still high. Headline inflation rose to 3.8% in July, up from 3.6% the month before. Core inflation also climbed. The inflation rate for services went up to 5% year-on-year in July from 4.7% in June. With services affecting the overall count more, this rise makes the inflation picture harder to read.

BoE Governor Andrew Bailey noted, “There is now considerably more doubt about exactly when and how quickly we can move those further steps.” His words show that the timing and speed of any change remain unclear.

The job market is steady, with unemployment at 4.7%, and wages continue to grow. Some economists say the Bank may cut rates only when inflation and wages slow down more clearly.

Upcoming Data Will Influence the Outlook

Key UK numbers are set for mid-September. Inflation figures will come on September 15, and labor market data will follow on September 17. If these reports show a clear drop in inflation and slower wage growth, market views of a November rate cut may gain strength.

GBP/USD Market Reaction

After the GDP data came out, the GBP/USD pair slipped. Before the report, the pair briefly rose to $1.35804, then dropped to a low of $1.35496. By September 12, it was about 0.15% lower at $1.35507. The BoE’s tough decision contrasts with views that the U.S. central bank may cut rates next week. This split in paths may push the GBP/USD pair below the $1.35 level if the BoE decides to cut rates.

Conclusion

The UK economy’s weak growth in July and rising inflation have put the Bank of England in a tight spot. Slow GDP would normally call for lower rates, but stubborn inflation in the services sector and a steady job market mean any cuts may wait until there is a clear sign of easing. Traders and investors now watch the upcoming inflation and labor data for clues about the Bank’s next move and the future path of the British pound.

About the Author
Bob Mason has over 28 years of experience in the financial industry, covering currencies, commodities, alternative assets, and global equities with a focus on European and Asian markets.

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Surging U.S. Inflation Reaches 2.9% in August: The Impact of Shelter and Energy Costs

U.S. Inflation Reaches 2.9% in August, Fueled by Rising Shelter and Energy Costs

By James Hyerczyk | Updated: September 11, 2025, 12:39 GMT

Recent U.S. inflation data shows consumer prices growing fast. The CPI went up 0.4% in August—a jump twice as big as in July. Over the past year, inflation reached 2.9%, up from 2.7% in July. Higher costs in housing, food, and gasoline play a large role. These higher prices spur talks on how the Fed will act next.

CPI Growth Shows Continued Price Pressure

The CPI increase of 0.4% comes in sharper than many expected. Shelter costs lead this rise. In August, shelter prices climbed 0.4% and are 3.6% higher over the year. This data confirms a tight housing market. The core CPI, which ignores food and energy, grew 0.3% this month and rose 3.1% over the year. Price pressure spreads through the economy.

Within core measures, rent for homeowners increased 0.4% while primary rent went up by 0.3%. Airline fares jumped 5.9% from last month. Prices for used cars rose 1.0%, and apparel prices grew 0.5%. In contrast, medical care costs fell 0.2%, with lower dental and drug prices giving slight relief amid rising costs elsewhere.

Food Prices Rise, Driven by Grocery Gains

Food prices also climbed in August. The food index grew 0.5% and food-at-home prices increased 0.6%. All six major grocery groups saw price hikes. Fruit and vegetable prices jumped by 1.6%, with tomato prices up 4.5% and apple prices up 3.5%. Prices for meat, poultry, fish, and eggs went up 1.0%, led by beef prices that rose by 2.7%. This path pushes the annual food index up 3.2%, outpacing overall inflation.

Energy Prices Bounce Back on Gasoline Gains

Energy prices turned up by 0.7% in August after a drop in July. Gasoline costs rose 1.9% in a seasonally adjusted move, bouncing back from a 1.1% drop. Meanwhile, natural gas prices sank 1.6% and electricity prices edged up 0.2%. Over the year, energy inflation is low at 0.2%, with gasoline still 6.6% lower than last year.

Market Impact and Fed Policy Views

Sticky inflation, seen in core CPI and shelter costs, makes quick Fed rate cuts seem less likely. Many experts expect the Fed to keep rates steady at the September meeting. Rising costs in food and travel add to the price pressure. Investors watch bond yields and a strong U.S. dollar with care. Stock markets may face more risk as borrowing costs rise.

