Issue link: https://info.seic.com/i/1539256
Executive Summary • August brought a mix of policy and diplomatic developments. The Federal Reserve signalled a possible rate cut in September and stressed the importance of data-driven decisions amid political pressure from President Trump. Meanwhile, President Trump hosted President Putin for the first Russian presidential visit in the U.S. since 2015, but talks around Ukraine ended without a formal agreement. • August saw the global equity rally expand beyond the "Magnificent Seven" U.S. technology stocks that led markets in recent months. Small cap and value stocks outperformed growth stocks as investors shifted attention to a wider range of sectors and companies. • U.K. inflation rose to 3.8% year-over-year in August, up from 3.6% in July, driven primarily by food and fuel prices. U.K. GDP is estimated to have increased by 0.3% in Q2 2025, down from 0.7% in Q1. Economic Factors Interest Rates • The Bank of England cut rates by 0.25% in August while expectations that the Federal Reserve will cut rates in September grew. Inflation • Inflation rose in both the U.K. and U.S. in August driven by tariff-related price pressures, while the Eurozone's headline inflation remained stable at the ECB's 2.0% target. Economic Growth • The Eurozone published updated economic growth projections showing expected 0.9% GDP growth for 2025 despite looming trade tensions. Tactical Views Fixed Income • U.S. and European yield curve steepening is expected to continue. We remain defensive in credit, neutral duration and underweight the long end of the curve. U.S. Large Cap Equities • U.S. large-cap equities underperformed in August as investor concerns over the long-term value of AI investments led to a shift toward safer assets and other parts of the market. Pessimistic Optimistic Pessimistic Optimistic SEI Monthly Update August 2025 This is a marketing communication Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic Legend SEI's Current View: Direction of movement from previous: For use by advisers of regulated intermediaries in the UK in acceptance with all applicable laws and regulations