Zacks Investment Management

A look beyond record highs to see what’s driving today’s valuations.

As always, this shutdown is getting constant media attention, and creating short-term uncertainty. But history shows that in the long run, its effect on markets will likely be minor.

Recent Fed rate cuts and rising yields on longer bonds (10-year and 30-year Treasurys) create a steeper yield curve. This is good news, but it may not fundamentally alter the economic outlook.

Although many investors are more bullish as 2025 closes, a number of worries remain—including inflation, Fed independence, dollar stability, crowded trades, and rising yields.

The 25-point rate cut was not a surprise, but is welcome relief. However, policy uncertainty and weak job growth mean continued volatility, even as Q3 earnings offer encouragement.