Please see the below article from Brooks Macdonald detailing their discussions on markets and Central Bank policy. Received this afternoon 23/09/2025.
What has happened
Risk assets powered higher over the past 24 hours, with the S&P 500 climbing 0.44% to a fresh record high. Tech stocks led the charge, fuelled by Nvidia’s blockbuster announcement of a potential $100 billion investment in OpenAI to bolster AI infrastructure, including new data centres. This propelled Nvidia’s shares up 3.93%, lifting the NASDAQ (+0.70%) and the Magnificent 7 (+0.75%) to new highs, with the Mag-7 now boasting a 20.43% gain year-to-date. In contrast, European markets took a breather, with the STOXX 600 dipping 0.13%. UK assets, however, showed resilience, as the FTSE 100 gained 0.11% and 10-year gilts rallied slightly.
Fed signals a hawkish tilt?
Rates markets took a slightly hawkish turn as Fed speakers weighed in. Atlanta Fed President Bostic expressed caution, pencilling in just one rate cut for 2025 and citing persistent inflation. St. Louis Fed President Musalem echoed this, warning against overly accommodative policy, while Cleveland’s Hammack called current policy only ‘mildly restrictive.’ Governor Miran’s dovish push for a lower fed funds rate was largely shrugged off, given his outlier vote for a 50bp cut at the last meeting. As a result, markets trimmed expectations for rate cuts. Treasury yields ticked up, with the 2-year at 3.60% (+3.1bps) and the 10-year at 4.15% (+2.0bps). Investors await Fed Chair Powell’s comments today.
What does Brooks Macdonald think?
A familiar pattern is emerging in US equities, reminiscent of 2023 and 2024, where gains are heavily concentrated in a handful of stocks. The S&P 500 is up an impressive 13.81% year-to-date, but the equal-weighted index lags at 7.65%, highlighting the outsized role of the Magnificent 7. While tech’s dominance drives headlines, the broader market’s steadier performance suggests a need for diversification to navigate potential risks in this top-heavy rally.
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Alex Clare
23/09/2025