Financial markets adopted a cautious tone this week as investors navigated limited visibility into the economy while the federal government shutdown reached its 38th day, the longest in U.S. history. Normally, the October jobs report would set the tone for growth and policy expectations, but the shutdown postponed its release and left investors without a key gauge of economic activity.
With most official data suspended, attention shifted to private indicators of economic strength. The ISM Services Index measured 52.4, suggesting steady growth, while the S&P Global U.S. Manufacturing PMI for October registered 52.5, signaling continued expansion. The ISM Manufacturing Index came in at 48.7, indicating mild contraction, and data from Automatic Data Processing (ADP) showed private payrolls rising by 42,000, reflecting modest job growth. The University of Michigan Consumer Sentiment Index for October was lower than expected, with both current conditions and consumer expectations down from last month. Together, these reports suggest the economy is maintaining moderate momentum, but the government shutdown and broader uncertainty may be beginning to wear on the consumer.
Investors also looked to the market for further guidance. The S&P 500 fell about 1.7% for the week as investors remained cautious amid the data blackout and political uncertainty. Bond yields were little changed, reflecting steady expectations for growth and inflation, with the 10-year Treasury near 4.08% and the 2-year around 3.54%. Oil traded near $60 per barrel, while gold eased to around $3,997 per ounce. Corporate earnings provided support, with many S&P 500 companies reporting stronger than expected results, helping to reinforce market resilience despite macroeconomic headwinds.
Overall, market sentiment remains cautious but constructive. The modest pullback in equities, steady bond yields, and softer commodity prices suggest expectations for slower but sustained growth. The economy appears stable, though constrained by political uncertainty. Chandler anticipates a gradual cooling of the economy through year-end, with inflation holding modestly above the Fed’s 2 percent target and recent tax changes providing support for growth in early 2026.
Against this backdrop, Chandler remains positioned with a modestly longer duration relative to benchmarks, anticipating that the yield curve will continue to steepen as monetary policy becomes more accommodative.
Next week (US Government data may be delayed by shutdown): NFIB Small Business Optimism, Consumer Price Index (CPI), Retail Sales, Producer Price Index.
© 2025 Chandler Asset Management, Inc. An SEC Registered Investment Adviser. Data source: Bloomberg, Federal Reserve, and ADP. This report is provided for informational purposes only and should not be construed as specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as an indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation, or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest rate, credit, and market risk. Interest rate risk: The value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low-rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market, in general, could decline due to economic conditions, especially during periods of rising interest rates. S&P 500 – The S&P 500 is a market value weighted index of 500 large-capitalization stocks. The 500 companies included in the index capture approximately 80% of available US market capitalization.
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