Market Recap: 29 September – 3 October 2025
Financial Markets
US Stock Market
This week the main US stock market indices were positive again, with the S&P500 and the NASDAQ 100 gaining 1.1% and 1.2%, respectively. The small cap index (Russel 2000) pushed up by 1.7%, hitting the historic maximum. Trading volumes were average.
COMMODITIES
Precious metals continued climbing. Gold and silver gained 3.4% and 4.2%, respectively. Gold is at a new all-time high of 3885$. Silver continues strong and will likely have some resistance around 48$, the historic maximum.
WTI crude oil fell 7% down to 60.7$/bbl. In the short term, the trading range should be 60-67$ and in the medium term 55-77$/bbl
Bitcoin is pushing through the roof, as it hit 125022$, a new all-time-high. If bitcoin falls, 100k$ and 93k$ should act as supports for the cryptocurrency.
US DOLLAR, MONEY SUPPLY
The relative strength of the US dollar (DXY) fell to 97.7. The EUR/USD is around 1.174$, the GBP/USD is at 1.348$, and the USD/JPY is at 147.46 JPY.
US M2 money supply at the date of 25th August 2025 was up by 0.36%, showing a continuous increase in the money supply since December 2023. Banks didn’t stop lending so far – if the money supply was going down, it would be a warning sign for the economy and equities.
The national financial conditions index (NFCI) released on 22nd September 2025 loosened by 0.13%. Note that this indicator is delayed by two weeks. Positive numbers in the NFCI mean tighter financial conditions, while negative numbers indicate looser financial conditions.
BONDS AND OPTIONS
US bond yields fell slightly this week. Yields now sit at 3.576% for the 2-year and 4.121% for the 10-year. The yield curve has uninverted since a year ago, an expression of expectations for low growth, low inflation, and short-term interest rate cuts. Long-term growth and inflation expectations are at ~4.7%.
The VIX was little changed, closing the week at ~16.6, showing investor complacency and optimism. The overall market remains quite expensive and options premiums are not very attractive at this moment – option sellers need to be patient and particularly selective regarding which contracts to sell.
Comment Section
This week we witnessed another US government shutdown. Under the US system, the different branches of government have to reach an agreement on spending plans before they can become law.The Republicans currently control both chambers of Congress. But in the Senate – or upper chamber – they are short of the 60 votes needed to pass the spending bill, which gives opposition Democrats some negotiating power. They want to see an extension of expiring tax credits which make health insurance cheaper for millions of Americans, and for a reversal of Trump’s cuts to Medicaid, a government healthcare programme used by millions of elderly, disabled and low-income people. Democrats also oppose spending cuts to government health agencies. A stopgap bill designed to avoid the shutdown was passed in the House, or lower chamber, but did not clear the Senate. On October 1, 2025, the federal government of the United States began a shutdown at 12:01 a.m. EDT as a result of congressional inaction on passing appropriations legislation for the 2026 fiscal year, which began that day. The shutdown resulted from partisan disagreements over federal spending levels, foreign aid rescissions, and health insurance subsidies. The shutdown resulted in the furlough of roughly 800,000 federal employees and left another 700,000 working without pay. While essential services such as Medicare, Medicaid, and the Transportation Security Administration continued, many agencies, including the National Institutes of Health, the Centers for Disease Control and Prevention, and the WIC program, faced partial or full suspensions of operations. The shutdown is the eleventh in U.S. history resulting in curtailment of government services, and the third under President Donald Trump. It is the first U.S. federal government shutdown since the 2018–2019 shutdown.
As of early October 2025, the primary reason for U.S. economic indicators not being released is a government shutdown, which has halted data collection and release. This shutdown impacts the Bureau of Labor Statistics (BLS) and other government agencies responsible for producing key indicators, such as employment figures.
The US government shutdown is not a new phenomenon. Likely, in a few days, an agreement will be reached and normal operations will resume. For now, the markets have totally ignored the situation and there is no response either in the bond market or the stock market.
Recycling the closing paragraph of last week… The movements in the markets were not overly reactive and equity markets in general look like they are reaching a top. A slight correction (up to 10%) wouldn’t be a surprise. However, although expensive, equities seem stable, and we cannot foresee what catalyst may change the narrative in the short term. Thus, a continuing drift upwards (until the end of the year) wouldn’t be surprising either. This is the time to keep looking for opportunities and avoid the overly expensive and hyped tech stocks! And maybe keep some cash for maneuvering in the case of a correction.
Have a nice weekend, and good luck!!!
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