Market Update: September 23, 2025

“Bond market, we hardly knew thee.” In true Hamlet fashion, the plot twist this week was that as “lower” rate headlines flashed across screens, bonds still sold off. Traditional relationships are wobbling as markets price in expectations that may or may not line up with subsequent reality.

Weekly Market Brief
U.S. equities advanced again, with growth strategies in technology and small caps leading the way. Internationally, developed markets gave back some gains, while emerging markets continued to hold the leadership spot year-to-date. Bonds, however, struggled as Treasury yields moved higher, giving back part of their strong performance earlier in the year.

Theme of the Week: What’s Priced In?
Record-high markets are brimming with embedded assumptions: how many rate cuts the Fed will ultimately deliver, how earnings will hold up, and how resilient margins prove if growth cools and tariffs persist. Markets rarely stumble just because expectations are high; they stumble when realized data diverges from those expectations. Confirmation bias, however, suggests markets may hold onto their preferred narratives longer than fundamentals warrant.

Notes from the Optimizer
This behavioral psychology effect is why market peaks often do not spell immediate doom. Historically, equities frequently rally in the year after setting new highs, as investor positioning helps extend gains even while risks accumulate beneath the surface. New highs should be viewed with both respect and caution.


The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.