October 11, 2025 Market Update

Market Recap

President Trump threatened China with stiff new tariffs. Mr. Market didn’t take the news well.

Tariffs took center stage again this past week as President Trump’s renewed threats to raise duties on China spooked the markets.  Major equity indexes saw sharp declines, sparking a flight to safety that sent investors toward bonds and gave assets like gold and silver yet another chance to shine.

Yields moved dramatically lower on Friday after easing midweek on softer jobless claims and consumer spending data, reinforcing expectations that the Federal Reserve would cut rates further before year-end.

The crosscurrents left investors struggling to reconcile optimism about innovation with unease about slowing growth.  Until that changes, markets are likely to remain in a holding pattern.

Market Commentary

The price of gold hit $4,000 per ounce for the first time last week and is up more than 50% so far this year.  Will it continue?

There are several reasons for the ongoing bullion rally, including political turmoil in the U.S. and abroad and expectations for interest rate cuts, which make gold, which doesn’t pay interest, more competitive with other interest-bearing safe havens such as cash and bonds.

But perhaps the most disconcerting reason for gold’s surge in popularity is the so-called “debasement trade”: the view that massive government borrowing and rising fiscal deficits will erode the value of paper currencies over time.

With federal debt still climbing and no sign of fiscal restraint, some investors see gold not only as a hedge against a stock market correction, but also as protection against a slow dilution of the purchasing power of the dollar.  In that sense, gold has acted as a kind of Goldilocks hedge—one that has made money even as stocks move higher.

Whether the rally will continue likely depends on the duration of investors’ worries about fiscal excess and a lack of policy restraint.  If interest rates edge lower and deficits keep climbing, gold’s appeal as both insurance and opportunity is likely to persist.  But buyer beware; momentum cuts both ways, and shifts in direction can occur suddenly.

In Case You Missed It

The stock market has risen during each of the last six government shutdowns, with the S&P 500 gaining an average of 0.3% during shutdowns that have occurred since 1976.