Don’t fight the Fed
In this Monthly edition, September 2025 of Liquid Real Assets (LRA) Market Update, John Vojticek and team take a look at how public markets viewed listed real assets (real estate, infrastructure, natural resources and commodities).
Click below for the full report, including our Market Commentary, Why it Matters and:
Macro Dive:
- U.S. Data, while it lasts
- From Patience to Pressure
- Eurozone Inflation, Mixed Signals
Real Assets, Real Insights;
- Staying Private (Real Estate)
- High Voltage (Infrastructure)
- Catalysts for Change (Commodities)
Market Index Returns
Week to date since August 31, 2025 as of September 30, 2025
Index definitions: Global Real Estate = FTSE EPRA/NAREIT Developed Index; Global Infrastructure = Dow Jones Brookfield Global Infrastructure Index; Natural Resource Equities = S&P Global Natural Resources Index; Commodity Futures = Bloomberg Commodity Index; TIPS = Barclays US TIPS Index; Global Equities = MSCI World Index; Real Assets Index = 30% FTSE EPRA/NAREIT Developed Index, 30% Dow Jones Brookfield Global Infrastructure Index; 15% S&P Global Natural Resources Index; 15% Bloomberg Commodity Index, 10% Barclays TIPS Index. Source: Bloomberg, DWS. Past performance is not indicative of future results. It is not possible to invest directly in an index.
Market Commentary
In the United States, the jobs market continued to show cracks, but other measures have been cruising along, suggesting that there hasn’t been broad contagion across the economy. Inflation has remained moderate despite the anticipated tariff effects and the U.S. consumer has shown resilience as evidenced by personal spending data. The U.S. government budget shutdown and associated bluster will continue until the impasse is resolved but history suggests shutdowns have limited economic impact. Shutdowns do have political winners but that will be decided during the 2026 midterm elections. It is clear the Republicans understand the health care cost issue is real and the only question is whether they come to the table before or after the shutdown has ended. That said the lack of official data could cloud decision making at the Fed’s October FOMC meeting. Across pond conditions in Europe have slowed, such as German manufacturing PMIs (purchasing managers index), disappointing investors following lofty expectations for infrastructure and defense spending, while labor costs rose, and consumer confidence softened. The budget difficulties in France and the lack of expected spending in Germany have also contributed to the deceleration in momentum.
During September the U.S. Federal Reserve’s FOMC (Federal Open Market Committee) delivered a 25-basis point (bp) rate cut, as expected by the markets. The new federal funds target range was set to 4.00% - 4.25% and the new Fed’s rate forecast (the dot plot) suggested two more cuts this year and one in 2026. In his accompanying speech, Fed Chair Powell noted this move could be viewed as a “risk management cut” to address “downside risks to employment.” The Fed’s (median) projection for the unemployment rate expected at year end was 4.5%, before edging down in 2026. GrowtDuring September the U.S. Federal Reserve’s FOMC (Federal Open Market Committee) delivered a 25-basis point (bp) rate cut, as expected by the markets. The new federal funds target range was set to 4.00% - 4.25% and the new Fed’s rate forecast (the dot plot) suggested two more cuts this year and one in 2026. In his accompanying speech, Fed Chair Powell noted this move could be viewed as a “risk management cut” to address “downside risks to employment.” The Fed’s (median) projection for the unemployment rate expected at year end was 4.5%, before edging down in 2026. Growth and inflation expectations also ticked up despite the expected labor market weakness.h and inflation expectations also ticked up despite the expected labor market weakness.
September was decidedly positive and demonstrated a broadening in participation as the Russell 2000 small cap index outperformed the S&P 500. Global Equities outpaced Real Assets on the strength of Technology and Consumer Discretionary stocks, reaching fresh all-time highs. The Consumer Staples, Energy, and Real Estate sectors lagged the broader global equity market. Within Real Assets, Commodity Futures, Natural Resource Equities, and Global Infrastructure securities outperformed, while U.S. TIPS (Treasury Inflation Protected Securities) and Global Real Estate underperformed despite generating positive returns. Across other market indicators, the VIX, a measure of 30-day expected stock market volatility, rose 6% to end the month at 16.3. Breakeven yields, a measure of implied inflation, fell 7 bps in the 5-year segment and 4 bps in the 10-year segment. Gold prices continued their strong run, climbing nearly 12% to end the month at $3,859/ounce. The bid for safe-haven assets,** such as gold, strengthened into month-end as a shutdown of the U.S. government looked increasingly likely. Oil prices fell to end the period at $62.4/barrel as the supply overhang loomed, and inventory increased in the U.S. China has also been stockpiling reserves and building additional capacity to take advantage of current pricing and recycle U.S. dollars into hard assets. The U.S. dollar was flat against major trading partners in the month. Credit spreads tightened 6 bps for investment grade credits and rose 3 bps for the high yield space.*
In the full report:
Why it matters, September update: We continue to monitor economic data trends for any inflection points in their rate of change. The markets are looking for signs of the Fed’s next move, whether it will hold out for more data (if available!) or continue the rate cut cycle. We have yet to see significant inflation pressure from tariffs and the Fed is watching to see if there will be a short bump-up in prices, or a more sustained period of price pressure. Comments from business leaders and policy makers have reminded market participants that the tariff impacts have not been fully felt.
