October 13, 2025 •Nathan Willis
Key Events: Fed caution amidst inflation concerns
Minutes from the September Federal Reserve meeting indicate that the FOMC remains on track to lower interest rates further this year. 10 of 19 members support two additional cuts, while the rest favor fewer, citing persistent inflation concerns. Surveys from the New York Fed and the University of Michigan show expectations remain above the Fed’s 2% target.[1]
The bankruptcy of auto lender Tricolor highlights potential weakness in the economy and the delicate balance as the Fed attempts to maintain full employment and price stability.
Market Review: Largest one-day drop since April
After surging more than 30% from the April lows, elevated valuations left the market vulnerable to a pullback—and that materialized on Friday with the steepest losses since April.
Investment-grade bonds stood out as the only segment to post a positive return for the week.
Outlook: Canary in the coal mine?
Was Friday’s market selloff simply a healthy pause in a strong rally, or does rising consumer stress—evidenced by increasing auto loan delinquencies—signal deeper economic trouble ahead?
The reality likely lies somewhere in between. While certain indicators such as credit strain and weakening employment data point to weakness, there are also compelling signs of resilience. Robust technology capital investment and solid retail sales reflect underlying economic strength. Additionally, ongoing fiscal and monetary support—through government spending and lower interest rates—continues to provide a favorable backdrop.
Uncertainty is a natural part of every investing journey. That’s why we remain confident that staying the course with a diversified portfolio of attractively valued assets is the most effective way to navigate market shifts—and we encourage investors to embrace the same balanced approach.
Canary in the coal mine?
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This material is intended to be educational in nature , and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. OneAscent can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.[4]
[1] Source: Bloomberg: NY Federal Reserve 1-year inflation expectations – 3.38%. University of Michigan 1-year inflation expectations
[2] Market Returns reference the following indices: Large Cap – S&P 500, Mid Cap Growth – Russell Midcap growth, Mid Cap Value – Russell Midcap Value, Small Cap – Russell 2000, Developed – MSCI EAFE, Emerging – MSCI Emerging Markets, Aggregate – Bloomberg US Aggregate, High Yield – Bloomberg High Yield
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