Key Insights from the Economic Summary of September 2025

Energy

The global energy markets are experiencing a period of volatility and mixed trends, particularly in the oil and gas sectors. The data show that while crude oil and Brent crude prices have seen relatively minor daily and weekly fluctuations, they've experienced significant year-over-year declines, indicating a recent decrease in demand or an increase in supply. This contrasts with natural gas prices, which, despite a minor daily drop, have had strong positive gains on a weekly and monthly basis, though they are still down substantially year-over-year. Meanwhile, other energy sources like gasoline and heating oil show their own unique trends, and coal, which is often seen as a less volatile commodity, is showing an interesting year-over-year decline.

The decline in crude oil and Brent crude prices, down over 9% year-to-date and year-over-year, suggests that global oil supply has outpaced demand. This could be a result of increased production from key oil-producing nations, or it might signal a broader economic slowdown that's curbing energy consumption.

For natural gas, the recent weekly and monthly gains of over 5% and 11% respectively, indicate a potential market rebound or a shift in short-term demand and supply dynamics. This could be influenced by seasonal factors like impending winter demand for heating or geopolitical events impacting supply routes. Natural gas is often a key input for electricity generation, and its price volatility can have a ripple effect on power markets globally.

The significant year-over-year declines in coal and European gas benchmarks (TTF Gas and UK Gas) point to a continued push toward alternative energy sources and a possible easing of the energy crisis that impacted Europe in previous years. This creates a market environment where there is no single dominant trend, but rather a series of diverging price movements across different energy commodities.

Businesses may need to consider diversifying their energy sourcing and exploring contracts that hedge against price volatility. The current volatility in global energy markets presents both risks and opportunities for supply chain leaders. Crude oil and Brent crude prices have weakened year-over-year, suggesting that supply is outpacing demand, potentially signaling a wider economic slowdown. In contrast, natural gas has shown short-term gains, influenced by seasonal demand and geopolitical factors, though prices remain lower than last year. Meanwhile, coal and European gas benchmarks continue to decline, reflecting both easing energy pressures and the longer-term shift toward renewables.

For supply chain leaders, these mixed trends highlight the need to diversify energy sourcing and adopt hedging strategies to manage volatility. Equally important is monitoring regional dependencies and geopolitical risks, particularly for natural gas, where supply routes can shift quickly. The continued decline in coal and European gas underscores the importance of aligning procurement strategies with the global energy transition. By balancing risk management with forward-looking investments in renewable energy, supply chains can build resilience and reduce exposure to sudden market swings.

Commodities

While some commodities, particularly those tied to traditional industrial demand and clean energy infrastructure, are experiencing robust growth, others are in a state of flux or decline. This lack of a cohesive trend has significant implications for global corporate supply chains, forcing businesses to adopt more nuanced and adaptive risk management strategies.

The upward movement in the prices of copper and platinum signals a continued and strong demand from established industrial sectors. As a foundational material for electrical wiring and construction, copper’s 14.32% year-over-year price increase underscores a resilient global economic environment and ongoing investment in infrastructure projects. Similarly, platinum's astonishing 53.00% year-over-year surge can be attributed to its essential role in both the automotive industry, particularly in catalytic converters for diesel engines, and the burgeoning hydrogen fuel cell sector. This dual demand for both traditional and clean energy applications has created a powerful upward force on its price. The stability and growth of these markets reflect industries that are either expanding or during a significant technological transition where these metals remain critical components.

In contrast, the steel and battery metals markets demonstrate significant regional and technological volatility. The data shows a split in the steel sector, with HRC Steel in the United States maintaining a strong year-over-year gain while Chinese steel prices have remained flat or slightly declined. This disparity highlights the influence of regional economic policies, tariffs, and varying rates of industrial output. Moreover, the raw material for steel, iron ore, has seen strong gains in both US and Chinese markets, suggesting that while the demand for the raw material is consistent, the final product’s price is sensitive to local market conditions. This fragmented trend in steel prices requires multinational corporations to implement agile sourcing strategies to mitigate cost fluctuations.

The most disruptive price movements are seen in the battery metals market, with lithium and silicon showing significant negative trends despite widespread adoption of electric vehicles and renewable energy. The year-to-date and year-over-year declines in lithium prices suggest a market grappling with a supply surplus, perhaps from new mining projects coming online or slowdown in demand growth for EV’s. This trend contrasts sharply with earlier market expectations and serves as a powerful reminder that technological booms do not guarantee perpetual price increases for every associated commodity. For industries relying on these materials, the price drops present both an opportunity for cost savings and a cautionary tale about media hype being detached from consumer demand.

