The Treat This Week Should Be A Rate Cut By The Fed

Market Commentary – October 27, 2025

This week the economic data void gets partially filled by a new CPI report – but the shutdown silence continues to haunt the markets.

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As the government shutdown continues, the flow of economic data has also been shut down. Earnings have been the leading news for the markets. It’s still early in earnings season, but so far, the first wave of announcements has started with a bang, with most companies reporting earnings better than expected. This is a big week for earnings with most of the Magnificent 7 (Mag 7) companies reporting earnings: Alphabet, Microsoft, Meta, Amazon and Apple. Yet, the big news this week is the FOMC meeting with the market expecting a decision on Wednesday of a 25 basis point (bps) interest rate cut. As the market expects another 25 bps cut in December, all ears will be listening for comments that might confirm the continued cutting cycle. Attention will also be paid to comments about if/when the Fed will stop its Quantitative Tightening (QT). So far, the bond market is warming to the current rate cutting cycle as both the 2-year and 10-year Treasury yields have been falling. We expect the 2-year to track toward 3% and the 10-year toward 3.8%. This is helping mortgage rates to also come down, a trend we expect to continue into next year. If the mortgage rate nears 5%, the housing market should improve.