Weekly Market Report: November 14th, 2025

Equity markets tried to take an overdue breather last week with earnings season largely behind us and inflation/FOMC dynamics taking on renewed focus. Despite some mid-week jitters, equity markets closed the week relatively flat with value outperforming growth domestically and international developed (+1%) and emerging (+0.75%) both posted stronger gains thanks to a weak USD (-0.31%). Interest rates inched higher across the curve, taking the 10yr back up to 4.14% to close the week.

Financial Market Highlights

• With encouraging 3Q earnings growth of 14.5% now in the rearview, equity markets looked more closely at the macro (inflation, labor) and monetary policy backdrop, translating to an upward drift on inflation/interest rates and a downward drift on Fed rate cut expectations.

Economic Highlights

• Absence of official inflation and jobs data drew attention to NFIB indications showing benign but stubborn inflation, weak sales expectations, and a stalling but not sharply deteriorating labor markets.
• BoA credit report reinforced the K-shaped recovery narrative with healthy consumer spending growth of 2.4% but barbelled in nature with anemic low income (0.7%) offset by strong high income (2.7%) spending. Wage growth eased unilaterally but was more pronounced in low-income deciles.

Policy Highlights

• The longest government shutdown on record ended last week but expectations are that data reliability and ripple effects will take some weeks to normalize.
• Ample Fed speak last week reinforced a cautious and uncertain path for monetary policy given absence of data and a lack of consensus going forward.
• An important and market impactful distinction on the SCOTUS ruling on POTUS use of IEEPA for tariff levies is whether refunds are mandated or not.

Bullish Asset Allocation Narratives

• Productivity and the AI boom are complimented by strong earnings and persistent growth.
• Growth conducive policies across the monetary, fiscal, and regulatory landscape including a dovish Fed, stimulative fiscal budget deficits, and business friendly deregulation initiatives.
• Fading tariff policy uncertainty with administration officials aggressively pursuing trade deals and a potential judicial branch check on the executive branch use of the IEEP Act to levy trade taxes.

Bearish Asset Allocation Narratives

• A monetary policy mistake by the Fed given the complex and abnormal level of distortion stemming from historic tariffs, immigration policies, and pandemic aftereffects on inflation and labor markets.
• Narrow market reliance on AI stock momentum including aggressive free cash flow spending trends, surging capex, eyebrow raising circular investment, and high valuation/earning expectations.
• Risks to consumption given normalized interest rates, low growth labor markets, cumulative inflation effects, and a fatigued consumer balance sheet.
• Tariff levies moving to multi-decade highs and associated pressure on inflation and profit margins.

Weekly Market Report: November 1st, 2025

Recommended equity market positioning continues at a policy neutral stance with an expectation that we may see some routine consolidation given labor market dynamics and the nature of this narrow/modestly overbought market. Healthy earnings, accommodative policy, and resilient consumption are reinforcing a stay the course message. From a fixed income perspective, bond yields have remained rangebound, and we see no compelling evidence of that changing in the near term, so we are maintaining a neutral stance accordingly.

Financial Market Highlights

• Earnings reports re-confirmed massive, big tech capex intentions while circular AI relationships and index concentration issues continue to garner the ire of seasoned investors. 
• Corporate earnings for Q3 are on pace for another strong season with 10%+ growth. Importantly, the blended 12.8% profit margin is above the figure from one year prior and handily above the five-year average.

Economic Highlights

• Supports to consumer spending remain intact for both higher income (wealth effect) and lower income (gig economy) cohorts. To add, Federal workers should get back pay, and stimulative monetary/fiscal policies are on the horizon.
• Questions surround to whether the weakness in the labor market can be countered by the AI-driven economic growth and productivity boom.

Policy Highlights

• The FOMC continued its rate cutting campaign in October by delivering another 25bps cut. Notably, the FOMC called an end to its balance sheet reducing QT program due to signs of strained liquidity in the banking system.
• The U.S. government shutdown continued through October with primary debates still squarely focused on spending disputes surrounding enhanced ACA tax credits, Medicaid and SNAP.

