October 2025 Insights

The S&P 500 Index advanced 3.5 percent in September, supported by the Federal Reserve’s decision to cut interest rates and a surge in capital spending on artificial intelligence (AI) data centers. These investments helped lift corporate earnings among many large-cap technology firms, which led the market higher. Meanwhile, the yield on the 10-year U.S. Treasury Note declined to 4.16 percent from 4.23 percent at the end of August, and oil prices slipped roughly 2 percent to about $62.50 per barrel.

The standout performer for the month and year-to-date – was gold. The yellow metal rallied 12.6 percent in September, climbing to a record high well above $3,800 an ounce. Strong central bank demand, coupled with investors’ efforts to diversify their portfolios, drove much of the move. Gold’s ascent accelerated after the U.S. froze Russian foreign assets, prompting countries to turn to gold as a hedge against a weaker dollar, geopolitical tensions, and unpredictable trade policies. Additionally, rising U.S. debt levels and the Trump administration’s preference for a softer dollar have altered global demand dynamics. Some central banks have even begun cutting rates despite persistent inflation, as governments seek to spend their way out of mounting debt burdens.

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The S&P 500 index overcame an early 3 percent pullback in the first days of August—driven by weak employment data—to finish the month with a 1.9 percent gain on renewed optimism for a potential Federal Reserve rate cut.

The bond market also reflected shifting expectations. The yield on the 10-year U.S. Treasury Note declined from 4.37 percent at the end of July to 4.23 percent by the end of August. In commodities, West Texas Intermediate crude oil eased from just over $69 per barrel to roughly $64.

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Despite months of trade tariff turmoil, the S&P 500 gained roughly 2.1 percent in July, reaching a new all-time high. Yields on the 10-year U.S. Treasury rose to 4.37 percent, up from 4.24 percent at the end of June, while crude oil climbed about 6 percent to nearly $69.70 a barrel.

The Federal Reserve left interest rates unchanged, maintaining its target range for the federal funds rate at 4¼ to 4½ percent. Corporate earnings have generally been solid, but markets were rattled by a sharp downward revision to recent U.S. job growth data.

The United States and the European Union have reached an agreement imposing a 15 percent tariff on most goods imported from the EU—down from the threatened 30 percent rate but still a substantial increase from the near-zero tariffs that existed previously. The key question now is who will ultimately bear the cost of these tariffs. If European companies absorb the expense, they may face reduced profit margins, potentially leading to job cuts. If the costs are passed on to consumers, higher prices could trigger secondary and even tertiary economic effects.

The U.S. also reached a parallel deal with Japan, setting a 15 percent baseline tariff on Japanese imports and securing a pledge of $550 billion in Japanese investment in the U.S. economy. However, shortly after the announcement, Japanese officials stated that Washington’s public description of the deal differed from their understanding of the terms, raising concerns about possible disputes down the road.

Separately, the U.S. and China agreed to a temporary trade truce. Under the arrangement, the U.S. will maintain 30 percent tariffs on Chinese goods, while China will continue retaliatory tariffs of 10 percent on U.S. exports. The truce is currently set to expire on August 12, 2025, but expectations are high that it will be extended.

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Over the past few months, markets have been roiled by a series of extraordinary and unusual events—many of which might only occur once in a decade. Amid heightened uncertainty stemming from protracted tariff negotiations, geopolitical tensions in the Middle East surged as conflict escalated between Israel and Iran. In a dramatic development, the U.S. deployed B-2 bombers over a weekend to strike Iran’s nuclear facilities, prompting a swift decline in equity market futures.

Oil prices surged to approximately $78 per barrel on concerns that Iran might retaliate by disrupting the oil supply route through the Strait of Hormuz. However, as fears eased, equity futures recovered, and oil ultimately ended the month of June near $65 per barrel.

A tentative ceasefire agreement between Israel and Iran—fragile though it may be—provided further relief, helping markets rally. For the month of June, the S&P 500 rose 4.96 percent, while the yield on the 10-year Treasury fell roughly 17 basis points (0.17%) to 4.24 percent.

To underscore just how extreme this market environment has been: the NASDAQ Composite posted its worst start to a year through mid-April since its inception, only to reach an all-time high by the end of June—a remarkable reversal.

Despite market enthusiasm surrounding tariff developments, the actual substance behind the headlines has been minimal. Much of the optimism is based on pauses or vague assurances rather than concrete agreements. For instance, Commerce Secretary Lutnick claimed that a trade deal with China had been completed, a statement echoed by President Trump, who then acknowledged a signed trade “truce” with China—a notable improvement when contrasted with the earlier threat of 145 percent tariffs. Still, significant challenges remain. China has reportedly imposed a six-month limit on rare-earth exports, and many semiconductor firms remain in the dark about what trade rules with China will ultimately look like.

