Market Musings 10/7/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
September rallies on #RateCuts, but the shutdown complicates October…
Markets rallied in September on #RateCuts, but the government shutdown complicates that going forward.
The S&P 500 ends up 3.5%, but the rally started to falter towards the end. In short, the story was weak #LaborMarkets and #RateCuts, but #Inflation still looms.
First, #LaborMarkets growth stayed soft with fewer payroll adds, more downward revisions and unemployment continued to creep higher.
That #LaborMarkets weakness helped lock in the first Fed #RateCuts of the year. However, the Fed’s outlook doesn’t match the speed the market expects.
The reason? #Inflation. It’s still above target, but still not spiking from #Tariffs impact yet.
Heading into October, markets wanted more clarity ahead of the next Fed meeting, but now the shutdown is delaying key data — including the September jobs report.
All we got so far for September was the ADP private payrolls which came in weaker than expected. It likely sets expectations lower for when the job report eventually drops, but it’s not typically a perfect match.
Meanwhile, consumer #Inflation expectations are rising fast, even if the actual data hasn’t shown much yet. But with the CPI and PPI reports also on hold until the government reopens, we may not get to see it that still held in September for a bit.
This leaves the Fed in a tough spot with both #LaborMarkets and #Inflation concerns, but potentially flying blind missing data going into their next meeting. They have emphasized being data-dependent. So if the shutdown drags on, they may hold off on further #RateCuts if they’re truly on the fence.
Meanwhile, off on its own, the #AI trade is still a primary driver of market strength. Led by infrastructure buildouts names with clear progress, we still need to see real monetization that currently remains more promise than proof. As we head into Q4, investors’ risk appetite will need to stay high to keep that momentum going.
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Original Photo by Pixabay.