Making Markets Quarterly Market Recap: Q3 2025 - [Making Markets, EP.67]
Oct 10, 2025
A strong Q3 saw the S&P 500 leap 10%, leaving tariff chaos behind. The hosts discuss the stark divide between wealthy asset owners and inflation-struggling consumers. They've explored the perplexing bond market signals amid stock surges and the potential pitfalls of opening private equity to retail investors. AI companies thrive on cult-like followings, yet face scrutiny for their capital consumption. Unusual credit market conditions and the resilience of markets despite societal unrest offer a captivating late-cycle snapshot.
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Late-Cycle Split Between Wealth And Income
- The market faces a late-cycle mix: slowing growth but still-strong asset prices driven by wealthy asset owners.
- Core goods inflation and services disinflation create offsetting forces that complicate Fed decisions.
Tariffs And The New Travel Margins
- Tariffs act like a tax and appear to be passed largely to American consumers, changing buying habits.
- Wealthy consumers still spend on travel and leisure, where firms raised margins post-COVID by running with lower variable costs.
Bonds Pricing Fed Cuts Affect Cash Flows
- The bond market expects Fed cuts and is pricing multiple cuts into rates, shifting investor behavior toward locking yields.
- Short rates drive cash and money market flows, creating pressure to move out the curve before cuts arrive.
