Good morning Traders and Quants! Welcome back from the long weekend and into a shortened trading week that may end up feeling longer than most. U.S. equities closed out August on a mixed note. The S&P 500 finished the month with a 1.9% gain, its fourth straight positive month, while the Nasdaq lagged late last week after renewed pressure on megacap tech. August’s resilience now gives way to September, historically the weakest month for markets. The macro setup is complicated: PCE inflation was in line with expectations at 2.9% core, GDP was revised up to 3.3%, and jobless claims edged lower. That leaves the Fed stuck between sticky prices and a labor market cooling only at the edges. With rate cut odds still above 80% for September, attention shifts quickly to Friday’s nonfarm payrolls.

Futures point to a lower open on the first trading day of September, continuing the soft close to August on Friday. A federal appeals court negated a majority of the tariffs enacted by the Trump Administration, adding another legal challenge to a growing list that includes Fed fights and immigration battles. Fed independence and the historical performance of September are also weighing on the market following a strong August that showed bullish rotations into small caps and away from megacap tech consolidation.

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September is here, and Wall Street is bracing for what has long been the most difficult month of the year for equities. History shows an average 1.3% decline in the S&P 500 since 1928, and hedge funds are already positioned cautiously, trimming exposure into the new month. The jobs data at week’s end could prove a spark, with traders warning of “extreme sensitivity” around any upside surprise in payrolls or wages.

Yet there are counterweights. Gold just broke through $3,500 an ounce for the first time, underscoring demand for hard assets in an inflation-mired future driven by fiscal largesse in the developed world. Some argue that the Fed’s dovish tilt after Jackson Hole could cushion the usual seasonal headwinds, while household surveys show sentiment is weak but not collapsing. The rally in Treasuries through August also gave equities breathing room. For investors, the choice is whether to lean into September’s caution or treat any pullback as a chance to reset positions for 2026 growth.

The geopolitical calendar is just as heavy as the economic one. Trump enters September juggling trade deadlines with India and China, fresh tariffs on digital services, and warnings from Europe about Fed independence. India is a particular flashpoint: the White House raised tariffs to 50% on imports, but reports suggest New Delhi has quietly offered to cut its own duties to zero in return for relief. At the same time, a thriving black market in Russian oil exports to India is blunting tariff impact, raising questions about enforcement.

Meanwhile, Beijing hosted Putin and Modi in a display of solidarity, even as deflationary signals continue to ripple through Asian economies. Russia and China signed a new deal on the Power of Siberia 2 gas pipeline, deepening energy links just as Western sanctions bite harder. The message is clear: global alignments are hardening around energy, trade, and currency flows. For markets, this backdrop means tariffs and pipeline politics are no longer just diplomatic theater but direct inputs into price stability and growth expectations.

Back home, Washington continues to juggle political theater and economic policy. Trump’s push to weaken the Fed’s independence has drawn fresh warnings, with European central bankers openly voicing concern about White House pressure. Legal challenges from Fed Governor Lisa Cook remain in the headlines, underscoring that the battle between the executive branch and the central bank is far from over.

At the same time, the administration is exploring new interventions elsewhere. Treasury Secretary Bessent floated the idea of declaring a national housing emergency, which would give the government broader authority over housing supply and mortgage markets. Add in policy battles over fentanyl testing in workplaces and vaccine mandates in schools, and September opens with as much uncertainty in domestic politics as in financial markets. For investors, this blurring of policy and politics is becoming the central theme of 2025.

September has a reputation as a bruiser for markets, and the first session of the month looks set to do little to shake that caution. With gold setting records, Fed independence under fresh scrutiny, and Friday’s jobs report looming, investors will need to navigate a landscape that blends macro tension with political risk. Pullbacks in this environment shouldn’t be dismissed as noise, they may set the stage for a healthier base if 2026 growth expectations hold. The month ahead promises volatility, but also opportunity for those willing to look past the near-term chop.