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The S&P 500 rallied 6.1 percent in May, though persistent tariff-related uncertainty continued to weigh on market sentiment. The primary driver behind the month’s gains was a temporary easing of trade tensions between the U.S. and China. Both countries agreed to a 90-day pause on reciprocal tariffs: China committed to reducing import duties on U.S. goods from 125 percent to 10 percent, while the U.S. lowered tariffs on Chinese imports from 145 percent to 30 percent – which includes a 20 percent levy tied to China’s production of fentanyl-related products.

However, market volatility resurfaced on May 23 when President Trump threatened a 25 percent tariff on Apple unless the company moved iPhone production to the U.S. That same day, he posted on social media recommending a flat 50 percent tariff on European Union imports starting June 1. Markets rebounded after Trump later announced a delay in the EU tariffs until July 9, following what he described as a “very nice call” with European Commission President Ursula von der Leyen.

Tensions flared again on May 30 when the President accused China, via social media, of “totally violating its agreement with us.” Further complicating the picture, the U.S. Court of International Trade ruled that the administration had exceeded its authority in imposing sweeping tariffs on nearly all foreign nations. An appeals court subsequently issued a temporary stay, allowing the tariffs to remain in effect for now.

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April brought extreme volatility across global financial markets, with sharp swings in stocks, bonds, currencies, and commodities. Much of the turmoil was sparked by President Trump’s unexpected implementation of “Liberation Day” tariffs, which marked a sharp departure from the initially discussed reciprocal and parity-based proposals.

The S&P 500 plunged more than 11 percent over a three-day span, only to rebound 9.5 percent in a single day following news of a 90-day pause on the tariffs—excluding China. For the month, the index ended down 0.76 percent.

Bond markets also experienced significant disruption. The yield on the 10-year U.S. Treasury surged from 4.01 percent on April 4 to 4.59 percent just five days later, reportedly driven by aggressive selling from Japan. By month-end, yields had eased to 4.17 percent.

Commodities were not immune. West Texas Intermediate crude oil fell 18 percent, closing near $59 per barrel. Gold briefly hit an all-time high of $3,500 per ounce before settling at approximately $3,318.

The volatility was set in motion on April 2, when President Trump issued an Executive Order declaring a national emergency. The order cited “a lack of reciprocity in our bilateral trade relationships, disparate tariff rates, and non-tariff barriers.” One example: the U.S. imposes a 2.5 percent tariff on imported gasoline-powered passenger vehicles, while the European Union levies a 10 percent tariff.

While the idea of reciprocal tariffs resonated with many, the administration’s initial actions went well beyond parity. The tariff hikes also targeted non-tariff barriers—such as currency manipulation, regulatory hurdles, government subsidies, and persistent trade deficits—taking markets by surprise.

Historically, sharp sell-offs are often followed by equally strong rebounds. The real question now is: where do we go from here?

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Over the past few months, market sentiment has shifted from optimism to heightened uncertainty, driven by concerns over tariffs, government spending cuts, rising prices, and a sharp decline in consumer spending. In February, the S&P 500 fell 1.4 percent, accompanied by increased volatility across financial markets.

Interest rates on the 10-year U.S. Treasury Note dropped from 4.58 percent at the end of January to 4.24 percent, reflecting growing worries about a slowing economy. Meanwhile, oil prices declined by approximately $5 per barrel over the past month, settling at $70.

Adding to market turbulence, President Trump announced plans to impose 25 percent tariffs on Canadian and Mexican imports beginning March 4, 2025, along with an additional 10 percent tariff on Chinese goods — on top of the 10 percent already implemented in February. This has fueled volatility, particularly as China and other affected nations have vowed to retaliate.

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The optimism sparked by Donald Trump’s election, fueled by hopes for less regulation and lower taxes, hit a snag in December. The S&P 500 index fell 2.5 percent during the month, while interest rates on the 10-year U.S. Treasury Note climbed from 4.18 percent at the end of November to 4.58 percent by December 31, 2024. This increase reflected market unease following Federal Reserve Chairman Powell’s efforts to justify a December rate cut. At the same time, oil prices rose over 3 percent, closing the year at approximately $71.72 per barrel.

In late December, President Biden signed a continuing resolution that funds the government through March 14, 2025. The legislation also includes emergency disaster aid for hurricane-affected communities and support for farmers. This action averted another potential government shutdown. Notably, Congress last completed the full budget process with all appropriation bills on time in 1996.

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Following the highly anticipated presidential election, the S&P 500 index rallied 5.7 percent in November and closed above 6,032 for the first time.  This advance was driven by the resolution of election uncertainty and the absence of a contested outcome, which prompted the unwinding of negative bets and a wave of fresh capital investments.  Meanwhile, the 10-year U.S. Treasury Note saw its yield decline by 10 basis points (0.10%) during the month, ending at 4.18 percent, as the Federal Reserve implemented its second interest rate cut of the year.  Oil prices remained relatively stable, holding just below $69 per barrel.

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