Latest / Markets with Megan: A Quick Financial Markets Update / Record Highs or Just High Hopes? | S2 E087 | 10-08-25

Transcript

Record Highs or Just High Hopes? | S2 E087 | 10-08-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan: Well, the Federal Reserve's helping the markets make fresh new record highs.
• 0:04
  Megan: It is Wednesday, October the 8th, and this is Markets with Megan.
• 0:07
  Megan: If you like this podcast, please subscribe.
• 0:09
  Megan: You can hit that alarm bell, share with friends, family, or colleagues.
• 0:12
  Megan: But we're here today to break down some of the data that we received and what that's meaning for the markets, especially what does that mean as we go into the end of 2025?
• 0:21
  Megan: First of all, we're still in the middle of a government shutdown, so we're not receiving all of our economic data that we discuss on this podcast.
• 0:29
  Megan: But we did get the minutes from the Federal Reserve meeting in September.
• 0:34
  Megan: And we like to look at these minutes.
• 0:36
  Megan: They come out a month later, primarily because we get more details into what was actually discussed as opposed to just what we get on the day of the meeting, which is a press conference, just a basic statement, as well as the dot plots are where the Federal Reserve thinks rates are going forward.
• 0:53
  Megan: Let's break down some of the key things out of these meeting minutes.
• 0:57
  Megan: Um, they did show the willingness to continue to cut interest rates, but they did show a bit more concern about inflation.
• 1:04
  Megan: This was a little bit more than we than we really got and a suggestion when they came out with that initial statement, but they are concerned about inflation.
• 1:13
  Megan: Now, when we talk about the dots or plots or where the Federal Reserve officials think interest rates will be over the coming months, there is baked in basically two additional quarter rate cuts by the end of this year, in one in October and then one in December.
• 1:31
  Megan: But there was a significant amount of uh division in the committee.
• 1:35
  Megan: When you look at six of the 19 participants in the committee, actually only saw one rate, one more rate cut, or none at all by the end of this year.
• 1:45
  Megan: So this is a very mixed Federal Reserve.
• 1:48
  Megan: It's a difficult situation for the Fed because we're not getting economic data until the government reopens.
• 1:54
  Megan: So they talked about the labor market.
• 1:56
  Megan: They're not concerned about a rapid drop in employment, um, and they're not concerned about some sharp deterioration, but they do see those risks as balanced now, that there is some weakening in the labor market that does warrant at least the one rate cut we got in September and possibly one or two more for the remainder of this year.
• 2:17
  Megan: Now, we look at what the markets are doing after we receive these minutes, bond yields are slightly, slightly higher.
• 2:24
  Megan: And that's because there was some expectation that we'd get maybe a 50 basis point rate cut at one of the meetings, or at least you know, three rate cuts for the remainder of the year, but it looks like we'll just get one, maybe two.
• 2:37
  Megan: Um, equities are still higher though.
• 2:39
  Megan: They continue to make record highs, and you're seeing the dollar rise today.
• 2:43
  Megan: We saw a pretty big jump in the dollar.
• 2:45
  Megan: That's the highest we've seen since um the beginning of August.
• 2:48
  Megan: So you're getting some increase in demand here for these US-based assets.
• 2:53
  Megan: In our opinion, we think this is a very difficult situation to predict because we are more concerned about inflation than the Fed would suggest.
• 3:02
  Megan: And obviously, as the markets are when we look at valuations here continuing to creep higher.
• 3:07
  Megan: This, if the inflation does continue on this trajectory where we've seen it been going, where it's been slightly inching higher again, this is going to take some of that steam out of the market because market participants are pricing in this perfect situation from an inflation standpoint.
• 3:23
  Megan: Now that's all we have today.
• 3:25
  Megan: There's one more piece of economic data that we could come out with this week.
• 3:29
  Megan: Um, it's the University of Michigan Consumer Sentiment Index, and that is because it's a privately produced survey.
• 3:36
  Megan: So that is not um being held, I guess you could say, with up with this government shutdown.
• 3:41
  Megan: We'll hope we get some um some conclusion to this shutdown by next week so we can get back to reporting this economic data for you.
• 3:48
  Megan: Thank you.
• 3:49
  Megan: And if you want a history of our podcast, you can go to marketswithmegan.fm.
• 3:52
  Megan: Thank you.