Weekly Mosaic Update


Top of Mind - Week of October 6, 2025

  • As anticipated, the Bureau of Labor Statistics (BLS) did not release its official Employment Situation report for September, which was scheduled to be published on Friday, due to the federal government shutdown. 
     
  • Once funding legislation is passed to end the shutdown, the Employment Situation report is slated to be released within 3-5 days, containing the nonfarm payroll data and the unemployment rate. 
     
  • With the official data delayed, we can turn to data released by private parties to gain insight into the labor market, such as the Conference Board, Automatic Data Processing (ADP), and the Institute for Supply Management (ISM). All three of which released employment data last week.
     
  • The Conference Board’s report indicated that consumers’ view of the labor market continued to weaken in September. The ADP Employment report showed that private employers cut 32K jobs in September, and the Employment component of the ISM Services index came in at 47.2, its fourth consecutive reading in contractionary territory. 
     
  • So, while we wait for the establishment employment data to be released, the data provided by the private sector appears to show softness.

 

Top of Mind - Week of September 29, 2025

  • Should Congress fail to reach a budget deal to fund the federal government by Tuesday evening, a partial shutdown will take effect beginning Wednesday.
     
  • Past government shutdowns have had minimal impact on the financial markets. However, the timing of this week’s possible shutdown has the potential to break precedent.
     
  • The Bureau of Labor Statistics (BLS) is scheduled to release its latest employment report on Friday, which will include the official Unemployment Rate and Nonfarm Payrolls for September. If a deal isn’t struck by midnight on Tuesday, the employment report will likely be delayed. 
     
  • Delayed BLS data could prove problematic for markets, as the probability of two additional interest rate cuts this year, consistent with the Federal Reserve’s latest Summary of Economic Projections, hangs in the balance. If the report shows signs of increased weakness, the probability of two more rate cuts will likely increase; however, a strong report could reduce the likelihood of two cuts by year-end. 
     
  • Equity markets have benefited from volatility, as measured by the VIX, which has been trending lower since April. However, a delay in the BLS data due to the government shutdown could challenge this trend. 

 

Top of Mind - Week of September 22, 2025

  • The valuation of the flagship S&P 500 Index remains in frothy territory as the current price to forward earnings stands at 22.7x. While past performance isn’t indicative of future returns, we’d like to note a few historical observations that are relevant today despite elevated valuations.
     
  • When the old adage of “sell in May and go away” proves to be a poor strategy, as it did this year with May, June, July, and August all producing positive returns, results for the S&P 500 over the remainder of the year have been positive 84% of the time.
     
  • This year, the S&P 500 notched 21 new all-time highs through the end of August. Since 1955, there have been 19 occurrences in which 20 or more new all-time highs were established, with the flagship index producing positive results over the remainder of each of these years 89% of the time. 
     
  • Lastly, there have been twelve occurrences of the Federal Reserve (Fed) cutting interest rates with the S&P 500 within 1% of its all-time high since the mid-1980s; in each of these instances, returns over the next twelve months have been favorable. On Wednesday of last week, the Fed cut interest rates by -0.25% after having been on pause for nine months, while the S&P 500 was within 0.1% of its all-time high. 

 

Top of Mind - Week of September 15, 2025

  • The Federal Reserve (Fed) is widely expected to restart cutting interest rates at its meeting this week. Coming into the meeting, the setup is nearly identical to last September, with a softening labor market and elevated inflation.
     
  • Last year, the Fed cited concerns of a softening labor market, including a massive annual revision to the Bureau of Labor Statistics reported jobs which was -818k last year at this time, a figure surpassed by Tuesday’s release of a -911k revision for the previous year ending in March 2025.
     
  • Inflation data from this past week doesn’t appear supportive of the same outsized 0.50% interest rate cut that the Fed delivered last September, as Core CPI remains well above the Fed’s price stability target of 2% (3.1% to be exact). Concerningly, the Super Core Services, a series not directly impacted by tariffs, is showing signs of reaccelerating.
     
  • Interest rate markets are indicating that, on top of a 0.25% interest rate cut at this week’s meeting, the Fed will deliver an additional 0.25% interest rate cut at each of its remaining meetings this year, one in October and one in December. 
     
  • Lastly, this meeting brings forward the third Summary of Economic Projections (SEP) for the year. We don’t anticipate any large changes to projections for this year; however, any changes to the terminal rate will be acutely noted by the markets. 

 

Top of Mind - Week of September 8, 2025

  • Treasury yields fell throughout last week as various employment data came out weaker than anticipated, with the bellwether 10-year Treasury yield ending the week below 4.10%.
     
  • The official unemployment rate ticked up to 4.3% in August. While not an alarming figure from an economic standpoint, it broke out of its range of 4.0% – 4.2% that it had been in for the last year, hitting its highest mark since late 2021.
     
  • August Nonfarm Payrolls indicated that +22K jobs were added in August, missing expectations of +75K and confirming the labor market softness previewed by the ADP report last Thursday, which came in -26K below an expected +80K.
     
  • Markets took this softness in the labor markets as evidence that the Federal Reserve will cut the policy rate at its meeting next week. 
     
  • Provided that risk assets remain priced for perfection, with equity valuations high and credit spreads near historically tight levels, if economic data releases—such as inflation readings on Wednesday and Thursday—necessitate markets to adjust to fewer interest rate cuts than currently expected, it could likely lead to increased volatility in both equities and fixed income. 

 

Top of Mind - Week of August 25, 2025

  • In the Federal Reserve Chairman’s speech at the Jackson Hole Symposium on Friday, he referenced that the downside risks to the labor market are now greater than the risks to higher inflation, with price pressures from tariffs being described as a one-time shift.
     
  • Also, in his address, he noted that the Fed views the current policy rate 1.0% above what they believe to be neutral, implying that they see the current target range of 4.25 – 4.50% as restrictive.
     
  • The shift in focus from inflation to the labor market, along with policymakers viewing their current stance as restrictive, seemingly solidified the probability of an interest rate cut at the next Fed meeting in September.
     
  • Asset prices responded favorably to the shift in focus, as heading into Friday’s speech, the probability of a rate cut at the September meeting had been fading. 
     
  • While most asset classes ended the week on a high note, the Magnificent 7 stocks, which have been the huge market leaders over the last few years, lagged as the market broadened out. 
     
  • A shift in the Fed’s focus, spurring them to re-engage in easing monetary policy, could provide a durable catalyst for the market to continue to broaden out. 

 

Top of Mind - Week of August 18, 2025

  • The Federal Reserve Bank of Kansas City is hosting its annual Economic Policy Symposium in Jackson Hole, Wyoming this week, which will be attended by central bankers from across the globe.
     
  • While the Jackson Hole conference isn’t a traditional Fed meeting where the Federal Open Market Committee (FOMC) meets to set and adjust monetary policy, Fed Chairman Jerome Powell is set to provide a speech titled “Economic Outlook and Framework Review.”
     
  • In this speech, many will be listening for possible clues to determine the potential path of monetary policy. Will there be an overwhelmingly cautionary (dovish) tone regarding the softness of the labor market, suggesting the desire to reduce the policy rate, or will there be a cautionary (hawkish) tone in respect to the risk of inflation failing to move towards their defined target for price stability? 
     
  • Curiously, there is enough data to support either case, and both risks will likely be noted in the Fed Chairman's comments. The forward guidance, whether direct or indirect, could heavily influence the interest rate market that quickly priced in three rate cuts after July’s labor market report, only to see these probabilities fade after last week’s inflation data. 
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