This week we will review the latest data from the U.S., Japan, and Europe.
Real Assets, Real Insights: This week we look at a large data center deal, investments in the infrastructure sector, and developments in the PGM (platinum group metals) market.
Click here to read the full report.
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* Source: Bloomberg Finance LP, as of September 30, 2025
** Financial safe havens are investments or assets that are expected to retain or increase in value during times of market turbulence.
Any mentions of specific properties or securities are for illustrative purposes only and should not be considered a recommendation. Diversification neither assures a profit nor guarantees against loss. Past performance is not a guarantee of future results. The opinions and forecasts expressed are those of the authors and may not come to pass. Forecasts are based on assumptions, estimates, views and hypothetical models or analyses, which might prove inaccurate or incorrect. Forecasts are not a reliable indicator of future returns. All investments involve risks, including potential loss of principal. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index.
Glossary
One basis point (bps) equals 1/100 of a percentage point.
Bloomberg Commodity Index (BCOM) traces 23 commodities and reflects commodity futures price movements.
Bloomberg U.S. Treasury Inflation Notes Total Return Index includes all publicly-traded U.S. Treasury inflation-protected securities that have at least one year remaining to maturity, are rated investment grade and have $250 million or more of outstanding face value
Credit spread is the difference between the yield (return) of two different debt instruments with the same maturity but different credit ratings.
Each dot represents where an FOMC member sees the federal funds rate at the end of each year.
Earnings refer to a company’s net income or profit over a specific period, typically reported quarterly or annually. They represent the amount a company makes after subtracting expenses, taxes, and costs from its total revenue. (Bloomberg)
The Dow Jones Brookfield Global Infrastructure Index measures the performance of pure-play infrastructure companies domiciled globally.
FTSE EPRA/NAREIT Developed Index represents general trends in global real estate equities.
The federal funds rate is the interest rate, set by the Fed, at which banks lend money to each other, usually on an overnight basis.
The U.S. Federal Reserve, often referred to as "the Fed", is the central bank of the United States.
The Federal Open Market Committee (FOMC) is the committee that oversees the open-market operations (purchases and sales of securities that are intended to steer interest rates and market liquidity) of the U.S. Federal Reserve.
High-yield bonds are issued by below-investment-grade-rated issuers and usually offer a relatively high yield.
Inflation is the rate at which the general level of prices for goods and services is rising and, subsequently, purchasing power is falling.
Inflation breakeven yield (or breakeven inflation rate) is the difference in yield between a nominal Treasury bond and a Treasury Inflation-Protected Security (TIPS) of the same maturity. This spread reflects the market’s expectation of future inflation over the life of the bond. (Bloomberg)
Investment grade (IG) refers to a credit rating from a rating agency that indicates that a bond has a relatively low risk of default.
The Nasdaq Composite Index is an equity index which contains all common stocks listed on the NASDAQ exchange.
The MSCI World Index tracks the performance of mid- and large-cap stocks in 23 developed countries around the world.
A nominal value in economics is not adjusted for inflation; a real value is.
The Nasdaq Composite Index is an equity index which contains all common stocks listed on the NASDAQ exchange.
The Purchasing Managers' Index (PMI) is an indicator of the economic health of the manufacturing sector in a specific country or region.
A Real Estate Investment Trust (REIT) is a company that owns and, in most cases, operates income-producing real estate. REITs sell like a stock on the major exchanges and invest in real estate directly, either through properties or mortgages.
The S&P 500 is an index that includes 500 leading U.S. companies capturing approximately 80% coverage of available U.S. market capitalization.
S&P Global Natural Resources Index includes 90 of the largest publicly-traded companies in natural resources and commodities businesses that meet specific investability requirements, offering investors diversified and investable equity exposure across 3 primary commodity-related sectors: agribusiness, energy and metals/mining.
The spread is the difference between the quoted rates of return on two different investments, usually of different credit quality.
A tariff is a tax imposed by one country on the goods and services imported from another country.
Treasuries are fixed-interest U.S. government debt securities with different maturities: Treasury bills (1 year maximum), Treasury notes (2 to 10 years), Treasury bonds (20 to 30 years) and Treasury Inflation Protected Securities (TIPS) (5, 10 and 30 years).
Treasury Inflation-Protected securities (TIPS) are a form of U.S. Treasury bonds designed to protect investors against inflation. These bonds are indexed to inflation and pay investors a fixed interest rate as the bond's par value adjusts with the inflation rate.
The VIX (CBOE Volatility Index) is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index. It is a popular measure of the volatility of the S&P 500 as implied in the short-term option prices on the index.
Yield is the income return on an investment referring to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost, its current market value or its face value.
A yield curve shows the annualized yields of fixed-income securities across different contract periods as a curve. When it is inverted, bonds with longer maturities have lower yields than those with shorter maturities.
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