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Quarterly Economic Report Q4 2025
Jon Schwartz, Jose Sevilla, Timothy Lee, CFA, Ivan Asensio, Ph.D., Darrell Leong, Steve Johnson, CFA, Christi Fletcher, Michael Duranceau, Edward Lee, Emelynn Abreu, Travis Dugan
Key takeaways
The SVB Asset Management Economic Report is a quarterly review and outlook on economic and market factors that impact global markets and business health.
01
The FOMC reinitiated its rate cutting cycle in September.
The Committee signaled further cuts, balancing concerns about the labor market with inflation.
02
The labor market showed signs of cooling.
Job growth slowed to an average of 29,000 per month and unemployment rose to 4.3%.
03
Inflation remains elevated but is expected to decline in 2026.
Trade issues, geopolitical tensions and the impending government shutdown affected expectations.
The data
The job market showed signs of softening in Q3 2025.
The FOMC stated in September that in relation to the balance of risks, it "judges that downside risks to employment have risen."
Inflation increased slightly and remains above target.
Core PCE increased to 2.9% year over year in August, but the Fed stated it expects inflation to resume a disinflationary path in 2026.
"In the near term, risks to inflation are tilted to the upside and risks to employment to the downside—a challenging situation."
Jerome Powell
Federal Reserve Board Chairman, September 17, 2025
Short-end interest rates fell as a result of rate cuts.
The 2-year treasury yield, often seen as a proxy for Fed policy expectations, declined as investors anticipated additional cuts.
Market sector performance saw a broad rally.
Optimism continued surrounding AI, the major stock indexes reached new highs and bond yields were lower across the curve.
All returns are on a total return basis. 2025 returns are on an aggregate basis through 09/30/2025. US Aggregate refers Bloomberg Barclays Aggregate Bond Index. US Treasury refers to the US Treasury allocation of the Bloomberg Barclays Aggregate Bond Index. US IG Corporate refers to the IG Corporate allocation of the Bloomberg Barclays Aggregate Bond Index. High Yield refers to the US Corporate High-Yield Bloomberg Index. Crude Oil refers to the Spot West Texas Intermediate Crude Oil - Bloomberg-sourced. S&P 500 refers to the S&P 500 Total Return Index. Tech refers to the S&P Global 1200 Information Technology Index. Biotech refers to the S&P Biotechnology Select Industry Index. IPO Index refers to the Renaissance IPO Index. Source: Bloomberg and Bloomberg Barclays Indices. Data as of 09/30/2025. Past index performance is no guarantee of future results.
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