The Correction Is Finally Here

Market Commentary – October 13, 2025

Equity markets sold off last Friday, responding negatively to President Trump’s threat of a massive tariff hike on China amid escalating tensions over rare earth exports.

His move followed Beijing’s decision to restrict shipments of those critical materials, prompting Trump to also threaten cancellation of his upcoming meeting with China’s President Xi Jinping. The S&P 500 fell 2.7% and the Nasdaq 100 declined 3.6% on the news. This pullback aligns with our expectation for a 5%–10% correction, with both indexes now at risk of testing their 200-day moving averages. October is traditionally known as a good buying opportunity leading into the seasonal year-end rally. We remain buyers and maintain that the S&P 500
can reach 7000 by end of the year and 7200 by early next year.

CBOE Volatility Index (VIX) Spikes Higher – Expect Continued Volatility

The equity market has not experienced high levels of volatility since Liberation Day in early April. Last Friday’s sell-off produced a spike in the CBOE Volatility Index (VIX) above 20. We expect volatility to remain elevated for a short period of time. Historically, when the VIX is above 20, it has signaled a good buying opportunity.

2-Year Treasury Yield Breaks Down Pointing To Continued Lower Short Rates

As stocks tanked last Friday, money fled to safety, driving the 2-Year Treasury yield down, breaking support and pointing to a move toward 3.4%. Interest rates remain in a downtrend, which should support risk assets as we enter the seasonally strong period for equities in November and December.