The Euphoria Trap: A Macro Pilgrim's Ledger (October 5, 2025)
Stocks at record highs, data blacked out, gold surging...what could possibly go wrong?
“Walking the path of global markets, one step at a time.”
Policy guidance once again set the tone as markets navigated a U.S. government shutdown that delayed key data, keeping attention on the Fed’s path and near-term growth signals.
Equities finished the week higher, with the Dow and S&P 500 setting new records while the Nasdaq slipped on Friday but still posted a weekly gain. Bonds rallied broadly as two- and ten-year Treasury yields fell on the week.
The dollar eased, gold advanced to fresh highs with a seventh straight weekly rise, and the VIX popped midweek before fading into the close.
Confidence has reached euphoric levels. Sentiment, positioning, and market momentum are stretched. But beneath the highs lies growing sensitivity to policy missteps, data surprises, and shifting flows.
“Extreme optimism or pessimism are both dangerous. The pendulum never stops in the middle.” — Howard Marks
The Week That Was
Tuesday opened with labor and sentiment. JOLTS for August showed job openings up by 19,000 to 7.227 million while hires declined, a marginal loosening that fits a gradual cooling narrative.
The Conference Board reported Consumer Confidence fell 3.6 points in September to 94.2, with the Present Situation down notably. Both releases landed before shutdown impacts spread.
Wednesday shifted to business activity and private payrolls. ADP reported that private employment decreased by 32,000 in September and pay growth slowed to 4.5 percent year over year.
ISM Manufacturing printed 49.1 for September, below 50, signaling ongoing contraction even as production improved and employment remained weak.
The Census Bureau’s Construction Spending for August, scheduled for release, did not publish because of the federal shutdown.
Thursday underscored the data blackout. Weekly Jobless Claims and the full Factory Orders report for August were not released due to the shutdown; market coverage highlighted the absence and leaned on non-government proxies.
Durable goods for August, already published the prior week, showed headline orders up 2.9 percent with ex-transportation up 0.4 percent.
Friday brought services and the missing jobs report. ISM Services fell to 50.0 in September, with new orders slowing sharply and the employment index still in contraction.
With BLS dark, the September Employment Situation was not released, and markets looked to private and survey indicators for signals on the labor backdrop.
Macro / Policy
With the U.S. government shutdown halting data releases, Fed officials avoided fresh guidance.
Markets instead focused on the delayed September jobs and inflation reports, which Chair Powell said earlier, remain essential before considering any rate adjustments.