📈 Markets Melt Up to New Records
U.S. equities, once again, climbed to record highs last week, extending their impressive 2025 run as investors brushed off government shutdown headlines and leaned into a familiar narrative of cooling economic data, dovish Federal Reserve expectations, and AI-driven optimism. The S&P 500 rose over 1% on the week as “bad news” once again became “good news” for markets anticipating easier monetary policy ahead (more rate cuts).
Soft data points including weaker ADP employment, Consumer Confidence, and ISM Services PMI readings bolstered expectations for rate cuts later this month. Rather than sparking growth fears, the string of soft prints reassured investors that the Fed remains on track towards easing. That backdrop, coupled with a massive wave of AI enthusiasm following OpenAI’s $500 billion private valuation, fueled momentum in growth and tech names and kept investor sentiment strong even as fiscal uncertainty lingered in Washington.
According to Refinitiv data, U.S. equity funds attracted roughly $36 billion in fresh inflows last week — the largest in several months. This highlights a seemingly renewed appetite for risk on Wall Street. But despite the strong index performance, underlying breadth was mixed, suggesting new highs were driven by heavyweights rather than a broad market surge.
💹 Rates, Dollar & Commodities
Treasury yields fell across the curve as the week’s softer data reinforced expectations for a Fed rate cut at the October meeting. The 10-year yield dipped just under 4% while short-term rates eased a bit as well. The U.S. dollar weakened modestly, unwinding some of its summer strength and lending support to commodities and emerging-market assets.
Gold extended its winning streak to a seventh consecutive week, climbing to its highest level in months thanks to those falling real yields, a softer dollar, and heightened demand for monetary hedges. Oil prices traded unevenly, weighed down by global demand concerns early in the week before rebounding on signs of tightening U.S. inventories and ongoing supply risks in the Middle East. Meanwhile, industrial metals such as copper and aluminum posted mixed performances as investors weighed tepid manufacturing data against longer-term structural demand tied to electrification and clean energy infrastructure.
🔎 Takeaway
Last week reaffirmed a powerful dynamic: Weak data is still fueling strong markets. With the Fed leaning dovish, the dollar softening, and AI optimism still commanding capital flows, equities continue to climb a wall of worry seemingly undeterred by political noise and macro uncertainty.
