Each month, CAISSA performs an analysis of prevailing global events, assessing their potential influence on our clients’ wealth plan. We are diligently having strategic discussions with our portfolio managers, ensuring that our position remains informed and aligned with current market dynamics.

Below, you will find CAISSA’s perspective on key topics markets are currently digesting.

The Fed Initiated its First Rate Cut Since December 2024, Reducing the Fed Funds Rate by 25 Basis Points

September marked a pivotal shift in monetary policy as the Federal Reserve enacted its first rate cut since December 2024, reducing the Fed Funds Rate by 25 basis points. This move, coupled with signs of labor market softening and persistent inflation concerns, reinforced investor expectations for continued policy accommodation.

CAISSA Perspective: Despite political uncertainty surrounding a potential government shutdown, markets remained resilient, buoyed by strong corporate fundamentals and improving sentiment across risk assets. The month saw broad-based gains across equities, fixed income, and real assets, with emerging markets and long-duration bonds leading performance.

U.S. Equities Posted Their Strongest September in Over 15 Years, Driven by AI Optimism and Monetary Support

U.S. equities posted strong gains in September, with the S&P 500 delivering its best monthly return for this period in over a decade. Investor sentiment improved following the Federal Reserve’s rate cut and signs of easing inflation, while optimism around artificial intelligence continued to support growth-oriented sectors.

CAISSA Perspective: Small-cap stocks showed renewed strength and benefited from lower rate expectations and improving risk appetite. Despite political uncertainty, domestic equities remained anchored by solid earnings and resilient consumer demand.

Emerging Markets Outperformed Developed Peers, with Standout Gains in China, Brazil, Mexico, and South Korea

International equities posted mixed results in September, with emerging markets continuing to outperform developed peers. The MSCI Emerging Markets Index recorded its ninth consecutive monthly gain, supported by strength in China, Brazil, Mexico, and South Korea, as well as improving investor sentiment and favorable policy environments. Developed markets delivered modest returns, with gains in Japan, France, and Canada offsetting weakness in Germany.

CAISSA Perspective: Currency movements played a meaningful role, as U.S. dollar softness provided a tailwind to foreign returns. While the pace of the developed market rally slowed, supportive valuations and accommodative central bank policies remain constructive for global equity allocations.

Shutdown Watch: Markets Stay Focused Amid Uncertainty

As the September 30 deadline passed without a funding agreement, the federal government officially entered a shutdown in October. Historically, shutdowns have been disruptive but not economically catastrophic. Since the 1970s, there have been 21 shutdowns, most lasting only a few days. Even the longest episodes—such as the 34-day closure in 2018—had limited long-term impact on GDP and were largely recovered in subsequent quarters.

CAISSA Perspective: For investors, the key takeaway is that shutdowns, while headline-grabbing, rarely warrant wholesale portfolio changes. It’s a good reminder that market outcomes are more often driven by fundamentals—corporate earnings, economic strength, and monetary policy—than by political gridlock.