Market Musings 9/23/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
Investors rally for #RateCuts, but Powell says hold up…
Investors are betting on bigger #RateCuts, but Powell’s trying to rein in the optimism.
Markets have rallied since last week’s Fed meeting. Even though the Fed only penciled in three more cuts through next year, investors are still betting on four or five.
On Tuesday, Powell poured some cold water on it noting both weakening #LaborMarkets risks as well as accelerating #Inflation risks.
On #Inflation, #Tariffs are the main concern. So far, retailers and importers are absorbing the costs, but eventually it will flow through to consumers – likely next year.
On #LaborMarkets, job creation has weakened sharply which drove last week’s #RateCuts. But, Powell noted other labor indicators remain stable and unemployment is still historically low.
Ultimately, the Fed is trying to prevent an acceleration in job losses while still balancing #Inflation upside risks. Essentially, the Fed is stuck: increasing #Inflation risks vs. weakening #LaborMarkets. With both of its dual mandates at risk, there is “no risk-free path”.
Meanwhile, markets are still all in on aggressive #RateCuts to stabilize #LaborMarkets. Despite a minor pullback Tuesday, the investors still full throttle.
What’s next? The #LaborMarkets jobs report coming next week followed by more #Inflation data mid-October. Markets will likely tolerate slightly hotter #Inflation and will want #LaborMarkets soft, but not crashing.
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Original Photo by Pixabay.