September 20, 2025 Market Update

Market Recap

Stocks climbed this week as Mr. Market welcomed the Federal Reserve’s first rate cut of the year (discussed below). Optimism that an easing cycle is underway was reinforced by a larger-than-expected drop in jobless claims, helping lift sentiment across sectors.

In the bond market, Treasury yields were choppy as investors weighed the Fed’s next steps. The 10-year yield finished the week around 4.14%, with short-term yields also edging higher. Credit markets fared better than Treasuries, as investors sought yield in riskier assets under expectations of looser financial conditions.

Taken together, the week’s moves reflect investors willingness to focus on near-term policy support while keeping one eye on lingering risks. Commodities such as gold and silver drew steady demand, a reminder that concerns about inflation and slowing growth haven’t disappeared.

Market Performance

Market Commentary

The Federal Reserve cut its short-term interest rate by 25 basis points last Wednesday, lowering the target range to 4.0–4.25%.  A narrow majority of Fed voters expect two more quarter-point reductions to follow before year-end.  But that wasn’t the whole story. 

The decision came against a backdrop of heightened political pressure on the Fed.  President Trump has argued publicly for deeper rate cuts to stimulate the economy, particularly the housing market.  His attempt to sway policy hit a setback earlier in the week when a federal appeals court rejected an attempt by his administration to remove Governor Lisa Cook from the Fed board.

Still, Trump notched a win when the Senate narrowly confirmed his economic adviser, Stephen Miran, to the Fed.  Miran wasted no time making his presence felt, dissenting from Wednesday’s decision in favor of a larger, 50 basis point cut.

For investors, the developments raise a broader question: while markets may welcome near-term stimulus, is a short-term rally worth the risk if politics begin to steer monetary policy more than data?  Stay tuned.

In Case You Missed It

Badger football fans appear to be losing patience with Head Coach Luke Fickell, with some going as far as calling for his termination.  By one estimate, buying him out of the 4 years that will remain on his contract after this year would cost the University approximately $25MM.  Ouch.