The Fed, U.S.-China Meeting, Halloween, Oh My!
October 27, 2025
Last week ended with the September U.S. Consumer Price Index (CPI) data coming in cooler than expected.1 The market viewed this as the latest affirmation that the Federal Reserve (Fed) will be able to continue its rate-cutting cycle. While the 10-year Treasury yield initially rallied on the report, it finished the day relatively unchanged at around 4%.2
On the other hand, the S&P 500 Index rallied following the report, closing near all-time highs and posting a year-to-date (YTD) gain of over 15%.3 This morning, the move higher in stocks continues, and the risk-on trade is resulting in slightly higher rates, with the 10-year yield moving above 4%.4 Corporate earnings continue to come in better than expected. Capital markets have demonstrated their openness and willingness to accommodate new forms of large capital raises.
This week includes several key events that the market will be watching closely. First, risk markets are opening on a positive note due to the constructive trade talks between the U.S. and China over the weekend. This sets the stage for a positive outcome from the Trump-Xi Summit on Thursday.5 On Wednesday, the Federal Open Market Committee (FOMC) is expected to cut rates by 25 basis points (bps) and could end quantitative tightening (QT).6 Both would support the trend toward lower rates, but optimism regarding economic growth is pushing rates slightly higher this morning. For context, the 10-year Treasury is approximately 55 bps tighter YTD.7 This week is the busiest for corporate earnings, with 44% of the S&P 500 Index’s market cap reporting.8 With Halloween falling on Friday, wishing a happy Halloween to all who celebrate!
Sources:
1CNBC – Dow rallies 400 points for first close above 47,000 ever following mild inflation report: Live updates; 10/24/25
2,4,7CNBC – 10-Year Treasury; as of 10/27/25
3CNBC – S&P 500 Index; as of 10/27/25
5CNBC – Trump says U.S., China close to trade deal ahead of Xi talks, TikTok decision; 10/27/25
6Yahoo! Finance – Will the October FOMC meeting be the end of QT? 10/25/25
8Goldman Sachs; as of 10/27/25
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