To Cut or Not to Cut?

Market Musings 10/29/2025

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

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Fed #RateCuts again, but keeps markets guessing for December…

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Markets got the expected October #RateCuts, but now left guessing if they’ll get another in December.

The Fed trimmed rates again by 25bps－just as expected.

However, coming into the meeting, the real question was whether we’d get more #RateCuts this year. Markets were feeling cocky with about a 2/3 chance going into the meeting hoping for confirmation.

Powell attempted to tamp down expectations noting December #RateCuts is “not a foregone conclusion” and “far from it”. Markets initially held steady after the Fed’s press release, but slipped on those comments.

While Powell was trying to give the Fed some optionality, we agree with the market at this point. Last meeting’s dot plot also showed the Fed split on #RateCuts #3, but the median forecast was for it.

Powell says the Fed wants to be data driven for decisions. However, with the government shutdown limiting data available, I’m not sure that the Fed will see a drastically different picture since September.

They’ll also likely want to err on #LaborMarkets with #Tariffs and #Inflation still coming in more muted.

We expect market optimism to creep higher ahead of the December meeting－seeing even bad news as a glass half full. With market optimism so rampant, it really would take an empty glass to break it. We’re not saying markets aren’t in a bubble… but we don’t see much on the horizon to warrant a downturn yet.

After earnings, we see markets likely focusing on #ConsumerConfidence spending going into the holidays. A lot of that data isn’t tied to the government shutdown. It’s not a direct read on #LaborMarkets or #Inflation, but can signal how the economy is chugging along.