Monthly Market Report – September 2025
Employment data in the United States once again became the main reference point for the market. The figures released in September were notably below estimates, with the labor market creating 22,000 new jobs compared to the 75,000 expected. A revision of previous months stands out, especially June, which instead of generating the initially announced 147,000 jobs actually cut 17,000. This is the first monthly employment contraction since the pandemic.
On Wednesday, September 17, the Fed delivered as expected and cut interest rates for the first time in 2025, lowering the benchmark by 25 basis points from 4.50% to 4.25%. Powell focused attention on the labor market, leaving inflation in the background. Looking ahead to future Fed moves, there is a notable disparity of opinions among its members, with some favoring aggressive cuts and others opposing further reductions.
Interest rate cut forecasts in the United States predict two more moves in 2025 (one at each of the two remaining meetings) and another two reductions in 2026. After that, the U.S. benchmark rate would end 2025 at 3.75% and 2026 at 3.25%.
Meanwhile, the ECB kept interest rates unchanged as expected. The institution acknowledged the end of the disinflation process in Europe, suggesting that 2.0% is the terminal equilibrium rate and that no further cuts will occur. The market does not anticipate any further reductions in borrowing costs for this year or for 2026.
The U.S. macroeconomic picture delivered two key figures. Firstly, inflation continued to rise slowly, although within expected values. The figure rose to +2.9% from the previous +2.7%, while core inflation remained unchanged at +3.10%. The second notable point was the upward revision of GDP for the second quarter. The figure increased to +3.8% from +3.3%, thanks to stronger household consumption.
Regarding equities, September did not follow its traditional bearish seasonal pattern. Most indices achieved significant gains, highlighting the strong performance of Wall Street. The S&P 500 posted new all-time highs week after week, reaching 6,699 points in the session on the 23rd. The U.S. benchmark index gained +3.53% in September and is up +13.72% so far this year. The “Magnificent 7” once again led the gains, accounting for two-thirds of the index’s monthly return.
European equities showed a similar performance, with the Eurostoxx 50 adding +3.33% for the month and bringing the 2025 year-to-date total to +12.95%. As a result, the return differential between the U.S. and Europe remains in favor of the U.S. benchmark, which achieved an additional 77 basis points of return by the end of September.
Regarding fixed income, the U.S. yield curve performed particularly well, shifting downward. The slowdown in the U.S. labor market and inflation in line with forecasts were the main bullish catalysts for bonds. Following the Fed’s rate cut, the yield curve reached its monthly low, with the 10-year benchmark yield facing strong resistance at 4.0%. After touching that level, yields rebounded steadily for the rest of the month, ending September with a yield of 4.15%.
There was little movement in European bonds during the month. The German yield curve ended September almost exactly where it started. After significant yield declines in the first week, the rest of the month saw continuous increases that brought yields back to their previous levels.
The dollar hit its lowest level against the euro following the Fed’s rate cut. The currency pair rose to 1.1919 EUR/USD, a level not seen since June 2021. The confirmation of the Fed’s move, along with the arrival of key resistance levels, led the USD to recover positions for the rest of the month, closing at 1.1734 EUR/USD — a monthly depreciation of -0.41% against the euro.
In France, the government confidence vote resulted in the resignation of Prime Minister Bayrou. Forty-eight hours later, Macron appointed Sébastien Lecornu, the former defense minister, as the new prime minister. The swift move aimed to avoid political crises in the country and prevent early elections. In any case, France has still failed to pass its fiscal consolidation program and budget, a situation that prompted credit rating agency Fitch to downgrade France’s rating by one notch from AA- to A+.
Russia conducted several drone and aircraft flights over NATO territory, specifically in Poland and Estonia. The incident ended without further consequences, although it highlights a new phase of probing by Putin. Also noteworthy is Trump’s shift in rhetoric regarding the conflict, acknowledging for the first time the possibility that Ukraine could regain lost regions and urging Europe to supply Zelensky with weapons.
Did you find this Monthly Market Report – September 2025 useful? If you’re interested in staying up to date with economic analysis and market trends, we invite you to explore other recent reports on our blog:
- Monthly Market Report – August 2025: Lee más aquí
- Monthly Market Report – June 2025: Lee más aquí