The New York Fed Staff Nowcast for the third quarter of 2025 is now at 2.10%. This is a small rise from last week’s figure of 2.08%. This change happened because of opposing trends in the Philly and Empire Fed surveys, which balanced each other. Additionally, retail sales gave a minor boost. More information will be released before the advance reading on the third quarter, which is set for October 30. This data will help create a clearer forecast.

Signs of Economic Resilience

The New York Fed’s GDP nowcast stabilizing around 2.1% is a good sign of ongoing economic strength. This lowers the likelihood of a Federal Reserve interest rate cut, which seemed more likely earlier in the summer of 2025. This steady growth suggests that we will probably see higher interest rates for a longer time. Given this situation, traders should be careful about expecting significant interest rate cuts soon. The CME FedWatch Tool indicates that the market sees only a 25% chance of a cut by December. This GDP data supports that low odds. Therefore, it makes sense to use SOFR futures to reflect a stable federal funds rate for the rest of the year. This consistent growth also suggests that market volatility may stay low. With the VIX around 14, which is historically low, selling options premium on broad indexes like the S&P 500 could be a smart strategy. We are considering using iron condors to benefit from a market expected to rise steadily without major disruptions.

Strength in the Consumer Sector

The rise in retail sales indicates strength in the consumer sector. The Consumer Discretionary Select Sector SPDR Fund (XLY) has increased over 4% in the last quarter, outperforming the industrial sector. Using call options or call spreads on consumer-focused ETFs could be an effective way to take advantage of this strength. Overall, the data shows that the “soft landing” scenario is still on track. We expect a market that is not overheating and is not heading into a recession. The main risk remains a surprising rise in inflation in the next report, which could prompt the Fed to act and disrupt the current stability. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now