September 2025 BoE Preview: On Hold With Balance Sheet In Focus

Pepperstone

Economic

Forex

Political

Summary:

As noted, Bank Rate is set to be maintained at 4.00% at the conclusion of the September MPC confab, after policymakers voted by the narrowest possible margin to deliver a 25bp cut at the prior meeting, in August. Money markets, per the GBP OIS curve, price no chance of any rate moves this time around, while discounting just 10bp of easing by year-end. The next 25bp cut isn't fully discounted until next March.

However, in keeping with almost all MPC decisions this cycle, the call to stand pat this time around is unlikely to be a unanimous vote.

A 7-2 vote in favour of holding Bank Rate steady seems to be the most plausible outcome, with external members Dhingra and Taylor dissenting in favour of a 25bp cut. Dhingra, owing to her typically uber-dovish policy stance, and Taylor owing to his initial vote for a 50bp reduction last time out, as well as recent commentary indicating his preference for ‘four to five' cuts being delivered this year (we've thus far had 3, in total).

In any case, no matter the vote split, the MPC's policy guidance is likely to be unchanged from that issued last time out, and the language with which participants have become familiar this cycle. Consequently, the statement is likely to reiterate that the MPC will take a ‘gradual and careful' approach in terms of future rate reductions, while also repeating that the pace of future rate reductions will remain ‘data-dependent'.

With the rate decision itself, and accompanying policy statement, both relatively predictable, the main area of intrigue around the September MPC decision will be the annual review into the Bank's balance sheet.For the last three years, the MPC has been reducing holdings in the Asset Purchase Facility (APF), which now comprises only Gilts, by £100bln per annum, with that pace split between the passive run-off of maturing securities which haven't been replaced in the portfolio, and active sales of Gilts from within the APF.

While those active sales have proceeded relatively smoothly, at least in terms of their reception by market participants, the Bank's own research points to the active sale process adding a premium of as much as 25bp onto the 10-year Gilt yield, and likely a higher premium further out the curve. In addition, these active sales also result in the Bank crystallising a loss on its holdings, for which it must be indemnified by HM Treasury, while also prompting a much steeper Gilt curve, compared to DM peers, as active sales take place in a market where demand for long Gilts is already waning significantly.With all that in mind, and with the tightening impact of quantitative tightening (QT), to at least some extent, offsetting any easing impulse from ongoing Bank Rate reductions, the MPC are likely to trim the overall QT envelope this time out.

Maturing Gilts in the APF would passively reduce the size of the Bank's holdings by around £50bln in the twelve months from the upcoming review, with the question then coming down to the amount of active sales that the MPC would seek to conduct. Anything greater than the 2024/25 amount of £13bln seems implausible, which likely leaves the overall reduction will land at around £60bln over the next 12 months. Ending active Gilt sales would be a pragmatic option to ensure market stability, though tilting sales increasingly towards shorter maturities to avoid a disorderly rise in long-end yields seems a more plausible choice.

Turning to other matters, with there being no new economic forecasts due this time around, there is also no post-meeting press conference scheduled. That said, Governor Bailey may make some media remarks, though these are likely to be very much in keeping with recent comments, namely that rates remain on a ‘downward path', but that the MPC should neither cut too quickly, nor too much.Taking a step back, besides the aforementioned balance sheet developments, the September MPC decision is unlikely to offer especially much by way of fresh information on the outlook for Bank Rate.

Still, by retaining the ‘gradual and careful' guidance, the MPC will clearly retain an easing bias, and a preference to deliver rate cuts at a predictable, quarterly pace. As such, the next 25bp cut is still likely to come at the November meeting, though the release of the September CPI report, due 22nd October, may threaten such a call, if headline inflation rises north of the MPC's projected 4% peak.

Source: Pepperstone

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Gerik

Economic

Commodity

Gold's Performance: A Shining Safe Haven

Gold has been one of the standout performers in 2025, with prices up more than 40%, far surpassing the S&P 500's 10% gain and Bitcoin's 20% rise. As a traditional store of value, gold's surge reflects broader economic uncertainties and the growing appeal of safer investments amidst financial turmoil. Unlike the stock market, which often benefits from overall optimism, gold's rally is rooted in concerns such as inflation, geopolitical instability, and financial risks.

The precious metal's rise is often seen as a barometer of investor sentiment during times of instability. People and institutions typically flock to gold when they seek to hedge against uncertainty, especially when other assets like the U.S. dollar or long-term bonds lose their appeal. Although gold’s current value reflects positive market conditions for some sectors, such as tech stocks, the surge is also a signal of broader economic concerns.