Bullish Asset Allocation Narratives

• Productivity and the AI boom are complimented by strong earnings and persistent growth.
• Growth conducive policies across the monetary, fiscal, and regulatory landscape including a dovish
  Fed, stimulative fiscal budgets deficits, and business friendly regulation.
• Fading tariff policy uncertainty with administration officials aggressively pursuing trade deals and
  a potential judicial branch check on the use of the IEEP Act to levy trade taxes.

Bearish Asset Allocation Narratives

•  A Fed policy error amid inflation and labor distortions from tariffs, immigration limits, and pandemic aftershocks 
• Market concentration in AI momentum stocks marked by heavy FCF burn, soaring capex, circular investments, and lofty valuations.
• Consumer risk from higher rates, weak labor growth, lingering inflation, and strained balance sheets

Weekly Market Report: October 17th, 2025

Markets last week remained in a partial economic data vacuum due to the government shutdown but still had the first batch of third quarter earnings reports, ample Fed speak, and some subtle AI and credit undertones to shape trading. The week began with an S&P 500 recovery rally that held on for a 1.7% gain and international developed (+2.5%) and emerging (+4.3%) participated and benefitted from a weaker USD (- 0.55%). Bond yields fell, reflecting slowing growth and perhaps echoed some credit and AI momentum
concerns.

Financial Market Highlights

• Third quarter earnings season kicked off last week on sound footing with a 7.5% bottom line expectation on positively skewed guidance and modest upward street revisions. 
• Signs of credit stress at U.S. regional banks (ZION , WAL ) kept percolating last week. While equity markets have remained relatively sanguine, global high yield spreads have begun to widen.

Economic Highlights

• An Atlanta Fed 3.9% Q3 GDP forecast would typically coincide with accelerating employment yet the consensus outlook is currently centered on a decelerating growth outlook with capital expenditures , personal consumption, and the housing market; all key questions going forward.
• Sell side analysis of state level unemployment claims fell from 235k to 217k last week and thanks to social security statutory requirements, markets will get a CPI reading on Friday.

Policy Highlights

• With no resolution in sight on the government shutdown, the economic data vacuum continues.
• China is maintaining two trade war fronts with the Dutch government blurring the business and national security line further last week by taking control of a Chinese owned semiconductor company, Nexperia, due to “serious governance shortcomings.” This in addition to recent U.S./China narratives.
• New research from Alvarez & Marshall suggests deregulation in the banking sector is set to unlock a significant amount of lending capacity, boosting both EPS and ROE across the industry.

Bullish Asset Allocation Narratives

• AI momentum, healthy earnings and persistent growth continue against a relatively liquid backdrop.
• Monetary, fiscal, and regulatory policies including a dovish leaning Fed, business friendly deregulation, and front end loaded deficit spending package are all supportive for risk assets
• Tariff tax policy uncertainty is fading with administration officials aggressively pursuing

Bearish Asset Allocation Narratives

• Market reliance on AI momentum coupled with skepticism surrounding circular AI driven capex, realized productivity enhancements, and associated valuation/earnings considerations.
• A monetary policy mistake by the Fed of loosening too quickly given above target inflation, resilient growth, and persistently low unemployment.
• Risks to consumption given normalized interest rates, low growth labor markets, and a fatigued consumer balance sheet.
• Tariff levies moving to multi-decade highs and associated pressure on inflation, profit margins, and consumers with longer-term implications on growth, trade, and consumption.

Weekly Market Report: June 6th, 2025

Last week equity markets welcomed a soft inflation print as strengthening the case toward future Fed rate cuts but a significant escalation of conflict in the Middle East on Friday quickly dampened risk appetite globally. WTI oil spiked 13% to $72.98 and UST yields closed lower across the curve. Global equity markets closed lower for the first time in three weeks while emerging markets (0.40%) were up.

