Market Insight

As we enter the fourth quarter and review 2025 to date, we suggest that investors have responded to the altered trade and economic landscape favorably despite significant policy changes. Investors did not succumb to the exaggerated possibilities for any appreciable length of time. The negative economic scenarios that some pundits put forth never materialized. Instead, investors examined data, “looked through” the noise, and realized robust performance by being patient and not overreacting. In our opinion, the Federal Reserve has applied the same methodology to its analysis of monetary policy. Historically, the Fed has sometimes been accused of being late on its actions. This has been a consistent and possibly a partially correct accusation. However, the nature of the Fed’s work and analysis is data-dependent, which means the data represents activity that has already occurred. While the Fed utilizes some proprietary, non-public economic data, models, and tools, they also must rely on reports simultaneously available to the public. In most cases they do not obtain information significantly before the public does. With inflation closer to 3% than 2%, we think the Fed has been on the right path. Now that employment figures are softening, the time is right for further interest rate cuts which we expect this year into next.