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The strength of the US equity market and tight credit spreads in investment grade and high yield indicate that the dollar decline in the first half of 2025 was not driven by foreign selling of US assets.
Instead, the decline in the dollar was likely driven by hedging activity, as foreign investors, after decades of not hedging their US investments, began hedging some of their dollar exposures.
With Section 899 behind us and the Fed keeping interest rates higher for longer, dollar hedging activity is likely to slow down.
Our chart book, available here, discusses the upside and downside risks to the dollar.
Sources: Bloomberg, BIS, Haver Analytics, IMF, Apollo Chief Economist 
Note: 1-year yield differential = 1-year German government bill minus 1-year US T-bill. pp = percentage points. Sources: Bloomberg, Macrobond, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The pause on reporting delinquent federal student loans to credit rating bureaus has ended. Eleven million borrowers are impacted. This poses a downside risk to consumer spending, as more households will have to allocate funds to pay their student loans, and those who fail to restart payments will see their credit score decline.
We put together a chart book to get a better understanding of the magnitude of this headwind to consumer spending, and it is available here.
The bottom line is that there are not only headwinds to consumer spending from higher tariffs, higher oil prices, and a shrinking labor force but also from middle-income households having to spend more on servicing their debt and having more difficulties borrowing as credit scores decline.
Sources: TransUnion US Consumer Credit Database, Apollo Chief Economist 
Sources: FSA, Apollo Chief Economist 
Note: Figures in row two are a subset of row one. Repayment: Includes loans that are in an active repayment status; Forbearance: Includes loans in which payments have been temporary suspended or reduced as a result of certain types of financial hardships. Approximately 180 days following the loan’s first 90+ DPD delinquency reporting, at 270 days past due, the borrower enters default status, where the borrower is subject to collection actions by the US Department of Education. Sources: FSA, Apollo Chief Economist 
See important disclaimers at the bottom of the page.
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The recent rise in WARN notices points to an increase in the unemployment rate in June, see chart below. A WARN notice is a legal requirement for US employers to provide at least 60 days advance written notice to employees, their representatives, and government officials before conducting a mass layoff, plant closing, or relocation.
Note: The Worker Adjustment and Retraining Notification (WARN) Act helps ensure 60 to 90 days advance notice in cases of qualified plant closings and mass layoffs. WARN factor is the Cleveland Fed estimate for WARN notices: https://www.clevelandfed.org/publications/working-paper/wp-2003r-advance-layoff-notices-and-aggregate-job-loss. Sources: openICPSR, US Department of Labor, Macrobond, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Weekly data for the number of people going to Broadway shows remains remarkably resilient, see chart below.
Sources: The Broadway League, Macrobond, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The daily data for the top 10 airports in the US shows some weakness among foreign arrivals, see the first chart below.
However, the weakness among foreign arrivals is offset by the continued strength in travel for US citizens, and the overall TSA data for the number of passengers traveling on airplanes originating in the US remains remarkably resilient, see the second chart below.
With the trade-weighted dollar down 10% since the beginning of the year, we expect to see an increase in foreign arrivals over the summer and a decline in US citizens traveling abroad.
Note: Airports included are ATL, LAX, DFW, MIA, ORD, DEN, IAD, SFO, MCO, and JFK. Sources: CBP, Apollo Chief Economist 
Sources: U.S. Department of Homeland Security, Macrobond, Apollo Chief Economist See important disclaimers at the bottom of the page.
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When FOMC members produce their forecasts ahead of Fed meetings, they are also asked how they view the risks to inflation and unemployment.
Currently, there are no FOMC members who foresee downside risks to the unemployment rate or inflation, see charts below.
In other words, the Fed continues to forecast stagflation and is concerned that we may experience rising inflation and rising unemployment at the same time.
These worries are likely driven by higher oil prices, tariffs, and immigration restrictions, all of which are putting upward pressure on inflation and unemployment simultaneously.
Sources: Federal Reserve Board, Bloomberg, Apollo Chief Economist 
Sources: Federal Reserve Board, Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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In 2010, 50% of all homes sold were purchased by first-time home buyers.
Today, the share is 24%, see chart below.
Sources: National Association of Realtors, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Examining Treasury auction metrics across the curve reveals no signs of weakness in demand for US Treasuries at present. Bid-to-cover ratios are stable, and there is no evidence of auctions systematically tailing, see the first four charts below.
These charts, however, offer little comfort when considering the rising trend in debt-to-GDP, the increasing term premium, the falling dollar, and the $9 trillion that the US government needs to refinance over the next 12 months, see the following four charts below.
In particular, debt-servicing costs are rising rapidly, and the US government currently pays a record-high $3.3 billion in interest payments every day, and for every dollar the US government collects in tax revenue, about 20 cents go to paying interest on debt.
With debt levels growing much faster than GDP, the bottom line is that Treasury issuance will continue to grow faster than the economy, and the most likely outcome is that investors will demand compensation in the form of higher long-term interest rates.
In sum, there is upside pressure on short rates from higher oil prices, higher tariffs, and restrictions on immigration, and there is upside pressure on long rates because of fiscal challenges.
This is obviously very important for investors in both public and private markets.
Our updated chart book looking at demand and supply for US Treasuries is available here.
Sources: Bureau of Public Debt, Haver Analytics, Apollo Chief Economist 
Sources: US Department of Treasury, Macrobond, Apollo Chief Economist 
Sources: US Department of Treasury, Macrobond, Apollo Chief Economist 
Note: Bloomberg ticker USN10YTL Index. Sources: Bloomberg, Macrobond, Apollo Chief Economist 
Sources: US Congressional Budget Office (CBO), Macrobond, Apollo Chief Economist 
Note: The NY Fed measure for the term premium is based on a five-factor, no arbitrage structure model. Sources: Federal Reserve Bank of New York, Macrobond, Apollo Chief Economist 
Note: 1-year yield differential = 1-year German government bill minus 1-year US T-bill. pp = percentage points. Sources: Bloomberg, Macrobond, Apollo Chief Economist 
Sources: US Department of Treasury, Macrobond, Apollo Chief Economist 
Sources: US Treasury, Bloomberg, Macrobond, Apollo Chief Economist 
Sources: US Congressional Budget Office (CBO), Macrobond, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Our outlook for real assets for the second half of 2025 is available here.
Source: MBA, Apollo Chief Economist 
Source: RCA, Bloomberg, Macrobond, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Our outlook for private equity for the second half of 2025 is available here.
Note: The calculation takes 5-year annualized and 10-year annualized returns for every 5-and 10-year window with sample starting in 2000 to 2024 and averaging returns over time. Sources: Preqin, Apollo Chief Economist See important disclaimers at the bottom of the page.
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