Jackson Hole & Jobs

Federal Reserve Chair Jerome Powell’s final speech at Jackson Hole revealed an important recalibration at the central bank: While the Fed has spent much of the last four years in inflation-fighting mode, it sees the balance of risks to the economy as shifting to the labor market.

Powell described the labor market as being in a “curious kind of balance,” with both labor supply and demand falling at the same time due to tighter immigration policies, restrictive monetary policy and economic uncertainty.

Labor Supply and Demand

This means employment risks are rising even though the unemployment rate remains low and near levels that could be considered full employment. Hiring is slow, and an increase in layoffs could result in a rapid increase in the unemployment rate, which could send recession fears higher. The Fed would like to avoid that if it can.

Of course, tariff effects are starting to show in the official inflation data (e.g. the huge upside surprise to the July Producer Price Index), which makes the pivot toward jobs a little treacherous. For now, because the labor market isn’t as hot as it once was, limiting the potential for price hikes to set off a wage-price spiral, most Fed officials expect the inflation impact of tariffs to be short-lived.

Portfolio Rotations Emerging

Financial markets largely interpreted Powell’s tone as a signal that the Fed will lower interest rates at its September meeting: The S&P 500 fell 1.5% during the week after the hot July PPI release, but Powell’s comments cancelled that out in a single day.

Just as the Fed seems to be gearing up for a change in strategy, however, investors look to be teeing up a change of their own. Growth and AI-sensitive sectors lagged the broader market, while small-cap stocks handedly beat large-caps for the first time since November 2024.

Size-Style Blend Monthly Returns

Looking globally, the Dollar Index depreciated 2.2% versus a basket of major currencies, helping international markets beat U.S. stocks for the first time since April.

That dollar weakness, along with demand concerns and interest rate cut expectations, left a clear impact on commodity markets as well. Gold and oil moved in opposite directions: Lower real (i.e. inflation-adjusted) Treasury yields are generally bullish for a non-yielding asset like gold, while oil supply continues to outpace demand.

This sort of price action is what a broadening rotation typically looks like, but whether it lasts beyond a few weeks remains to be seen.

Market Recap

Asset Returns

August 2025 Sector Total Returns

Macro

•  Against expectations for an increase of 105k jobs in July, only 73k were added. Additionally, the prior two months were revised down by 258k, the largest such downward revision since May 2020.

•  In his Jackson Hole speech, Federal Reserve Chair Jerome Powell signaled that the balance of risks was shifting toward the labor market.

•  While July CPI was largely in-line with consensus estimates (+0.2% m/m & +2.7% y/y), PPI surged 0.9% m/m versus expectations for an increase of 0.2%. It was one of the largest upside surprises on record.

•  The University of Michigan’s consumer sentiment index fell to 58.2 in July, below consensus of 62.0, amid rising inflation expectations.

•  Against a basket of major currencies, the Dollar Index (DXY) fell 2.2% on the month, as dovish Fed policy and improved global risk sentiment boosted foreign currencies.

•  Gold finished the month at an all-time high of $3,448, buoyed by the weakening dollar.

Equities

•  With nearly all S&P 500 companies having reported second-quarter results, earnings growth is tracking toward 10.8% y/y, meaningfully above the 2.8% expected at the start of earnings season.

•  81.5% of companies have reported positive earnings surprises, the most since the third quarter of 2021.

•  Small-cap stocks beat large-cap stocks by 5.0 percentage points, the most since July 2024.

•  A basket of AI-sensitive stocks fell 5.2%, meaningfully underperforming the broader market for the first time since February.

Fixed Income

•  2- and 10-year Treasury yields fell 34 and 15 basis points, respectively, as expectations for an interest rate cut intensified in response to weakening economic data and Fedspeak.

•  Investment Grade and High Yield credit spreads ended the month at 79 and 272 basis points, respectively— near their lowest levels on record.

•  Treasury volatility (i.e. the MOVE Index) continued its multi-month decline and is now at its lowest level since January 2022.

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Performance data quoted represents past performance. Past performance does not guarantee future results. Market returns will fluctuate, and current performance may be lower or higher than the standardized performance data quoted.

You’ve probably heard it before: A strong credit score can save you a lot of money and hassle over time.

But in the bustle of daily life, it’s easy not to think about that three-digit number, let alone make it a priority to raise it or keep it high.

So we’ve got some stats to inspire you:

In a recent survey from Marist Poll and Yahoo Finance, 42% of Americans said their credit score helped them achieve their financial goals during the past year, while 19% said it hurt them. A higher credit score tends to make it easier to borrow money and get lower interest rates on credit cards, car loans, and mortgages. Even insurance premiums may be lower.

Let’s say you were taking out a five-year $45,000 loan to buy a new car, putting 10% down. Boosting your FICO score to 720 from 620 would save you an estimated $127/month in interest — more than $7,600 over the five years, according to FICO®. That’s almost half the total interest.

Or you’re buying a house with a $400,000 30-year mortgage and a 20% down payment. A score of 760 rather than 680 could shave an estimated $101/month in interest, and more than $36,000 overall. (Use this FICO calculator to see how other scores could impact the interest you pay.)

In fact, a recent Bankrate study found that borrowers with a credit score of 620 versus 700 pay an average of roughly $3,400 more each year for essential financial products.

So what? Credit scores matter (so much so that people are even posting screenshots of their FICO scores to Tinder.) Whether your score is where you want it to be or not, good credit habits can make a big difference to your bottom line. Here’s how to develop them:

First, keep close track. There are plenty of ways to review both your score and your credit reports for free. The three national credit bureaus (Equifax®, TransUnion® and Experian®) offer free reports up to once a week at AnnualCreditReport.com. And many banks, including SoFi, will monitor your score at no cost and alert you of any changes. Monitoring will help you stay on top of potential errors or credit fraud — just make sure to report it right away if something is off. (And don’t worry, checking your score won’t impact it.)

Next, dig in. If you’re using a credit score monitoring service like SoFi’s, you’ll be able to see what’s affecting your score and which areas you might be able to improve. Your payment history has the biggest impact on your score, so if you’re able to, pay your credit card and other loans on time, every time. (Setting up auto-pay is an easy way to stay on top of this.)

Another important factor is how much of your available credit (aka total credit limit) you’re using. While you’ll often hear you should stay below 30%, the lower the better, as long as it’s not 0%.

Pro tip: One way to lower your percentage is to request a credit limit increase from one of your lenders. You could be eligible for a higher limit, especially if you haven’t updated your income recently.

Don’t let a mixup cost you. Missing payments can hurt your score even when there’s an innocent mistake. And collection efforts stay on your credit reports for seven years.

Let’s say your car lease payments were on autopay but when you extended the lease, you didn’t realize the autopay needed to be renewed too, so you mistakenly missed a payment. Or, you haven’t paid some of your medical bills because you believe they should be covered by insurance. Don’t ignore past-due bills and final notices, even if you think they were sent in error. Follow up (with the doctor, insurer, or lease provider) right away to avoid having it reported to the credit bureaus.

Related Reading

How Income and Salary Affect Your Credit Score (SoFi)

Why Do My FICO® Scores Vary by Credit Bureau? (FICO)

Penalized: The Hidden Cost of Credit Score in Homeowners Insurance Premiums (Consumer Federation of America)

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