August 2025 set the tone for a cautiously optimistic outlook as we move into the final months of 2025. Despite mixed signals in the U.S. labor market and political headwinds surrounding the Federal Reserve’s independence, economic activity showed underlying strength, and markets leaned into the prospect of an initial 25 bps Fed cut in September after Jackson Hole signaled a shift in the balance of risks toward growth and employment.

The U.S. baseline tariff regime expanded in August, raising questions for supply chains and margins even if exemptions soften the immediate blow. While market reaction was contained, the policy overhang should eventually feed through prices and earnings with a lag. European markets experienced volatility due to political instability, yet maintained positive momentum overall.

Equity markets continue to be driven by a handful of AI leaders, which makes the current rally a bit fragile. While easing rate expectations are providing some support, there’s still reason to stay cautious. The environment calls for balance, taking advantage of opportunities but being mindful of inflation, labor market trends, and tariff impacts that could create bumps ahead.

We hope you enjoy reading these updates and find them helpful for the month ahead.