Market Insights Recap — Week of August 25, 2025

Hello, I'm Steve Orr, Texas Capital's Chief Investment Officer.

A busy August almost in the books. So big picture? Throwing inflation in the hole and back in gear. What should we do with our portfolios? Now, early reports on the third quarter GDP suggest about 2.5% growth, not bad. Credit spreads are at or near all-time highs. Astros still in first place. Private credit and banks are lending. The IPO market is open again. Unemployment remains low. Wage gains nationally are above inflation levels. Does that big picture sound like a country that needs cheaper money? Well, I don't think so. That list does work for keeping your stock allocations in place.

Fed Chairman Powell's Friday Jackson Hole speech focused on jobs, not inflation. That 35,000 average job growth the last three quarters kind of rattled Powell. So he opened the door to a possible rate cut at their September 17 meeting. He also jettisoned their policy of targeting an average of 2% inflation. So the Fed is going to worry more about jobs going forward, and then toss their inflation concerns to the side. Now, over the next few weeks we have inflation this Friday, personal consumption expenditures, won't matter as much to the Fed, 2.9%, first Friday in September, the jobs number for August and then finally on 9/11, consumer prices, which again won't matter as much to the Fed. The markets love lower interest rates, rallied strongly. Dow Industrials hit a new high on Friday, and more importantly, over 90% of the New York Stock Exchange stocks were higher. And winners beat losers 9 to 1. So a rare August rally could set us up for a better-than-average September. Last week was a typical seasonal pothole, down a couple of percent through Thursday. Jackson Hole? Other edge of the pothole, markets jolted up. Your portfolio's higher. So be prepared for more of those potholes. Keep your position steady. Any questions? Email me at [email protected]; 'til next time.