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Market UpdatesSeptember 25, 2025

Stocks Up, Jobs Cool, Rates Tug-of-War: Your September Market Update

Hoxton BlogStocks Up, Jobs Cool, Rates Tug-of-War: Your September Market Update

  • Market Updates

August was a mixed picture of positive equities but a weak U.S. jobs print, a rates tug-of-war, and some portfolio tweaks.

In this video, Omer Chowdhry, Head of Global Fixed Income & Multi-Asset Strategies at ‏Aditum Investment Management, talks about what changed last month, and what’s expected next. 

Here are some of the highlights.

August Market Movements

Stocks mostly moved higher in August, even if the ride was a bit bumpy. 

In the U.S., the big household names gained only a little, but smaller companies had a standout month – helped by hopes that easing inflation and steadier interest rates will support Main Street businesses. More stocks joined the advance, not just a few leaders. 

Abroad, China and Japan ticked up, and Europe held its own, with defensive sectors and exporters helping. 

Leadership kept changing – some days cyclical sectors led, other days defensives did. Overall, results varied by company, so careful selection mattered. Bottom line: a generally risk-on month with small caps out front.

Surprise in the U.S. Data

The U.S. job market cooled in August. 

The economy added about 77,000 jobs – below expectations – and prior months were revised lower. Hiring was concentrated in a few service areas, wage growth eased, and average hours slipped, all pointing to a labour market losing some heat. 

Bonds were volatile. Yields fell after the jobs report, as softer growth often means lower rates, then bounced when inflation data ran hotter than hoped. 

Investors are split. Some prefer longer-term bonds and defensive stocks on slowing growth. 

Others worry inflation could linger, keeping rates higher for longer – an environment that can favour companies with strong current cash flow and selected commodity exposure. 

Credit and the dollar were steady to firm: corporate bonds generally held up, weaker issuers moved more, and the U.S. dollar edged higher on rate expectations. Stock leadership kept rotating between lower-risk and cyclical sectors.

Interest Rates Outlook

Longer-term interest rates are expected to drift down toward roughly 4% as growth cools and inflation keeps easing. 

When longer rates fall, prices on longer-maturity bonds typically rise – think of it like a seesaw, with yields down and bond prices up. That’s why some investors prefer adding duration (more years until a bond matures) when they think the economy is slowing. 

There’s also a practical wrinkle: the U.S. has a big pile of debt coming due in 2025/26 that needs to be rolled over. That refinancing creates an incentive to avoid locking in very high borrowing costs for years. 

While the Fed doesn’t set long rates directly, a cooler economy, softer inflation, and issuer preferences can all nudge market rates lower over time. 

None of this is automatic. If inflation proves sticky, or growth re-accelerates, longer rates could stay higher for longer – and long bonds would be choppier. 

But if the cooling trend holds, gradually lower yields and better support for longer-dated bond prices is the base case many investors are working with.

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Hoxton Wealth

September 25, 2025

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