Fin-X Weekly 29th September 2025

Global equities retreated from recent highs as US bond yields rose on inflation concerns and new tariff announcements. AI and technology companies dominated corporate headlines, as analysts questioned possible circular earnings risks.

The OECD lifted its 2025 global growth forecast but warned of tariff-related risks. PMI surveys pointed to steady yet fragile expansion, with ongoing weakness in manufacturing and persistent cost pressures.

Federal Reserve officials signalled divergent policy outlooks, while Chair Powell highlighted elevated equity valuations.

Key upcoming events include the RBA’s policy decision tomorrow, US ISM surveys and employment data, the Chinese PMIs, and updates on eurozone inflation and unemployment. US lawmakers will attempt to avert a government shutdown.

Bond yields rose last week amid renewed concerns about inflation, following the United States' announcement of a new round of tariffs. Global stocks retreated from record highs, with some analysts questioning the sustainability of AI-driven earnings. The Federal Reserve Chair also noted that equity valuations appeared elevated, while the geopolitical focus centred on speeches and meetings at the United Nations.

The OECD revised its forecast for global growth in 2025 to +3.2%, up from +2.9% in June. “Global growth was more resilient than anticipated in the first half of 2025, especially in many emerging-market economies but also in the United States,” the organisation reported. It warned that the full impact of tariffs has not yet materialised and that “downside risks loom large.”

US Q2 GDP was revised sharply higher from an annualised +3.3% to +3.8% in the BEA’s third estimate. The strength primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending, prompting a rebound from a -0.6% (revised) annualised contraction in Q1.

S&P Global flash PMI data highlighted continued but uneven expansion across major economies. Manufacturing showed particular weakness, while cost pressures persisted and selling price inflation remained evident in the US. Optimism among businesses softened, with firms citing the effects of tariffs, weaker export demand, and hiring caution. While headline growth numbers remained in expansion territory, the surveys indicated a recovery that is steady but fragile, with inflation risks keeping policy settings in focus.

The US government introduced several new tariffs late last week. A 100% levy was applied to branded pharmaceuticals, although generics and some firms establishing US facilities may be exempt. Heavy-duty trucks will face a 25% tariff starting next week, while kitchen and bathroom fittings will attract a 50% tariff. Upholstered furniture imports will be subject to a 30% tariff. The measures were framed as support for domestic industries but raised concerns about inflationary pressures.

Monetary policy updates were varied. China’s prime loan rate and Switzerland’s policy rate were held steady, while the Swedish Riksbank unexpectedly cut rates by -0.25% to 1.75%. In New Zealand, Anna Breman, currently deputy governor of the Riksbank, was appointed to lead the Reserve Bank of New Zealand from December. She will be the first female governor of the institution and takes office at a time of weak growth and fragile confidence.

Australia’s monthly CPI rose to +3.0% yoy, while core inflation slowed to +2.6% yoy. The Reserve Bank of Australia is expected to hold its policy rate at 3.6% at this week’s meeting.

In Canberra, Governor Michelle Bullock reiterated that earlier rate cuts aimed to support household spending and stabilise the economy in the face of slowing growth, volatile inflation, and softer employment. She signalled a cautious approach, citing productivity growth and unit labour costs as ongoing concerns and noting that further cuts were not under consideration for now.

In the United States, the Fed’s preferred PCE measure of inflation rose in line with expectations from +2.6% yoy in July to +2.7% yoy in August. Core PCE inflation held at +2.9% yoy. August personal income (+0.4%) and spending (+0.6%) were both stronger than anticipated.

Federal Reserve officials expressed divergent views on future policy. New Governor Stephen Miran argued that interest rates remain too high and should be cut aggressively, targeting a level closer to 2%. In contrast, St. Louis Fed President Alberto Musalem supported the most recent cut but warned against further easing that could risk over-accommodation. Richmond Fed President Tom Barkin emphasised that inflation and unemployment are moving closer to the bank’s goals and saw limited scope for further deterioration. At the same time, Chair Jerome Powell reiterated that labour market

weakness had outweighed inflation concerns in the latest decision. In a response to a question related to apparently easy financial conditions, he remarked that “by many measures, for example, equity prices are fairly highly valued.”

Developments in the technology sector dominated corporate news. Nvidia committed $100 billion to OpenAI to expand data centre infrastructure, pushing its shares higher. OpenAI unveiled its $400 billion Stargate project, which will bring five new global centres in collaboration with Oracle, SoftBank, and Nvidia. Oracle advanced after confirming its role in managing TikTok’s US algorithm transition, alongside a leadership reshuffle. Apple also held talks with OpenAI and other firms on the potential integration of third-party AI technology into its ecosystem.

Following the announcements, analysts raised concerns over the “circularity” of large technology firms’ earnings, as revenues are often driven by reinvestment across each other’s platforms, including cloud services, chips, and advertising.

In Australia, ASIC released a report on private credit markets, noting questionable practices among some managers. Separately, Macquarie agreed to compensate Shield investors $321 million following regulatory findings.

Geopolitical attention was centred on speeches at the United Nations meetings in New York. President Donald Trump sharply criticised global migration, climate policies, and the organisation’s effectiveness. He warned Western nations that “your countries are going to hell,” dismissed climate change as “the greatest con job ever perpetrated on the world,” and urged an end to renewable energy initiatives. Trump also threatened tariffs on Russia if the war in Ukraine persists, opposed recognition of Palestinian statehood, and demanded the release of hostages in Gaza.

Prime Minister Anthony Albanese used his address to promote Australia’s bid for a UN Security Council seat, call for urgent climate action, and announce strengthened 2035 emissions targets. He reaffirmed support for a two-state solution, recognised Palestine, and condemned Hamas. Albanese reiterated Australia’s commitment to Ukraine, Indo-Pacific stability, and international rules-based order, while urging cooperation on child safety, antisemitism, and dictatorship.

The PM followed his attendance with meetings at 10 Downing Street with UK Prime Minister Keir Starmer, discussing AUKUS, Ukraine support, and critical minerals cooperation. He then stopped in the Middle East during his return leg to discuss the Australia-UAE CEPA bilateral free trade agreement.

Meanwhile, European diplomats warned Moscow that NATO would respond to further airspace violations, including the possibility of downing aircraft. Secretary General Mark Rutte indicated that members are prepared to escort or, if necessary, take down unauthorised Russian drones or aircraft entering NATO airspace, aligning with calls to take stronger measures if required.

Looking ahead, the RBA is expected to hold the cash rate at 3.6% tomorrow. The new month brings the ISM and labour market updates in the US, with unemployment expected to remain at 4.3% as just +50k jobs are added to the economy. Chinese PMIs are also due out ahead of the national holidays, with updates on inflation and unemployment expected in the eurozone. Members of Congress will attempt to avoid another US government shutdown before the start of October on Wednesday.

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