- The U.S. economy remained resilient throughout the third quarter, with U.S. GDP growing 2.5% according to the initial Bureau of Economic Analysis estimate. The growth was driven by strong consumer spending, a key sign of strength for the consumer-driven U.S. economy.
- The unemployment rate was unchanged from September at 4.1%, despite lower than expected job growth due to recent hurricanes and labor strikes.
- U.S. equity markets, which experienced heightened volatility and struggled to find direction in October, rallied throughout election day and continued to surge after the announcement of Donald Trump’s reelection.
- Expectations of broad deregulation leading to heightened growth provided a boost across many different sectors, including financials, energy, and industrials.
- Fixed income markets, on the other hand, were negative for the month as yields in the belly and longer end of the curve crept higher, likely influenced by expectations for higher growth and inflation with little mention of future efforts to reign in an expanding deficit.
- Bond market weakness continued post-election as investors assessed the potential impacts of upcoming policy changes.
- The U.S. dollar, which weakened throughout the third quarter, reversed trend in October and strengthened into and post-election, due in part to the expectation of rates remaining higher for longer.
- Trump's proposed tariffs could reintroduce inflationary pressure into the U.S. economy and further complicate the path forward for the Fed, leading some strategists to temper their expectations for the pace of interest rate cuts through the end of 2025.
- With inflation continuing to moderate, markets had priced in a 100% chance of a 25 bp rate cut leading up to the November meeting of the FOMC, which, at its close, Fed Chair Powell announced would in fact take place.
- As with any presidential election there may be short-term volatility across markets as new policies are implemented and existing ones are expanded or curtailed, but investors are usually best served by focusing on long-term investment strategies and financial goals.