Lower Interest Rates and Gold's Appeal

The expectation of lower interest rates, as the Federal Reserve looks to support a weakening labor market, has further bolstered gold’s attractiveness. As interest rates decline, risk-free assets like U.S. bonds become less appealing, pushing investors toward gold. The potential for a substantial rate cut, even a jumbo cut, has electrified markets, making gold a more appealing safe-haven investment in comparison to low-yielding assets.

In addition to U.S. policy moves, global political shifts, particularly following the pandemic, have contributed to increased demand for gold. With rising uncertainty in long-standing global alliances and fresh tensions in the political landscape, investors are hedging against potential risks by turning to precious metals.

Dollar Decline and Global Gold Demand

The U.S. dollar has faced significant pressure in 2025, with the greenback losing nearly 10% of its value by mid-year. The U.S. government's mounting debt and the growing concerns over the dollar’s stability have led to increased interest in alternatives like gold. Central banks worldwide have responded by boosting their gold holdings, surpassing U.S. Treasury holdings for the first time since 1996, according to Bloomberg data.

This global trend reflects broader shifts in confidence away from U.S. assets. Analysts predict that continued pressure on the dollar could propel gold to new heights. Goldman Sachs analysts, for instance, forecast that gold could reach $5,000 an ounce by 2026, driven by the growing distrust of the U.S. financial system and potential challenges to the Federal Reserve’s independence.

Gold’s Long-Term Bullish Outlook

Despite gold’s strong performance, it remains a defensive asset, not driven by the promise of high returns or technological innovation. Unlike assets like Bitcoin, which offer the potential for rapid gains, gold’s value lies in its stability and reliability. This makes it a trusted asset during times of economic uncertainty but also means that its growth is often tied to the broader health of the global financial system.

As we move into 2026, the outlook for gold remains positive, particularly if inflation pressures persist and if the U.S. dollar continues to weaken. While gold may not offer the explosive growth seen in other sectors, its role as a safe-haven asset in volatile times ensures its place in the portfolios of many investors looking for stability.

Gold's 2025 rally reflects broader economic concerns, including inflation, geopolitical instability, and Fed policy. As global uncertainty persists, gold remains a valuable asset for risk-averse investors. With expectations of continued weakness in the U.S. dollar and potential Federal Reserve actions, the precious metal’s performance is likely to continue shining well into 2026.

Source: Yahoo Finance

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Michelle

Economic

Stocks

A gauge tracking emerging market equities rose on Wednesday, with a Federal Reserve interest rate cut all but sealed for this month, while Polish assets came under pressure as Russia's war in Ukraine spilled into its territory.

The zlotyweakened 0.4% against the euro, underperforming regional peers, while Warsaw's stocks fell 2%.

Poland said it had shot down Russian drones that entered its airspace during an attack on western Ukraine — the first time a NATO member has engaged militarily inthe conflict.

Since Russia's invasion of Ukraine in 2022, drones have periodically strayed into NATO territory, including Romania and Poland, but had not previously been intercepted.

Ukraine's international bonds edged lower, while the Russian roubleweakened to a more than five-month low.

"We're going to see more incidents like this partly because it's war. Poland has a very strong lobby and the economy speaks for itself and continues to do well and it's politically in a good place, So it's in a very strong position," said Jonathan Young, CEO of CEEMENA-focused investment firm Gryphon Holdings.

"You're obviously going to get this kind of short-term reaction to what happened overnight but I wouldn't be reading too much into it."

Meanwhile, an Israeli airstrike on Qatar that targeted Hamas leaders rocked markets in the Middle East. Stocks in Dohafell 0.4%, while Saudi Arabia'sand Dubai'sindexes slipped more than 0.2% each.

Tel Aviv stocks, however, bucked the trend, hitting a record high for a second straight session.

Emerging markets shook off a week of political churn in countries including Turkey, Argentina, Thailand, Indonesia and Nepal, as a looming Federal Reserve rate cut kept risk appetite alive. The MSCI EM equity gauge was on track for a second straight weekly gain, with CME's FedWatch tool showing a 25 bp cut fully priced and odds of 50 bp creeping higher.

"A lot of EM countries don't have deep stock markets, but they have big economies. If the Fed cuts and the dollar is weak, there will then spillover effects into these stock markets, but the longer-term view is what's the economy looking like," Young added.

Hungary's central bank was due to publish August minutes on Wednesday after holding rates steady for an 11th straight month, with headline inflation still above its 2%–4% target band. The high carry has kept the forint in favour, powering one of central and eastern Europe's strongest year-to-date gains.

