Articles & Commentary

Executive Summary 

Amidst ongoing US policy unpredictability and signs of a softening labor market, the US economy and markets have continued to demonstrate notable resilience. A long-awaited Federal Reserve interest rate cut, and strong corporate earnings supported equity and credit markets – yet policy shifts, elevated stock valuations, and ongoing geopolitical tensions continue to pose potential headwinds. Looking back on the third quarter and ahead to the remainder of 2025 and the new year, several trends seem to be emerging.

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After considerable volatility from late February through April, markets have stabilized and have reached new record highs, seemingly unaffected by persistent uncertainty. Although unpredictable tariff policy, unprecedented executive actions, and a budget bill projected to dramatically expand the federal deficit remain ongoing concerns, market volatility in response to these developments has diminished.

Firings of senior officials – including those responsible for overseeing the collection and reporting of key economic and statistical data – could threaten the integrity and reputation of the organizations along with the financial market’s confidence in the data they provide. Even before these dismissals, we believe there was a noticeable decline in the quality of inflation statistics, with the Bureau of Labor Statistics increasing its use of estimates from a historical average of 10% to 30%.¹ As we examine the economy and markets, we note that the relationship between data and market responses may be evolving.

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