Market Anecdotes

• Armed conflict escalated in the Middle East last week as U.S.-Iranian diplomatic efforts failed and Israel launched strikes on Iranian military assets and nuclear infrastructure. Markets responded logically with surging oil prices and a risk-off tone across equity markets.
• Treasury auctions last week saw a relatively healthy 10yr where it traded through pre-auction yield for a fourth consecutive issuance. However, the FT highlighted the notable rise in long-term government bond yields and the weak USD which is back below its early April low.
• Indications of progress with U.S.- China trade talks last week were constructive but garnered a muted market reaction given renewed tariff threats from Trump, strategic tensions with China, and high effective overall tariff rates still in place.
• Bessent indicated in Congressional testimony last week that for the 18 major trading partners currently in negotiations, the deadline for reciprocal tariffs will be pushed out, assuming the U.S. feels negotiations are happening in good faith.
• Economic release highlights last week included a benign May inflation reading alongside improved confidence and sentiment in the NFIB and UofM indices respectively.
• Inflation, growth, and labor market data didn’t change market expectations for next week’s FOMC meeting where ‘wait and see’ is the guidance. Markets are not pricing in any rate cuts until the September meeting (67%), which is effectively a coin toss given how far out it is.
• In a reminder that private equity is no silver bullet to outperformance, the State Street private equity index through year end 2024 is underperforming the S&P 500 over 1-, 3-, 5-, and 10-year periods.

Bullish Asset Allocation Narratives

• Barring any inflation/interest rate surge, growth, employment, and the business cycle look to be simply cooling rather than falling into the prevailing recession narratives.
• A stimulative U.S. budget deal and business friendly deregulation are continuing to take shape in D.C. which should bolster growth dynamics in the U.S. as long as bond markets sign off.
• Trump has demonstrated a finite pain threshold with tariff policy induced angst as administration officials, financial markets, and public opinion press for resolutions to trade disputes and policy uncertainty. While not over, peak tariff panic is likely in the rear view.

Bearish Asset Allocation Narratives

•  The Fed may ultimately need to maintain restrictive monetary policy for longer than otherwise necessary due to resilient growth, tariff inflation pressures, and healthy labor markets.
• Upward pressure on U.S. interest rates due to fundamental and technical factors present unique challenges for politicians, investors, and economic growth with wide ranging implications.
• Policy uncertainty leading to negative business and consumer sentiment poses risks to employment (deferred hiring), business capital expenditures, and personal consumption.

Weekly Market Report: June 6th, 2025

Last week U.S. equity markets passed the 20% recovery mark, with the S&P 500 closing within 2.5% of the February record high. Constructive May job numbers and indications of the U.S.-Sino trade discussions fed the positive narrative with budget negotiations and reaffirmed Fed ‘wait and see’ approach to monetary policy filled the counter narrative. Bond yields moved higher last week with intermediate (2yr-10yr) maturities increasing double digits, pushing the 10yr back above 4.5% at Friday’s close.

Market Anecdotes

• The Mag 7 world has driven the 20%+ rebound in the S&P 500 since the April 8th low, accounting for a whopping 40% of the move.
• Global long bond yields have been moving higher, likely due to higher cost tariff driven restructuring of global supply chains. However, intermediate term yields and bond volatility have remained rangebound, suggesting fiscal deficit concerns have not yet revealed themselves.
• We have a stark mirror image in the first five months of the year with gold up 24.2%, its best initial five months with data back to 1975, and the USD down 8.4%, the second worst initial five months with data going back to 1967. International equities have benefited tremendously.
• As expected, tariff tax policy in April triggered the largest drop in U.S. merchandise trade on record (-19.8%), a dramatic 45% reduction in the merchandise trade deficit, a surge in Q2 GDP estimates, and a 51% increase in the inflation rate (1.35% to 2.05%).
• The CBO published its estimate of the fiscal impact of the OBB at $2.4t, excluding interest and assuming Congress will allow the tax cuts to expire in 5 years.
• Notable economic reports last week included generally positive labor market data and some mixed data in the form of ISM surveys indicating improving employment but rising prices.

