Here are the highlights of the past quarter. Please download the attached full report for more details.
● The Seasonally Adjusted Annual Rate for GDP in 2Q25 rose a strong 3.8% as AI-related spending,
including infrastructure spending to support future AI demand, boosted US growth, while proposed
tariffs had yet to meaningfully impact the economy.
● The unemployment rate rose to 4.3% in June and revisions by the BLS cut job growth for the 12
months ending in March by half.
● CPI Inflation has been coming down marginally in 1H25 but has stalled recently and rose 2.9% YoY
in August, up from 2.7% YoY in July as the recent increase in tariffs is showing up in numbers.
While the FED was on hold for 1H25, they lowered the overnight rate by 0.25% in September and
indicated potentially two more cuts in 4Q25 with further cuts in 2026.
● The S&P 500 had another strong Q, increasing 7.8% for 3Q25. Technology (13.04%) and
Communication Services (11.82%) led the sectors while REITs (1.73%) and Materials (2.63%) were the
laggards.
● The 10-year Treasury bond yield decreased by 8 bps during the quarter to end at 4.15%, leading
to a slight increase in bond prices. The Aggregate US Bond Index increased by 2.0% in 3Q25, and was
up 6.0% YTD.
● The price of gold rose 15.12% in 3Q25 and was up 47.0% YTD.
● We favor investment grade intermediate term bonds. While long-maturity bonds offer higher price
appreciation in a recession scenario, the yield difference versus intermediate bonds is too small
for the elevated risks of future declines if the US does not reduce fiscal deficits.
● We recommend bond ladders of IG Intermediate bonds with attractive yields but we expect less
price appreciation than in the past with almost all bond returns coming from the coupons going
forward.
● Short term interest rates follow the FED rate. The FED cut rates by 25 bps in September and is
guiding to 50 bps of cuts in 4Q25 and further cuts in 2026, indicating reductions to money market
returns. With this in mind, we recommend investors to term out cash positions not needed for
liquidity purposes.
● Studies show that market timing typically produces inferior returns. We encourage
diversification and a focus on working towards financial planning goals.
Click the link below for more details and information on specific market sectors.