Market Outlook

Strong August inflation keeps the U.S. dollar firm against low-yield coins. Bond yields may continue to rise as the market adjusts to a longer period of high rates. Stock markets may see short swings as ideas of quick rate cuts fade and investors settle into a longer phase of tight money.

About the Author

James Hyerczyk is a seasoned U.S.-based technical analyst and educator with over four decades in market study and trading. He studies chart patterns and price moves deeply. He has written two books on technical analysis and knows much about stock and futures markets.

For continued coverage on macroeconomic indicators, market forecasts, and financial news, stay tuned to FXEmpire.

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Navigating the Tensions: China and the US Trade Showdown Amid Deepening Economic Strains

China Faces Trade Showdown as Tariff Truce Masks Deepening Strains

By Bob Mason
Updated: September 11, 2025, 02:45 GMT

Overview

The US and China set a trade pause. This break stops a steep tariff rise now. Under this calm, hard disputes grow. Tariff conflicts, supply chain issues, and rare earth problems still trouble both sides. These fights stress China’s plans for steady growth and shake market trust.

Trade Truce Extension: A Temporary Pause

In August 2025, US and China extended their trade calm for 90 days. This step stops the start of a 145% tariff on many Chinese goods. The pause does not solve other trade issues. In Geneva, both sides met for two days. China agreed to lift some limits on rare earth exports. The US agreed to ease rules on semiconductor chips. Later talks in London and another break did little to clear mistrust or bring a full trade plan.

Rising Geopolitical Pressures

US moves against China get more complex. The US added tariffs to fight against goods sent through third countries. Firms forward goods from Vietnam and Indonesia to avoid steep fees. Vietnam now pays a 40% tariff on some shipments, and Indonesia pays a 19% fee. Vietnamese exports to the US dropped by 2% in August. At the same time, Vietnamese imports from China also fell by 2%. Rumors spread about US plans to require firm proof of product origin. Such steps could hurt China’s trade edge.

US officials also pressured the European Union to set 100% tariffs on some goods from China and India. This push aimed to cut Russian oil purchases and nudge Moscow on the Ukraine matter. The call came during a meeting of the Shanghai Cooperation Organization, where leaders like Russian President Vladimir Putin and Indian Prime Minister Narendra Modi appeared.

US officials reopened trade talks with India. Former President Trump spoke of ending trade blocks. This change may lower India’s Russian oil buys and shift how its economy links with China.

Chinese Economy Under Stress

Trade fights now hurt China’s economy. Its exports to the US fell 33% compared to last year in August. Growth slipped from 7.2% in July to 4.4% in August. Unemployment climbed from 5.0% to 5.2%, while jobless numbers among the young jumped from 14.5% to 17.8%. These shifts hit workers hard.

Lower sales in shops now worry many about hitting a 5% growth target. In response, the government plans new help for workers and trade. On September 10, the National People’s Congress met. Leaders stressed using the budget to bring back balance to the economy.

Economist Robin Brooks from the Brookings Institution said, "China loses ground. Its US exports dropped 24% in one quarter. Exporters must choose: shift goods or cut prices. Both paths hurt earnings and push prices down."

Mainland Markets Stay Steady

Despite the stress, Chinese stock markets hold up well. The CSI 300 and Shanghai Composite Index rose near 13%. The Hang Seng Index climbed over 30%. Local buyers and money from abroad keep the markets active.

Beijing works to keep the economy safe. Yet trade talks, a housing crisis, and weak local buying still risk the future. A shaky job market can slow spending and mind share.

A solid trade deal with the US might boost exports, raise company profits, grow jobs, and lift spending. That boost would support growth and push stocks higher.

The Road Ahead

Investors watch as China plans to share new data soon. Reports on retail sales and industrial output will appear on September 15. Those numbers will show if a small stumble starts a larger drop.

If spending and output rise, market hope may grow fast. Stocks could hit high levels in 2025. But if low news continues and prices fall, Beijing may miss its goals and need more policy moves.

With trade fights still burning and political stress on the rise, China stands at a turning point. How it balances trade plans and wins back market trust will shape its future and that of the global scene.

Contact: For more updates on the US-China trade scene and market views, stay tuned to FXEmpire.

