WEEKLY INSIGHTS

September 29, 2025

Key Takeaways:

U.S. Government on the brink of a shutdown.
The Government will shut down if appropriations bill or Continuing Resolution not passed.
Only “essential” workers and services will remain operational.
Senate failed to pass the Continuing Resolution bill passed by the House.
Government shutdowns have the potential to cut GDP growth.

U.S. Government Preparing for a Shutdown

With just days until an October 1^st deadline, the U.S. government is at risk (yet again) of shutting down as Democrats and Republicans remain far apart over government funding measures. The government’s fiscal year ends on September 30^th and every year, congress must pass a spending package which determines how the government will spend taxpayer money on specific programs and/or activities over the next fiscal year (October – September). Last week, the House and Senate were on recess, with the House not returning until October, putting the pressure on the Senate to pass a funding package. President Trump canceled a scheduled meeting on September 23^rd with Democratic leaders because he was not optimistic on a compromise. In this Weekly Insights, we aim to provide an overview of what a potential government shutdown may look like, and the implications for markets and the economy.

Why a shutdown… this time?

In mid September, the GOP-controlled House passed a Continuing Resolutions (CR) bill which would have funded the government at current spending levels through November 21st. However, the Senate voted down the bill. The sticking point for Democrats is they want an extension of Affordable Care Act subsidies (set to expire at the end of the year) and a reversal of the cuts to Medicaid funding (enacted in Trump’s One Big Beautiful Bill). If Congress can’t agree to a CR by September 30^th at midnight, the government shuts down.

What does a shutdown mean?

Many government employees could be furloughed and Federal government functions could be suspended. However, “essential” workers and services, such as law enforcement and public safety, will continue, but these workers will not be paid until the government reopens. Military operations, air traffic control, and federal criminal investigations are among services/jobs considered “essential.” One of the key services that would be impacted for investors is data collection and economic data releases.

What about markets and the economy?

According to Oxford Economics, every week the government is shut down translates into a decrease in GDP growth by 0.1 – 0.2 percentage points.¹ We looked at all government shutdowns since 1976 and what it means for the U.S. Dollar and the S&P 500. Our analysis suggests there is little impact on equities as the S&P 500 has declined 0.7% when the shutdown is more than five days and has been flat if it is less than five days. The U.S. Dollar has produced similar returns. Both the S&P 500 and the U.S. Dollar are positive, on average, in the one month time period after the shutdown ends.

The Bottom Line

President Trump is scheduled to meet with Congressional officials today, but we are not expecting much progress. The last government shutdown (2018-2019) lasted 35 days and was the longest in history. Shutdowns are always dangerous but this time we are facing the potential of a major hurricane, ongoing trade negotiations, a potential solution to the Israel/Gaza conflict and a Russian leader who continues to push limits.

LISTEN NOW: Markets With Megan

Your Economic and Market Detailed Recaps

New home sales surge as buyers come off the sidelines.
U.S. economy expands at the fastest pace since 3Q23.
PCE inflation driven higher by services prices.
Global equities fall on cautious Fed commentary.
Bond yields rise on uncertain interest rate path.
Commodities higher by the most since June.

Weekly Economic Recap — Inflation Remaining Stubborn

U.S. business activity expanded in September at the slowest pace in three months according to the S&P Global Flash Manufacturing PMI reading. Prices paid for materials increased to a four-month high while prices received fell to the lowest level since April. Slower sales led to the largest build in inventories of finished goods going back to 2007.

New home sales in the U.S. unexpectedly increased at the fastest annualized pace since January 2022. The surge in sales comes around a time when 30YR mortgage rates began to fall, pulling some buyers off the sidelines. Inventory of new homes fell to the lowest level this year (490K) as a result. All regions registered higher sales, while the South, the country’s larget home-selling region, climbed to the highest since March 2021.

The U.S. economy expanded at the fastest pace since 3Q23 after the government revised its previous estimate of consumer spending higher. Consumer spending expanded at a 2.5% annualized pace, higher than the previous estimate of +1.6%.

Sales of existing homes were flat in August, but decreased marginally from the previous month (-0.2%). Sales were strongest in the Midwest as prices in the region are ~22% below the national median price ($422,600). Sales of homes priced above $1 million increased 8% YoY, contributing the most to sales.

The Fed’s preferred inflation gauge, PCE Core, increased 2.9% on an annualized basis for the second straight month. The headline reading increased 2.7% YoY, slightly higher than the 2.6% advance last month. Services prices increased at the fastest monthly pace since May (3.6%).

