Weekly Market Update for October 10, 2025
by Jared Plotz, Director of Research
The government shutdown entered its second week with few signs of a near-term resolution, as both sides of the political aisle dug their heels in further. Markets were higher on the week entering Friday, with a Gaza peace plan announced which yielded a ceasefire between Israel and Hamas. Then on Friday, President Trump stated that ongoing discussions with China on trade had taken a negative turn, and the markets reversed course. The S&P 500 finished the week down -2.7%, while the Nasdaq fell -3.6%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.06%, down -6 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, rose +1 bp to 3.83%.
Economic data flow remains lighter than usual amidst the government shutdown; however, the backdrop remains fairly solid. Labor downside risks persist while consumer spending is holding steady. The University of Michigan’s October data suggested consumer sentiment was relatively unchanged versus a month ago, still at relatively low levels.
While Friday marked the 10th day of the government shutdown, investors have yet to show much concern on the issue. We have not seen widespread federal layoffs, though chatter on Friday suggested that they may begin shortly. Meanwhile, even without layoffs, many federal workers risk seeing reduced or missed paychecks soon. This could begin impacting consumer sentiment and spending.
Gavyn and I took the opportunity to listen to Federal Reserve Board Governor Michael Barr speak to the Economic Club of Minnesota on Thursday (photo below). Governor Barr discussed a number of pertinent issues, including the labor market and inflation, ultimately voicing a more cautious stance to future policy adjustments amidst heightened inflation risks. Meeting minutes from the Fed’s September gathering, released Wednesday, also signaled a guarded approach. The group hopes it will have the typical economic data it needs before its next meeting during the last week of October.
Next week, the third-quarter (Q3) earnings season will begin in earnest for public companies, with the Big Banks reporting results starting Tuesday. Company results will dominate the calendar over the ensuing month. Also on Tuesday, the NFIB Small Business Optimism Index is released. Next week, CPI and PPI inflation readings will be delayed until 10/24. The Bureau of Labor Statistics plans to bring back staff to finish those reports since the Social Security Administration needs the Q3 CPI to calculate cost-of-living adjustments before November. The longer the shutdown lasts, the bigger the data vacuum may become, making business decisions and the Federal Reserve’s macroeconomic policy adjustments more difficult.
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