- August 28, 2025
- Posted by: Melanie Scott
- Category: Market News
U.S. economic data delivered another upside surprise as Q2 GDP grew 3.3%, beating expectations of 3.1%. The strength came largely from consumer spending and a drop in imports, which eased the drag on growth, while weaker business investment and exports held back further gains. On the labor front, jobless claims fell by 6,000 to 229,000 last week, underscoring a still-resilient employment picture despite softer momentum in some sectors.
Pending home sales slipped 0.4% in July, following a 0.8% decline in June, but rising mortgage applications for purchases hint that more committed buyers are waiting in the wings. Should the Fed move forward with a rate cut, affordability could improve and bring those buyers into the market more decisively.
The political spotlight is on the Federal Reserve as Governor Lisa Cook filed a lawsuit today against President Trump after he attempted to fire her over mortgage fraud allegations. It argues that Trump lacks legal authority to remove her “for cause,” particularly since the alleged misconduct occurred prior to her nomination and remains unproven. Cook is seeking a court injunction to block the firing. The lawsuit adds to a historic fight over Fed independence, a major source of uncertainty for markets.
At the same time, the U.S. dollar weakened, with traders now pricing in an 87% chance of a September rate cut. The drop followed dovish remarks from New York Fed President John Williams, who suggested easing could be warranted.
Across the Atlantic, ECB minutes from July revealed divisions among policymakers on the inflation outlook. The central bank held its key rate at 2.15% in July and is expected to do so again in September, but further cuts remain on the table later this year if trade tensions and slowing growth intensify.
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