Related Reads:

  • "China Ready for Global Pivot as US Trade Tensions Deepen Economic Risks"
  • "US Jobs Report Misses Forecast: Weak Nonfarm Payrolls Signal Labor Market Cooling"
  • "Surprise Drop in PPI Strengthens Case for September Fed Rate Cut"

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Brookfield’s Bruce Flatt Sees Bright Future for New York Real Estate Amid Expert Insights on Market Recovery and Rate Cuts

Brookfield CEO Bruce Flatt Bullish on Real Estate Rebound Amid Lower US Interest Rates

Brookfield Asset Management CEO Bruce Flatt shows clear confidence in a real estate rebound. He points to strong market changes and lower U.S. interest rates. Flatt signals that now is a good time to invest, especially in New York City. He explains his view at Brookfield’s annual investor meeting in New York.

Scarcity of New Construction Spurs Rent Growth

Flatt notes that few large office buildings are built in New York City. London sees the same trend. Less new construction and higher demand mean rents will rise. “In the next five years, rents are going through the roof,” Flatt said. He adds that limited supply, strong demand, changing rates, and easier financing come together to lift the market.

Anticipated US Interest Rate Cuts to Fuel Market Recovery

Flatt expects U.S. interest rates to drop by about 100 basis points in the next 12 to 18 months. This drop will ease financing challenges. “Transaction activity has come back,” Flatt noted. “Now you can finance nearly everything in real estate worldwide. Real estate depends on financing.” Even if office and retail segments face challenges, strong fundamentals keep the market steady.

US Market Poised to Catch Up to Other Regions

The recovery in Canada is ahead because of faster rate cuts. The U.S. market lags a bit. Flatt points out that when U.S. rates fall, the market will speed up. “Other markets have already turned, but in the U.S. we are waiting for lower rates. That change will drive recovery further,” he explained.

Brookfield’s Strategic Positioning in Real Estate and AI

Brookfield has stayed active in real estate while others let go. This steady approach gives the firm an edge when the market bounces back. Flatt also stresses a big move into artificial intelligence (AI). He calls AI a $7-trillion opportunity. If Brookfield follows through, AI-related businesses may become the firm’s largest segment in ten years. The firm is investing in AI infrastructure with plans worth around $200 billion, many with real estate links.

“We’re building core AI to drive productivity in businesses,” Flatt remarked. He explains that AI will change every business. Staying ahead in this tech race is key to remaining competitive.

Expanding Access to Alternative Investments

Brookfield is also opening doors for U.S. retail investors. It offers ways to invest in alternatives like private equity and real estate. This move follows U.S. government steps that let more people invest in alternative assets through employer plans.

Bruce Flatt’s confident outlook shows that key real estate markets are set to grow as financing improves. With bold investments in AI and smart real estate play, Brookfield aims to lead global investment trends in a changing market.

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PPI Plummets: New Data Fuels Expectations for Fed Rate Cut in September

Surprise Drop in Producer Price Index Bolsters Expectations for September Federal Reserve Rate Cut

By James Hyerczyk | Updated: September 10, 2025, 13:06 GMT

In a surprising turn, U.S. wholesale data for August shows the Producer Price Index (PPI) dropping. This drop makes many think that the Federal Reserve may cut rates in its next meeting.

Key Highlights:
• U.S. wholesale prices fell by 0.1% in August, while experts had predicted a 0.3% rise.
• Core PPI, which leaves out food and energy costs, also fell by 0.1% against a forecast of 0.3%.
• Equity and bond markets reacted well, as S&P 500 futures climbed and Treasury yields dropped.
• The 10-year Treasury yield slid to 4.068%, and the 2-year yield dropped 1 basis point to 3.529%.
• CME FedWatch now shows traders fully expecting a Fed rate cut in September.

Weaker Wholesale Inflation Supports a Soft Monetary Outlook

U.S. wholesale prices fell by 0.1% last month. The Bureau of Labor Statistics found that this drop did not match economists’ views of a steady rise. The core PPI’s drop shows that price pressures eased when food and energy are not counted. This fact made investors gain hope and push up equity futures, while bond prices did well as yields dropped.

