MARKET UPDATE

This morning equity markets are steady and Treasury yields are relatively unchanged with the 10-year yield trading near 4.10%.  The latest CPI data remains stubbornly above the Fed's 2% target.  On the other hand, recent jobs and unemployment data has continued to show signs of stress, starting with several significant revisions lower in late spring/early summer.  September and October's FOMC meetings both resulted in a 25bps cut, and expectations are unclear for the remainder of 2025.  The September forecast materials suggest that the target rate will likely continue to move modestly lower over the next year.  The Fed continues to observe the economic data and emphasize that their focus is on maintaining the dual mandate of 2% inflation and full employment.  Prior to the September meeting, the FOMC preferred to be patient before lowering rates, as they observed the available data on these two key metrics in today's dynamic macroeconomic environment.  Notable topics at this point in the current economic cycle are one time structural changes due to the pandemic, as well as recent global trade policy changes.  The FOMC will continue to observe and discuss how these events and new rate cuts impact inflation and employment in the US.  The upcoming FOMC meeting is set for next week.

- CMS Staff