Bullish Asset Allocation Narratives

• Barring any inflation/interest rate surge, growth, employment, and the business cycle look to be simply cooling rather than the prevailing recession narratives.
• A stimulative U.S. budget deal and business friendly deregulation are continuing to take shape in D.C. which should bolster growth dynamics in the U.S. as long as bond markets sign off.
• Trump has demonstrated a finite pain threshold with tariff policy induced angst as administration officials, financial markets, and public opinion press for resolutions to trade disputes and policy uncertainty. While not over, peak tariff panic is likely in the rear view.

Bearish Asset Allocation Narratives

• The Fed may ultimately need to maintain restrictive monetary policy for longer than otherwise necessary due to policy uncertainty, tariff inflation pressure, and a resilient labor market.
• Fundamental and technical factors in U.S. bond markets (upward pressure on rates present unique challenges for investors and economic growth with implications across the economy.
• Policy uncertainty is translating to negative business and consumer sentiment posing risks to employment (deferred hiring), business capital expenditures, and personal consumption.

Weekly Market Report: May 30th, 2025

Last week equity markets closed higher globally as tariff legal challenges took shape but late week narratives served reminders that tariff volatility is anything but over. The S&P 500 was up 1.9% to close out an impressive May where markets rebounded from volatility in April. Interest rates took a breather last week, falling 10-12 bps across most maturities taking 30yr yields back below 5%.

Market Anecdotes

• U.S. equity market returns relative to developed international markets requires close examination of productivity, regulation, and innovation over the long run with the former clearly outpacing the latter, despite near term performance separation.
• Bond markets continue to monitor U.S. fiscal package negotiations with great interest.
• Equity markets digested the U.S. Court of International Trade ruling which checked Executive branch tariff powers under the auspice of national emergency, but an immediate appeal from administration lawyers produced a temporary stay.
• Another late week tariff announcement saw Trump increase imported steel and aluminum tariffs from 25% to 50%, a protectionist move for the industry but at a higher price consequence.
• Bespoke noted a change in equity market behavior on days where trade/tariffs/trade wars dominate the news cycle which led to notable underperformance during March (-0.45%) and April (-0.89%) but drove notable outperformance during the month of May (+1.34%).
• Recent Fed developments include a read-out from Powell’s visit to the White House – likely bolstered by last week’s SCOTUS decision insulating the Chair and BOG from removal by POTUS and the release of May’s FOMC meeting minutes which reiterated the Fed’s wait and see stance.
• Last week’s economic release highlights included in-line U.S. PCE inflation (2.1%), surging Japanese inflation (3.6%), an upside revision to UofM consumer sentiment, rising jobless claims, and durable goods orders contracting as expected.

Bullish Asset Allocation Narratives

• A stimulative U.S. budget deal and business friendly deregulation are continuing to take shape in D.C. which should bolster growth dynamics in the U.S. as long as bond markets sign off.
• Trump has demonstrated a finite pain threshold with tariff policy induced angst as administration officials, financial markets, and public opinion press for resolutions to trade disputes and policy uncertainty. While not over, peak tariff panic is likely in the rear view.
• Barring any inflation/interest rate surge, growth, employment, and the business cycle look to be simply cooling rather than the prevailing recession narratives which may ultimately allow the Fed to loosen restrictive monetary policy toward the end of summer/early fall.

Bearish Asset Allocation Narratives

• Fundamental and technical factors in U.S. bond markets (upward pressure on rates) present unique challenges for investors and economic growth with implications across the economy.
• Policy uncertainty is translating to negative business and consumer sentiment posing risks to employment (deferred hiring), business capital expenditures, and personal consumption.
• The Fed overstaying restrictive policy due to pipeline inflation, high inflation expectations, and resilient labor market poses risks to growth.