The 4Sight Weekly Report – Week of August 25, 2025
August 25, 2025

The 4Sight Weekly Report

Macro + private credit lens with forward look; includes scenario matrix, sector notes, and risk/opportunity signals for allocators.

Theme of the Week — “Grinding Toward Balance”

The July CPI print reinforced disinflation, but the path remains uneven: goods inflation has cooled, services remain sticky. Credit conditions are stabilizing, but both banks and private lenders continue to emphasize structure over looser terms. The market’s mood is cautiously constructive, with allocators seeking carry without abandoning discipline.

Macro Brief

  • Inflation: July headline CPI 2.7% YoY, core 3.1%. Shelter is still the largest driver; energy muted but geopolitics remain a risk.
  • Growth: ISM Services slipped modestly but remains above 50; ISM Manufacturing still below 50, though new orders improved.
  • Rates: Futures still price the first cut in mid-2026, though markets lean dovish after softer retail sales and wage data.
Labor Market

Unemployment drifted up to 4.4%. Wage growth slowed, but services pay remains above pre-COVID averages. Participation rates are steady.

Bank Flow (H.8)

C&I lending flat over 4-week average; deposits stable. Large banks show appetite for quality credits; small banks still cautious.

Private Credit Update

  • Issuance: Middle-market activity steady in health care and business services; cyclical sectors remain thin.
  • Spreads: First-lien unitranche in SOFR+575–600bp range; dispersion wider for cyclicals and smaller borrowers.
  • Terms: Springing covenants common; tighter MFN clauses; documentation premium persists.

What It Means Right Now

  • Expect stable spreads but continued emphasis on covenants and reporting rights.
  • Short-duration senior risk still best positioned for carry + protection.
  • Sector selection remains critical: recurring-revenue industries clear, discretionary/labor-heavy names challenged.

Risk Watch

  • Shelter & services stickiness delaying disinflation’s last mile.
  • Refinancing tests ahead for mid-market borrowers with 2026–27 maturities.
  • Geopolitical risks in energy markets could reverse recent headline CPI relief.

Opportunity Watch

  • Healthcare lending remains resilient, with contracted demand and stable cash flows.
  • Senior secured, floating-rate continues to attract allocator demand.
  • Documentation premium creating alpha for lenders insisting on tighter rights.

Quote of the Week

“Markets can live with high rates; what they cannot live with is uncertainty.”

References

  1. U.S. Bureau of Labor Statistics. Consumer Price Index — July 2025. BLS CPI
  2. Federal Reserve Board. H.8 Bank Balance Sheet Data. Fed H.8
  3. Institute for Supply Management. PMI Reports. ISM
  4. Federal Reserve Board. Senior Loan Officer Opinion Survey. Fed SLOOS
  5. Fitch Ratings. Private Credit Monitor. August 2025 Update.