Weekly Market Commentary October 20, 2025
WEEK IN REVIEW
Economic developments during the week were shaped by key inflation data, central bank commentary, and disruptions caused by the ongoing government shutdown. Together, these events offered insight into the Federal Reserve’s evolving stance and the challenges of navigating a data-constrained environment.
On Tuesday, October 14, Fed Chair Jerome Powell addressed the National Association for Business Economics, warning of “significant downside risks” in the labor market and signaling that the Fed may soon end its balance sheet runoff. Powell emphasized the difficulty of operating without full government data, noting reliance on private labor indicators and that substitutes for official inflation data are “less good.” His remarks reinforced expectations for a more cautious and dovish policy approach
On Wednesday, the Consumer Price Index (CPI) for September showed a 0.4% month-over-month increase, while Core CPI rose 0.3%, bringing the year-over-year Core CPI to 3.7%. These figures suggest inflation remains persistent but is not accelerating, supporting the view that price pressures are stabilizing.
Thursday’s Producer Price Index (PPI) added complexity to the inflation picture. Headline PPI rose 0.5%, and Core PPI increased 0.3%, reversing the prior month’s decline. The data hinted at renewed wholesale cost pressures, which could eventually filter into consumer prices
Meanwhile, the government shut down delayed several key reports, including retail sales and the full employment summary. Bloomberg and other sources reported that CPI data collection was strained, and policymakers are increasingly “flying blind” without timely indicators. The shutdown has created a data vacuum, complicating the Fed’s ability to assess economic conditions accurately.
Overall, the week highlighted the Fed’s balancing act: stabilizing inflation, monitoring labor risks, and adjusting policy amid limited visibility. Powell’s tone and the inflation data suggest a shift toward caution as uncertainty grows.
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