A 0.2% decline in service prices, including a 1.7% drop in trade services, added to the change. Prices in machinery and vehicle wholesaling fell by 3.9%, which suggests prices in these sectors are easing. In contrast, prices for goods edged up a small 0.1%. Energy costs fell by 0.4%, while food prices ticked up 0.1%. Core goods prices, which leave out food and energy, rose by 0.3%. The numbers point to softer price movements in the goods market.

Tariff Effects and Labor Market Dynamics Under Scrutiny

Inflation stays above the Fed’s 2% goal. Fed leaders note softer rises in rents and wages as a sign that they can be patient. Tariffs set in the past still affect some goods; for example, tobacco prices grew by 2.3%. Recent labor data showed close to one million fewer new jobs in the year ending March 2025. Some worry about this drop even as Fed officials call the job figures “solid.” Such points add extra steps to the Fed’s choice on interest rates.

Implications for Upcoming Fed Policy and Market Outlook

This unexpected drop in the PPI makes many investors and analysts believe that the Fed will lower interest rates in September. Market watchers now wait for Thursday’s Consumer Price Index (CPI) report, which may back this view. If consumer inflation shows similar softness, it may push market views toward not just one, but perhaps more rate cuts in the near future.

Soft inflation and mixed signals from the labor market have made equities rise and Treasury yields fall. If current patterns hold, markets may get ready for a looser monetary policy that supports growth.

About the Author

James Hyerczyk is a U.S.-based technical analyst and educator. He brings over 40 years of experience in market analysis and trading. He studies chart patterns and price moves, has written two books, and has worked in both the futures and stock markets.

For more timely updates on market forecasts, economic news, and financial trends, visit FXEmpire.com.

Disclaimer: This article is for educational and informational purposes only and does not mean to serve as investment advice. Readers should check details and speak with a financial advisor before making any investment decisions.

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China Faces Rising Deflation Fears Amid Weak Trade Data as Markets React Positively

China Faces Growing Deflation Risks as Trade Data Slows; Hang Seng Index Shows Gains

By Bob Mason
Updated: September 10, 2025, 02:28 GMT

China’s economy shows signs of deflation. Trade numbers weaken. Consumer demand stays low. The signs point to growth that may slow down. The Hang Seng Index climbs in Hong Kong. This rise brings hope that a new government plan may help.

Key Economic Indicators Signal Deflation Risks

China’s Consumer Price Index dropped 0.4% compared to last year in August. It was expected to drop only 0.2%. Prices did not move from month to month. This fact suggests low buying levels. Unemployment rises. Households spend less. Problems in the real estate field and a slow pickup in credit add to the low spending.

The Producer Price Index fell 2.9% compared to last year in August. In July, the drop was 3.6%. The numbers match expert views. The result shows that factory and wholesale price pressures may ease a bit.

Divergent Consumer and Producer Price Trends

Consumer prices fall to low levels as demand suffers. Factory prices hold their fall to a slower pace. Two trends show different sides of the economy. The manufacturing scene gains some hope as the RatingDog Manufacturing PMI grows. It went from 49.5 in July to 50.5 in August. New order gains hit their fastest rate since March. These changes help stop eight straight months of falling average prices.

Trade Data Paints a Bleaker Picture

Exports grew 4.4% compared to last year in August. This rate slows down from July’s 7.2% jump. The United States saw shipments fall by 33%. Trade challenges push exporters toward tougher price cuts. This change may cause prices to drop further. Tariffs and extra taxes mix into this risk.

Market Response and Policy Outlook

Investors watch the news with hope that new plans come soon. The Hang Seng Index climbs 0.60% to 26,094 early in the day. The Mainland China CSI 300 ticks up by 0.05%. The Shanghai Composite Index falls by 0.02%. Investors set their eyes on data coming on September 15. Retail sales, factory data, and job numbers matter now. The government faces more pressure to use well-targeted fixes. Low spending and unemployment call for clear plans.

Outlook

China shows signs of slow growth. Some parts of the economy recover. Other parts slip into deflation. A government plan may help steady things across the board before the Politburo meets later this month. With a weak world market and low local spending, Beijing’s next steps will be vital in stopping deeper deflation.

About the Author:
Bob Mason works in financial markets over 28 years. He studies currency, commodities, and stocks with a focus on economies in Europe and Asia.

This report uses data available on September 10, 2025. It serves for information and does not give investment advice.

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