The Week Ahead - 09/29/2025

The Week Ahead: Cuts, Shutdown Risks, and Safe-Haven Surge

The Daily Brief - 09/29/2025

Markets start the week cautiously optimistic: equities are firmer as investors digest a Fed downshift while bracing for a potential U.S. government shutdown. Lower rates support duration and rate‑sensitives; gold has surged to records as safe‑haven demand builds. Oil softened on supply restoration, easing inflation pressure at the margin. With valuations rich into earnings, guidance and margins will drive dispersion—and any data blackout would magnify volatility on reopening.

Shutdown Risk: Data Blackout and Fiscal Spillovers

A lapse in funding would cloud macro visibility and nick Q4 growth. With CR efforts failing, agencies are preparing furloughs ahead of a potential 12:01 a.m. Oct. 1 shutdown, and leaders meet Monday. A shutdown would delay jobs, inflation, and retail sales data, tighten cash flow for contractors, and dent confidence—especially if it extends beyond days.

Maintain higher liquidity buffers and expect noisy data on reopening.

Fed Cuts 25 bps, Maps Soft-Landing Path

Easier policy lowers funding costs while keeping options open. The Fed lowered the target range to 4.00%–4.25% (11–1), with Powell citing risk management amid softer labor. The SEP points to core PCE ~3.1% in 2025, unemployment ~4.5% in Q4‑25, and a median funds rate ~3.6% by Q4‑25, with markets eyeing another cut as soon as October.

Duration extension and quality growth/rate‑sensitives remain supported.

Oil Slides on OPEC+ and Kurdistan Supply Return

Cheaper crude eases inflation but pressures upstream cash flows. WTI fell ~1.8% to $64.52 and Brent ~1.7% to $68.09 as OPEC+ signaled a November increase (~137 kb/d) and Iraqi Kurdistan exports resumed (180–190 kb/d initially). Added barrels, steady U.S. output, and soft manufacturing outweigh winter demand and geopolitics—for now.

Tilt to downstream/integrated; be selective in high‑cost E&Ps.

Gold Hits Record Above $3,800

Falling real yields and official buying fuel the rally. Spot touched ~$3,860 and holds near ~$3,833, up ~45% YTD with three straight quarterly gains. Fed‑cut expectations, central‑bank diversification, ETF inflows, and geopolitics powered the $3,800 breakout; technicians now eye $4,000.

Core bullion hedge intact; rebalance on pullbacks toward support.

Earnings Season: High Bar Meets Premium Multiples

Elevated valuations raise penalty for misses and shaky guidance. Q3 S&P 500 EPS is tracking +7.9% y/y (ninth straight quarter) with an unusually positive guidance skew. Yet the forward P/E ~22.5 (vs 5‑yr 19.9) leaves leaders needing clean beats, while 2025–26 EPS growth of ~11–14% anchors expectations.

Expect dispersion; favor quality compounders with balance‑sheet strength.

Quick Hits

Equities resilience: Futures firmer; YTD gains (Nasdaq ~16%, S&P ~12.8%) broaden, but rich P/Es demand clean prints.
Inflation pulse: PCE ~2.7% y/y; core just under 3%—above target, not re‑accelerating; shutdown could delay prints and blur policy signals.
Labor cooling, not cracking: Unemployment ~4.3%, August payrolls ~22k, participation ~62.3%; slower hiring aligns with a controlled cooldown.
Crypto divergence: Bitcoin rebounded ~5% to ~$114k as altcoins lag; regulatory progress builds institutional rails, but breadth stays thin.
Geopolitics/trade policy: Ukraine strikes sustain risk premia; tariff/exemption tweaks and MFN drug‑pricing push add sector noise—watch healthcare margins and industrial supply chains.

Shutdown Risk Meets Record Gold: A Volatile Week Ahead