The Dividend Cafe Wednesday - October 29, 2025
Oct 29, 2025
Interest rates took center stage as market reactions followed a Federal Reserve cut, driven by mixed signals from Fed Chair Powell. A rise in volatility ensued after uncertainty about future rate cuts. The discussion also tackled the surge of 401(k) plans, diving into their link with corporate governance rather than just the popularity of index funds. As the economy faces scrutiny amid a government shutdown, insights into recent market performances keep listeners on their toes.
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Market Moved On Fed Nuance
- The Fed cut rates 25 bps and ended quantitative tightening as widely expected.
- Powell's caveat about December cuts spooked traders despite high odds of another cut.
Futures Reacted Excessively
- Traders overreacted to Powell saying a December cut wasn't guaranteed.
- That comment pulled Fed futures probabilities sharply lower despite limited new data.
Shutdown Clouds Fed Signaling
- Government shutdown reduced available economic data, complicating Fed guidance.
- With sparse data, Powell could reasonably avoid promising future cuts.