Weekly Market Update (Sep 28, 2025)
HIGHLIGHTS
Investors are being cautious although S&P500 is near its all-time high level. A US government shutdown next week appears highly likely.
- Dollar: Due to the normalizing cross-asset correlations in the recent weeks, markets became more uncertain about the scope for further dollar weakness. The urgency to reduce USD exposure has decreased.
- US Job: The lack of job creation is likely to be driven by the oversupply issue instead of a decrease in labor demand. The economy is in a no-fire no-hire situation. Markets believe that the weakness in job market will not continue to the level of significant job losses.
- Government Shutdown: If there is a shutdown, it will begin on 1 October. Not all workers will be affected. Employees who work will receive pay when the shutdown ends. Interest payment on debt will continue to be paid and Treasury auction will also work as usual. Government data would be suspended during shutdown, while Fed and private sector data will continue to publish.
MARKETS
| Nasdaq | 22,484.07 | -0.65% |
| S&P 500 | 6,643.07 | -0.32% |
| Dow | 46,247.29 | -0.15% |
| 10-Year | 4.19% | +5bps |
| Brent | 70.13 | +6.19% |
| DXY | 98.18 | +0.54% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
Goldman Sachs: Investors’ risk appetite is growing, supported by the great performance in IPO. The average IPO this year increased 30% on the first trading day.
UBS: Valuation is a function of the macro environment, and they have little relationship with the near-term return. The 12-month forward price-to-earnings ratio of S&P500 hit 22.9X. However, high valuations are not a clear signal for returns over the next 12 months historically.
Fixed Income
Barclays: Bond markets have reflected the concerns about the fiscal dynamics in different countries. US became better after factoring in tariff revenue. Non-US long-duration holders should expect spikes in term premia from time to time.
UBS: Non-US bond is preferable due to the continuous USD weakness. We recommend EM local currency bond, with the support of US rate cuts.
Economy
Barclays: EU’s economy has been unexpectedly resilient in recent years, and likely to grow in the coming quarters. Markets expect major economies like US, EU and China will grow steadily this year, amid the backdrop of trade war.
UBS: Fed fund rate is still above its neutral rate. We believe it has room to cut more before the risk of inflation gets higher. It is likely that Fed is prioritizing labor market weakness over inflation.