Weekly Market Recap — Global Equities Fall on Fed Commentary

Equities:

The MSCI AC World Index was lower for the first time in four weeks. Investors absorbed cautious Federal Reserve commentary which tempered expectations for rate cuts. All major U.S. equity averages were lower. Large-cap value was the only area of U.S. equities to finish the week higher. Technology underperformed as the Nasdaq posted the worst performance of all major averages. Small-caps, as tracked by the Russell 2000, fell for the first time in eight weeks.

Fixed Income:

The Bloomberg Aggregate Index was lower for the second straight week as bond yields climbed amid tempered rate cut expectations. Short-term yields increased more than long-term yields. Floating rate instruments and EM Bonds (USD) were higher as investors weighed Fed commentary that suggested rate cuts are not a set path.

Commodities/FX:

The Bloomberg Commodity Index was higher for the second time in three weeks and by the most since June. Crude oil prices were higher by the most since early June as investors weighed inventory drawdowns in the U.S. and Ukrainian drone attacks on Russia’s infrastructure. Gold prices were higher and continued to notch record highs on geopolitical and trade tensions.

WATCH NOW: Alternate View Podcast

Data is as of August 2025.
Data Source: FactSet Research Systems, Verdence Capital Advisors.

Reproduction without permission is not permitted. The indexes presented are unmanaged portfolios of specified securities and do not reflect any initial or ongoing expenses nor can it be invested in directly. An investment’s portfolio may differ significantly from the securities in the index. This material was prepared by Verdence Capital Advisors, LLC (“VCA” or “we”, “our”, “us”). VCA believes the information and data in this document were obtained from sources considered reliable and correct and cannot guarantee either their accuracy or completeness. VCA has not independently verified third-party sourced information and data. Any projections, outlooks or assumptions should not be construed to be indicative of the actual events which will occur. These projections, market outlooks or estimates are subject to change without notice. This material is being provided for informational purposes only and is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice. Past performance is not a guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product or any non-investment related content, made reference to directly or indirectly in these materials will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any discussion or information contained in this report serves as the receipt of, or as a substitute for, personalized investment advice from VCA. Alternative investments are designed only for sophisticated investors who are able to bear the risk of the loss of their entire investment. Investing in alternative investments should be viewed as illiquid and generally not readily marketable or transferable. Investors should be prepared to bear the financial risks of investing in an alternative investment for an indefinite period of time. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. All indexes are unmanaged, and you cannot invest directly in an index. Index returns do not include fees or expenses. Sector Watch Use of this website is intended for U.S. residents only. Any recommendation, opinion or advice regarding securities or markets contained in such material does not reflect the views of Verdence Capital, and Verdence Capital does not verify any information included in such material. Verdence Capital assumes no responsibility for any fact, recommendation, opinion, or advice contained in any such research material and expressly disclaims any responsibility for any decisions or for the suitability of any security or transaction based on it. Any decisions you may make to buy, sell, or hold a security based on this research will be entirely your own and not in any way deemed to be endorsed or influenced by or attributed to Verdence Capital. It is understood that, without exception, any order based on such research that is placed for execution is and will be treated as an UNRECOMMENDED AND UNSOLICITED ORDER. Further, Verdence Capital assumes no responsibility for the accuracy, completeness, or timeliness of any such research or for updating such research, which is subject to change without notice at any time. Verdence Capital does not provide tax, or legal advice. Under no circumstance is the information contained within this research to be used or considered as an offer to sell or a solicitation of an offer to buy any particular investment/security. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk. Commodity‐related products, including futures, carry a high level of risk and are not suitable for all investors. Commodity‐related products may be extremely volatile, illiquid and can be significantly affected by underlying commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions, regardless of the length of time shares are held. Data is provided for information purposes only and is not intended for trading purposes. Verdence Capital shall not be liable for any errors or delay in the content, or for any action taken in reliance on any content. Weekly Insights/Qtrly & Annual Outlook The indexes presented are unmanaged portfolios of specified securities and do not reflect any initial or ongoing expenses nor can it be invested in directly. An investment’s portfolio may differ significantly from the securities in the index. Semi-Annual Chart Pack Where shown, performance information presented is that which has been calculated and presented by an unaffiliated third-party manager. We have no insight into the performance of the advisor/product/account or fund shown and do not attempt to determine whether the performance presented is accurate. Therefore, the performance could be incorrect, overstated or not reflective of actual trading of client funds. There is the potential that the performance shown is a back test and not the result of real investment advice and trading. As such, it could not be relied upon as indicative of future returns of a particular strategy. Where performance shown is that of a pooled account, limited partnership, or private equity fund, you should be aware that there is a significant lack of transparency into the operations and investment process and investment vehicles invested in. As a result, pricing and valuation of the underlying holdings which produced the stated performance could be incorrect, stale, or overstated and therefore the performance figures presented cannot be relied upon. Before