Consider FX markets and IMPACT re Commodities

The diverging performance of major industrial materials is both a cause and effect of significant shifts in the foreign exchange landscape. The growth of some commodity markets, the regional fragmentation of others, and the surprising decline of a third group can only be fully understood by considering the powerful influence of a weakening U.S. dollar and the varied performance of other major currencies. This intricate relationship presents a new and significant layer of complexity for global businesses. 

The upward trajectory of commodities such as copper and platinum is not solely a reflection of strong industrial demand but is significantly amplified by the broader decline in the value of the U.S. dollar. With the Dollar Index (DXY) down by over 10% year-over-year, and major currencies like the Euro and Swiss Franc strengthening considerably, a mechanical effect is at play. As most commodities are priced in U.S.

dollars, a weaker dollar makes these goods effectively cheaper for buyers using other, stronger currencies. This dynamic has made copper more accessible for global construction and manufacturing, contributing to its 14.32% year-over-year price increase. Similarly, the dramatic surge in platinum prices can be attributed not just to its use in catalytic converters and hydrogen fuel cells, but also to a powerful currency-driven demand from international buyers seeking to hedge against a devaluing dollar. SKILLSOOP predict platinum price to 4 X from here.

While the general rule of a weaker dollar supporting commodity prices holds, regional currency fluctuations introduce significant distortions. Australian and New Zealand dollars have weakened against the USD over the past year. This should, in theory, make Australian and New Zealand commodity exports, like iron ore, more competitive. Yet, the price of iron ore has still seen strong gains, indicating that underlying global demand is powerful enough to overwhelm the negative currency effect. Conversely, the relative strength of the Chinese yuan against the U.S. dollar may have contributed to the flat or declining steel prices in China, making it more expensive for international buyers to import Chinese steel, while a weakening dollar against other currencies has made steel more competitive in the U.S. market.

The performance of a commodity is no longer a simple indicator of industrial health; it is a complex reflection of its supply and demand fundamentals, its relationship to the U.S. dollar, and the specific dynamics of the currencies of its key trading partners. For any global corporation, a comprehensive strategy must now include a granular, item-by-item analysis of both commodity prices and the foreign exchange rates of relevant markets. Navigating this new environment requires a sophisticated approach to risk management, one that accounts for the powerful and often conflicting forces of supply chain pressures and the global currency market.

Debt

The global debt market serves as a vital barometer for economic health, with 10-year government bond yields providing a crucial snapshot of these dynamics. The trends reflect not only the immediate actions of central banks but also underlying concerns about inflation, fiscal policies, and broader economic stability.

The United States presents a relatively stable picture on the surface. With its 10-year Treasury yield at 4.0790%, a slight daily increase belies a significant downward trend on a monthly and year-to-date basis. This movement suggests that the Federal Reserve's recent rate cuts have been effective in lowering borrowing costs at the shortened, and open market operations are hiding the real credit crisis at play. In stark contrast, the United Kingdom's 10-year gilt yield is notably higher at 4.6290%. Its volatility and a marked year-over-year increase point to growing investor apprehension regarding the nation's fiscal policies and persistent inflationary pressures. The UK's bond market has shown a heightened sensitivity to government announcements. In truth, businesses have lost confidence in the UK and the labour government, as GDP can barley service the debt.

Germany's 10-year Bund yield, at 2.67%, and France's at 3.48%, have both been rising in recent months. This is particularly noteworthy for Germany, which is traditionally considered a fiscally haven. The increase could be a result of market speculation about a potential reform of the country's "debt brake" and an expected rise in government borrowing. Meanwhile, Japan’s 10-year government bond yield remains comparatively low at 1.60%, yet its steady year-to-date rise signals a clear shift in monetary policy and a growing expectation of higher inflation in an economy long known for deflationary pressures.

The yields in major emerging markets like Brazil and Russia remain highly volatile and exceptionally high, at 13.5% and 14.0%, respectively. Such elevated yields are a direct reflection of significant country risk, a higher cost of borrowing, and concerns about currency depreciation. The data on Russia shows a substantial decrease in its yield over the past year, which may be due to market manipulation or strict controls, like the US. India, while also an emerging market, shows a more stable yield that still reflects a different risk profile compared to its developed-economy counterparts.

Ultimately, these varying national trends reinforce the fundamental inverse relationship between bond prices and yields. A bond's yield is not determined in a vacuum but is heavily influenced by a confluence of economic factors. The actions and communications of central banks are a primary driver, as rate cuts and quantitative easing directly impact borrowing costs and investor expectations. Inflation and economic growth are also crucial, as a strong economy with rising prices naturally leads investors to demand a higher return to preserve their purchasing power. Furthermore, the simple forces of supply and demand, the issuance of new debt versus investor appetite, can put upward pressure on yields, particularly when institutional investors reduce their demand for long-dated bonds. Government budget deficits, by increasing the supply of bonds, also play a direct role.