In Asia, Chinese stocks,,were in the green, tracking broader Asian markets, after data showed the country's producer deflation eased in August as Beijing stepped up efforts to curb price competition, while consumer prices fell at their fastest rate in six months.

Source: Reuters

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Gerik

Economic

Stock Market's Focus Shifts to Jobs Data

Stock traders are shifting their attention away from inflation concerns as the U.S. job market takes center stage in shaping future Federal Reserve policies. Despite expectations for a hot inflation report when the Consumer Price Index (CPI) is released on Thursday, the market is bracing for a more measured response. Options traders are anticipating only modest movements in the S&P 500 Index, with a swing of nearly 0.7% in either direction, which is lower than the average reaction to past CPI reports.

Traders are more concerned with the U.S. labor market, where recent data has shown signs of weakness. This weakness is expected to push the Federal Reserve to lower interest rates, with the market pricing in a potential rate cut of 0.25% at the upcoming September meeting. As inflation continues to remain high, the Fed's challenge is finding a balance between combating inflation and supporting a struggling job market.

Inflation Expectations and the Fed's Rate Path

Economists are forecasting a 0.3% rise in core CPI for August, which would leave inflation significantly above the Fed's 2% target. A higher-than-expected inflation print could delay the Fed's planned rate cuts and prompt a shift in market sentiment. However, most traders are focused on the labor data, with weaker jobs numbers likely leading to more aggressive Fed action in the form of rate cuts in October and December.

The Fed's future actions are being closely watched, as expectations are building for at least a full percentage point in rate cuts over the next year. The market is betting that weaker job growth will give the Fed room to act, even if inflation remains sticky.

Market Reactions to CPI and Economic Growth

The potential market reactions to the CPI report vary depending on the data’s outcome. If the core CPI rises between 0.25% and 0.3%, the S&P 500 could see an advance of 1% to 1.5%. However, a CPI increase above 0.4% could lead to a decline of up to 2% in the S&P 500. While the economy remains resilient with GDP growth projected at 3% for the third quarter, any positive surprises in economic data could complicate the Fed's efforts to curb inflation and force the central bank to keep rates higher for longer.

Despite the ongoing uncertainty, the Cboe Volatility Index (VIX) remains well below the critical 20 mark, signaling that traders are not overly concerned in the short term. The Citigroup U.S. Economic Surprise Index is also near its highest level since January, indicating that economic data is largely exceeding expectations. However, if positive economic surprises continue, it may make the Fed's task of managing inflation more difficult, especially if inflation pressures persist.

For stock traders, the direction of the labor market will be the most critical factor in determining the Fed's next move. If job data remains weak and inflation continues to surprise on the upside, the Fed could be forced to keep rates higher for longer, which could add volatility to the markets. Conversely, if the Fed's actions align with market expectations and inflation pressures subside, the outlook for stocks could improve. As traders await the CPI report and the next jobs data release, the focus will remain on how the Fed balances its inflation-fighting mandate with the need to support economic growth.

Source: Reuters

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Gerik

Economic

Stocks

A New Benchmark for Public and Private Assets

Morningstar has developed a groundbreaking benchmark to help investors track performance across both public and private equity markets. The Morningstar PitchBook US Modern Market 100 Index, launched on Wednesday, is the first index to combine exposure to both asset classes, offering a more comprehensive view of the U.S. economy and its key companies. The index is made up of 100 of the largest U.S. companies, with a 90% weighting toward publicly traded firms and a 10% allocation to venture-backed companies, reflecting the growing importance of private assets in the modern market.

The inclusion of private companies in the index highlights a shift in the asset universe, as opportunities in private markets continue to expand. As Sanjay Arya, head of innovation at Morningstar, points out, companies like OpenAI and Stripe have remained private for longer, accessing capital without the need to go public. These companies represent some of the most dynamic and fast-growing sectors, which public-only indices often miss. "To ignore them is to miss out on some of the fastest, most dynamic companies out there," Arya said. This new benchmark allows investors to track these companies alongside the more established public sector, which is traditionally dominated by large tech firms.

Private Market Growth and Challenges

Private equity, while smaller than the public market, has seen significant growth. Morningstar reports that crossover investors, including sovereign wealth funds and hedge funds, have been involved in approximately 5,000 private market transactions since 2021, totaling $450 billion. Despite the growth, incorporating private assets into an index poses challenges, especially in terms of pricing and liquidity. To address these issues, Morningstar has utilized secondary trading platforms and applied liquidity screens to ensure a reliable benchmark.

