At the risk of repeating myself, 2025 has been quite the interesting year. Just when you think we’ve seen the last of the unexpected events, something else comes our way. It seems to the be the year of “stay tuned!”

This week, we had two rather unexpected occurrences – the end of Q3 (not unusual that it ended, but unusual how strong it was) and yet another shutdown of the US government. Let’s take a look.

Q3 – Markets March Higher

Despite considerable arguments to the contrary (that dominated the business news this summer), the third quarter proved to be another very strong three months for investors. Equity markets produced incredible gains (Tech-focused Nasdaq gained 11%, the S&P 500 increased 7%, and the Dow Jones Industrial Average rose 5% in the quarter, bringing year to date gains to 17%, 13%, and 9%, respectively). International markets also did quite well, with Developed Markets rising 4.8% in the quarter and Emerging markets following suit, rising 10.6% in the quarter. This brings their annual returns to an impressive 25.1% and 27.5% respectively. Fixed income investors were not left behind. The Barclays Aggregate Index rose 2% in the quarter (up 6.1% YTD) as rates began to fall and current yields remained strong.

September (and Q3 overall) are usually weak seasonally and there was added concern there may be such weakness this year given the already high YTD results and ongoing uncertainty over many potential market-moving topics (like inflation, tariffs, government policies (see next topic!), AI and related valuations, etc). 2025 proved the skeptics wrong.

As we enter Q4, it seems like two main tailwinds – likelihood of fed rate cuts and positive momentum – are in the driver’s seat. Even the government shutdown hasn’t derailed the upward trend in markets in this first trading week of Q4. We have a lot of time left before year-end but for now, markets appear determined to advance.

As you likely know (if you’ve been reading for a while), nothing is a “sure thing” in markets and investing. And it’s always better to build an ark before it starts raining! That makes now an excellent time to review your portfolio. A few actions to consider – rebalance to target allocations, reduce concentrated positions, ensure sector weights are in line with your risk tolerance, revisit retirement contributions and max out yet this year if possible, and, if you are in distribution/spend-down phase, consider sweeping a bit more cash for safekeeping if you have far exceeded your return objectives for the year. It’s been a good run – enjoy the successful year we’ve had but as always, prepare for the worst & hope for the best as we enter Q4 2025. And “stay tuned!”

Government Shut Down

As of the date of this post (October 2, 2025), the US Government has once again shut down. The closely divided Senate was unable to reach a compromise on a bill to fund the government, forcing the government to shutdown and stop all non-essential operations. The impacts vary greatly by government area and tend to unfold in stages (this New York Times article explains it well).

Markets barely reacted to the news, posting record highs after the shutdown. This is largely due to the shutdown being pretty well expected (and priced in). However, the longer it goes, the more damaging the effects could become as there could be impacts on the real economy and company earnings (lower spending due to furloughed workers, lower travel revenue, lost consumer confidence across the board, etc).

Another interesting twist of this shutdown is that the data-dependent Federal Reserve may not get any data. The Bureau of Labor Statistics, responsible for reporting monthly jobs data, won’t be sharing its September report on 10/3 as planned. And if the ADP report from earlier this week (private payrolls showing a loss of 32,000 jobs instead of a gain of 50,000), the news in that report might have been rather persuasive. Inflation reports may also be delayed later this month if the shutdown drags on. For now, markets continue to expect another rate cut at the next meeting, but if the Fed can’t get a read on what’s happening in the economy, that may not be as certain as many believe it to be.

As I noted above, 2025 has been quite the year and I have a feeling we aren’t done yet. Stay tuned and always, we will get through this – together.

Onward we go,