ALTERNATIVE MARKETS UPDATE – END AUGUST 2025

​President Trump’s attempt to remove Federal Reserve Governor Lisa Cook marked one of the most serious confrontations between the White House and the Fed in decades. The move triggered legal challenges and intensified debate about the independence of US monetary policy, raising concerns that political interference could damage the central bank’s credibility. The timing was notable: just days earlier, Chair Powell used Jackson Hole to signal that the “balance of risks” was shifting toward weaker growth and that the Fed was prepared to cut rates if conditions worsened. A month ago, market participants were almost unanimous in expecting a 25bps cut in September, but sentiment has since fragmented. While many still anticipate a modest move, fading optimism about growth has led some investors to push for a deeper 50bps cut, while others are no longer convinced that there will be a cut. The upcoming meeting and the legal drama around Cook will be a key test of both policy direction and institutional autonomy.
Markets have responded with a mix of caution and positioning for easing. Equities largely shrugged off the political drama, supported by strong earnings momentum and ongoing enthusiasm for artificial intelligence. Nvidia’s Q2 earnings call delivered a sharp revenue increase, underscoring relentless demand for AI infrastructure, though management tempered expectations by warning of lower data centre sales in Q3. The stock’s results highlighted both the strength and the fragility of the AI trade, which continues to anchor broader equity sentiment. Meanwhile, Treasuries and gold drew safe-haven inflows as governance risks rose, with the 10-year Treasury yield slipping toward 4.25% as conviction in near-term cuts grew. The debate over whether the Fed opts for 25bps, 50bps, or no cut at all in September is keeping volatility elevated across rates markets, even as equities lean on AI-driven growth to offset policy uncertainty.

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RESEARCH PERSPECTIVE VOL. 258 August 2025 Alternative Markets Update President Trump’s attempt to remove Federal Reserve Governor Lisa Cook marked one of the most serious confrontations between the White House and the Fed in decades. The move triggered legal challenges and intensified debate about the independence of US monetary policy, raising concerns that political interference could damage the central bank’s credibility. The timing was notable: just days earlier, Chair Powell used Jackson Hole to signal that the “balance of risks” was shifting toward weaker growth and that the Fed was prepared to cut rates if conditions worsened. A month ago, market participants were almost unanimous in expecting a 25bps cut in September, but sentiment has since fragmented. While many still anticipate a modest move, fading optimism about growth has led some investors to push for a deeper 50bps cut, while others are no longer convinced that there will be a cut. The upcoming meeting and the legal drama around Cook will be a key test of both policy direction and institutional autonomy. Markets have responded with a mix of caution and positioning for easing. Equities largely shrugged off the political drama, supported by strong earnings momentum and ongoing enthusiasm for artificial intelligence. Nvidia’s Q2 earnings call delivered a sharp revenue increase, underscoring relentless demand for AI infrastructure, though management tempered expectations by warning of lower data centre sales in Q3. The stock’s results highlighted both the strength and the fragility of the AI trade, which continues to anchor broader equity sentiment. Meanwhile, Treasuries and gold drew safe-haven inflows as governance risks rose, with the 10-year Treasury yield slipping toward 4.25% as conviction in near-term cuts grew. The debate over whether the Fed opts for 25bps, 50bps, or no cut at all in September is keeping volatility elevated across rates markets, even as equities lean on AI-driven growth to offset policy uncertainty. STONE MOUNTAIN CAPITAL Stone Mountain Capital is an advisory boutique established in 2012 and headquartered in London with offices Pfaeffikon in Switzerland, Tallinn in Estonia and Dubai and Umm Al Quwain in United Arab Emirates. We are advising 30+ best in class single hedge fund and multi-strategy managers across equity, credit, and tactical trading (global macro, CTAs and volatility). In private assets, we advise 10+ sponsors and general partners across private equity, venture capital, private credit, real estate, capital relief trades (CRT) by structuring funding vehicles, rating advisory and private placements. As of 14th June 2025, Stone Mountain Capital has total alternative Assets under Advisory (AuA) of US$ 62.9 billion. 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