The index focuses on large-cap, high-growth companies, including major public names like Microsoft, Nvidia, Apple, and Amazon, and private companies such as SpaceX, OpenAI, and Stripe. This growth-focused strategy means the index carries higher inherent risk, particularly in the tech sector, which is vulnerable to pullbacks. However, the index has shown strong performance, with a 28.2% one-year return, outpacing the S&P 500’s 20% increase.

While the index's emphasis on innovation and growth offers potential for outperformance, it also exposes investors to volatility. The modern market index’s preference for riskier, high-growth companies reflects broader economic trends, with more and more market drivers emerging outside traditional public sectors.

A More Complete View of the Market

Morningstar’s new benchmark offers investors a unique way to track companies that may be underrepresented in traditional indices. For example, OpenAI, valued at $500 billion, is larger than major companies like Exxon Mobil or Procter & Gamble, yet remains largely absent from most portfolios. By capturing both public and private equity exposure, the Modern Market 100 provides a fuller picture of today’s economy, driven by technological innovation and the growing role of private firms.

Arya argues that as the market evolves, benchmarks like the Modern Market 100 will help investors gain insights into shifting economic contours, particularly in the growing innovation economy. This new index is poised to offer a valuable tool for tracking the performance of companies that are shaping the future of the global market.

Source: CNBC

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Economic

China Cracks Down on False Marketing in Automotive Sector

In a move aimed at tightening control over the automotive industry, China’s Ministry of Industry announced a three-month campaign to address misleading marketing practices and online irregularities. The crackdown follows a series of regulatory changes made earlier this year in response to a fierce price war that has impacted the country's automotive sector. The industry, already reeling from the effects of the price competition, is now facing a new wave of scrutiny as the government seeks to curb false and manipulative marketing tactics.

The ministry's statement highlights a focus on combatting the dissemination of negative content about automakers that is intended to profit from tarnishing competitors' reputations. The crackdown will also target the manipulation of online platforms, including the use of trolls to damage rivals' reputations. While the government did not specify which online platforms would be affected, the move underscores the growing importance of regulating the digital marketing landscape within China’s automotive market.

Impact of the Price War and Slowing EV Growth

China’s automotive sector has been grappling with the consequences of an ongoing price war that has affected automakers, dealers, and suppliers. The country’s electric vehicle (EV) and hybrid sales have experienced a sharp slowdown, growing at the slowest pace in over 18 months. As the Chinese government continues to combat excessive competition in the sector, automakers face a challenging environment. The latest initiative aims to bring stability by addressing both deceptive marketing practices and the economic strains resulting from unsustainable price battles.

The crackdown on marketing irregularities is seen as part of the broader effort by the Chinese government to stabilize the industry and ensure that the competition remains fair and transparent. The results of this campaign will likely set the tone for future regulatory measures in China’s rapidly growing EV market.

The Ministry of Industry's new initiative to address false auto marketing and online irregularities marks a significant step in the Chinese government's efforts to stabilize its automotive sector. While the industry continues to navigate the effects of a price war, the crackdown aims to bring more transparency and fairness to the marketplace. By curbing misleading practices and reducing online manipulation, China hopes to foster a healthier environment for automakers, suppliers, and consumers alike, ensuring that the sector remains competitive without jeopardizing its long-term sustainability.

Source: Reuters

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Blue River

Technical Analysis

USD/JPY held stubbornly within the tight 146.90–149.00 range despite the recent NFP-driven turbulence that caused a flash drop to 146.29. However, with the sideways move now stretching into its eighth consecutive week and the clock ticking down to today’s release of the US Producer Price Index (PPI) for August, a shift in sentiment may be just around the corner.

The data may reveal whether input costs continue to squeeze producers’ margins, strengthening the case for sticky inflation as the labor market shows stronger signs of cooling. From a technical perspective, traders remain indecisive: the RSI is hovering just below its neutral 50 mark, while the MACD is muted between its zero and red signal lines. Price action is also limited near the 20- and 50-day simple moving averages (SMAs).

As a result, traders may prefer to stay on the sidelines unless a clear break occurs. A sustainable move below the 146.90 floor could open the door to the 145.55 support level. Further declines might then target 144.35, followed by the 142.70 floor.

On the flip side, buyers may wait for a decisive rebound above the 200-day SMA at 148.60 and the 149.00 zone. If that resistance gives way, the pair could advance toward the 151.00 level, which the bulls failed to secure in July. Slightly higher, the tentative resistance trendline connecting the May and July highs could cap gains near 151.75.

In short, USD/JPY remains in wait-and-see mode for the second straight month. A move above 148.60 or below 146.90 could set the next directional course.