International News 01 September 2025
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Oil Prices Fall on Demand Concerns and Rising OPEC+ Supply
Oil prices declined on Friday (Aug 29, 2025) as traders anticipated weaker U.S. demand and higher supply from OPEC+ heading into the fall. Brent crude for October delivery, which expired Friday, settled at $68.12 per barrel, down 0.73%, while the more active November contract fell 0.78% to $67.45. U.S. West Texas Intermediate (WTI) closed at $64.01, down 0.91%. Analysts pointed to the end of the U.S. summer driving season and an expected increase in OPEC+ production as key factors pressuring prices. Market sentiment was also shaped by global trade tensions, with President Donald Trump’s tariffs fueling uncertainty over future economic growth. Despite the bearish outlook, some analysts noted that U.S. crude inventories fell more than expected in late August, signaling still-strong industrial and transportation demand. Supply risks also linger after Ukrainian strikes on Russian oil terminals, though peace talks in Europe eased concerns. Meanwhile, geopolitical tensions persist as India continues purchasing discounted Russian oil, defying U.S. pressure and new tariffs on Indian imports. While OPEC+ output is rising, several experts argue U.S. market balances remain tight, leaving uncertainty over how long current price pressures will last.
U.S. Consumer Spending Rises, Fed Still Seen on Track for Rate Cut
U.S. consumer spending rose a solid 0.5% in July, matching forecasts and following a 0.4% gain in June, according to the Commerce Department. Household consumption, which accounts for over two-thirds of economic activity, remained supported by steady wage growth and low layoffs. However, import tariffs imposed by President Donald Trump have begun to raise business costs, prompting companies to slow hiring. Job gains averaged only 35,000 per month in the three months through July, far below the 123,000 pace seen a year earlier, while consumer surveys showed the share of Americans saying jobs are “hard to get” reached a 4.5-year high. Despite firmer inflation, the Federal Reserve is still expected to cut rates at its September 16–17 policy meeting. Core PCE, the Fed’s preferred inflation gauge, rose 0.3% in July and 2.9% year-on-year, slightly above June’s 2.8%, while headline PCE held steady at 2.6%. Fed Chair Jerome Powell recently acknowledged labor market risks, noting tariffs could push prices higher as inventories run down and industries from retail to autos warn of rising costs. Since December, the Fed has held its benchmark rate at 4.25%–4.50%, but weaker hiring trends may tip the balance toward easing despite persistent inflation concerns.
U.S. Treasury Yields Edge Higher Ahead of Fed Rate Decision
U.S. Treasury yields ticked higher on Friday (Aug 29, 2025), though the 2-year note remained on track for its steepest monthly drop in a year. The move came ahead of the Labor Day holiday and after inflation data aligned with expectations. The Commerce Department reported the PCE Price Index rose 0.2% in July, following a 0.3% increase in June, while core PCE gained 0.3% for a second straight month. The data reinforced expectations for a Fed rate cut at the September 16–17 policy meeting, with Fed funds futures now pricing in an 89% chance of easing, up from 84% before the release. Despite this, short-covering and month-end flows pushed yields slightly higher. The 2-year yield rose 0.2 bps to 3.637% but remained down 32 bps for August, its biggest monthly decline since last year. The 10-year yield climbed 2.3 bps to 4.23%, widening the 2s–10s spread to 57 bps—the largest monthly steepening since April. Market optimism for policy easing was bolstered by Fed Chair Jerome Powell’s dovish remarks on labor market risks, while political uncertainty lingers as President Trump’s effort to oust Fed Governor Lisa Cook faces a court test, potentially paving the way for a more dovish central bank lineup. Meanwhile, traders expect heavy corporate bond issuance to resume after the summer lull.