Tragedy, Inflation, and Record Markets

September 15, 2025

Financial Markets

This past week will be remembered not only for financial milestones but also for tragedy. The assassination of Charlie Kirk, a prominent right-wing political figure, shook the nation and cast a shadow over markets already grappling with inflation concerns and geopolitical instability.

Despite these headwinds, equity markets displayed surprising resilience. U.S. indexes continued their climb into record territory, with Information Technology leading all sectors, advancing 3.10% over the week. The Consumer Staples sector was the only decliner, falling 0.15% for the week.

Investor sentiment appears driven by momentum, though many observers note the counterintuitive nature of markets pressing higher against such a challenging backdrop. With domestic and international uncertainties weighing on the outlook, the recent gains highlight the strong appetite for risk assets—even if fundamentals suggest caution.

Economics

While market performance has been strong, underlying economic signals are less reassuring. Two of the most important drivers of U.S. growth—employment and consumer spending—are showing signs of weakness. Job creation has slowed, and consumer spending, often considered a barometer of confidence, has softened. Together, these trends raise questions about the durability of the current expansion.

Tariffs remain another source of concern. The administration continues to rely on trade barriers in unpredictable ways, leaving businesses and investors uncertain about long-term implications. Economists broadly agree that such policies risk raising costs, dampening trade, and complicating global supply chains.

Amid these challenges, the Federal Reserve may emerge as the stabilizing force. With inflation above target but moderating and labor market indicators softening, markets widely expect the Fed to announce a 25-basis point interest rate cut at the conclusion of its September FOMC meeting on Wednesday. Such a move would provide some relief to households and businesses while supporting investor confidence.

Conclusion

Forecasting the economy’s future path is always an inexact science, and current conditions offer no clear answers. Still, awareness of the facts allows investors to position more carefully. This is not a bearish call nor a recommendation to abandon markets. Instead, it is a reminder that risks are real and growing. With equity indexes at all-time highs and the broader economy flashing mixed signals, caution is warranted. We continue to believe a measured, disciplined approach—grounded in quality investments, prudent diversification, and long-term perspective—remains the best way to safeguard clients’ interests through uncertain times.

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