investing, we encourage you to request additional information, particularly performance information, of any product that you are considering for your client. You should read, as applicable, the Prospectus, SAI, Composite Disclosure and/or performance disclosure associated with any product that you are considering for investment for your or your client’s. Products shown may have minimum account sizes or minimum investments which may preclude retail and non-high net worth investors from being able to invest in these products. You should be aware that certain LPs may be closed to new investors and therefore your clients may be prevented from investing in these products. Portfolio Implementation and Rationales The SMA Asset Allocation Models do not represent a personalized recommendation of a particular investment strategy to you or your clients. You should not buy or sell an investment without first considering whether it is appropriate for your client’s portfolio. Additionally, you should review and consider any recent market news. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. Diversification and asset allocation do not ensure a profit and do not protect against losses in declining markets. Any forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data. Investments in growth stocks may experience price volatility due to their sensitivity to market fluctuations and dependence on future earnings expectations. Sector allocation references to market capitalization (“smid cap” or “micro caps” etc.) may be subject to special risks given their characteristic narrow markets, limited financial resources, and less liquid stocks, all of which may cause price volatility. International/global investing can involve special risks, such as political changes and currency fluctuations. These risks are heightened in emerging markets. A significant percentage of the underlying investments in aggressive asset allocation portfolio investments have a higher-than-average risk exposure. You should consider your risk tolerance of each of your clients carefully before choosing such a strategy. An investment with multiple underlying investments (which may include asset-allocation or custom blended investments) may be subject to the expenses of those underlying investments in addition to those of the investment itself. Investments may reside in the specialty category due to 1) allowable investment flexibility that precludes classification in standard asset categories and/or 2) investment concentration in a limited group of securities or industry sectors. Investments in this category may be more volatile than less flexible and/or less concentrated investments and may be appropriate as only a minor component in an investor’s overall portfolio. Investment Managers You and your clients should carefully consider investment objectives, risks, charges, and expenses of Funds discussed. This and other important information are contained in the respective Fund prospectuses and summary prospectuses, which should be read carefully before investing. Investment portfolio statistics change over time. Current performance may be lower or higher than return data quoted herein. The investment return and the principal value of an investment will fluctuate; so, an investor’s shares/units, when redeemed, may be worth more or less than their original cost. Verdence relies heavily on unaudited third-party data. Data sources include public data, such as mutual fund data, and non-public data, such as information provided by other investment advisors and managers of limited partnership pooled accounts. Data and/or statistics included on this Portal, including references to performance, opinions, ratings, rankings, manager statistics and demographic information, product, or strategy descriptions, either quantitative or qualitative, are based upon information reasonably available to us as of the applicable date(s) then-published. Information has been obtained from sources that we believe to be reliable, but these sources cannot be guaranteed as to their accuracy or completeness. All data and information produced by a third party has the potential to be incorrect, incomplete, or otherwise misleading. No implication shall be created that the information contained on the Site is correct, including as of any time subsequent to the publish date, and Verdence does not undertake an obligation to update such information at any time after such date. Verdence makes not warranty or representation of the veracity of the data and information and its use of the information should not be implied as an endorsement of any material or statements made. Data, particularly non-public data, is subject to error and where the information is not audited, the potential for error is greater. Where shown, performance information presented is that which has been calculated and presented by an unaffiliated third-party manager. We have no insight into the performance of the advisor/product/account or fund shown and do not attempt to determine whether the performance presented is accurate. Therefore, the performance could be incorrect, overstated or not reflective of actual trading of client funds. There is the potential that the performance shown is a back test and not the result of real investment advice and trading. As such, it could not be relied upon as indicative of future returns of a particular strategy. Where performance shown is that of a pooled account, limited partnership, or private equity fund, you should be aware that there is a significant lack of transparency into the operations and investment process and investment vehicles invested in. As a result, pricing and valuation of the underlying holdings which produced the stated performance could be incorrect, stale, or overstated and therefore the performance figures presented cannot be relied upon. Before investing, we encourage you to request additional information, particularly performance information, of any product that you are considering for your client. You should read, as applicable, the Prospectus, SAI, Composite Disclosure and/or performance disclosure associated with any product that you are considering for investment for your or your client’s. Certain products shown may have account minimums or minimum investment sizes that are unattainable for your clients and therefore they may not be eligible to invest in these products. Reference to registration with the Securities and Exchange Commission (“SEC”) does not imply that the SEC has endorsed or approved the qualifications of Verdence or its respective representatives to provide any advisory services described on the Site.