The Profit Margin: November 3, 2025
Statistic of the Week
The International Monetary Fund (IMF) projects that the U.S. government’s debt burden will surpass that of both Italy and Greece. By the end of 2029, the IMF expects gross government debt to reach 143.4% of GDP, exceeding the previous record set following the pandemic. The IMF also anticipates that the U.S. budget deficit will remain near 7% of GDP annually through the remainder of the 2020s.
Global Perspective
The United States and China have agreed to a one-year trade truce. Under the agreement reached between President Trump and President Xi, the U.S. will lower tariffs on Chinese imports to 47%. In return, China has committed to purchasing 12 million metric tons of U.S. soybeans during the remainder of 2025 and each year from 2026 through 2028. Additionally, China will take measures to reduce the flow of fentanyl into the U.S. and lift restrictions on rare earth element exports.
Market Moving Events
Tuesday: Trade Deficit*, Factory Orders*, JOLTS*
Wednesday: ADP Employment, ISM Services
Thursday: Jobless Claims*, Productivity*
Friday: Nonfarm Payrolls,* Consumer Credit
*Denotes data unlikely to be released if federal government remains closed.
Commentary
Markets continued their upward trend last week, with all three major U.S. equity indices posting gains. The Nasdaq led the way, advancing 2.24%,1 while the Dow Jones Industrial Average rose 0.75%.2 The S&P 500, though the laggard, logged its third consecutive weekly gain, rising 0.71%.3 Bond yields moved higher, with the 10-year Treasury yield edging up 0.06% to close Friday at 4.08%.4
Last week’s news cycle was dominated by corporate earnings reports, the Federal Open Market Committee (FOMC) policy announcement, and trade negotiations between the United States and two of its key Asian counterparts—China and South Korea. Overall, corporate earnings have been broadly positive, with two key themes emerging this quarter. First, tariff policy has not had a significant impact on corporate profitability. Second, corporate America continues to display an insatiable appetite for investment in artificial intelligence. This ongoing buildout has supported profits across a range of industries and appears poised to continue driving growth. The FOMC lowered its benchmark interest rate by 0.25% (chart right). While markets are pricing in the likelihood of a third cut this year in December, Chair Powell emphasized that another reduction is not a “done deal.”5 Finally, the United States reached a one-year trade truce with China (see Global Perspective). The easing of trade tensions should help bolster currently subdued corporate confidence.
With the federal government shuttered, there is a growing deficit of insight into the labor market. More than 30 days into the shutdown, it appears likely that we will miss a second consecutive nonfarm payrolls report.
Chart of the Week
The FOMC cut its benchmark rate by 0.25% last week to a target range of 3.75%-4.00%. This marked the second rate cut of the year. Markets are expecting an additional cut at the December meeting.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week:
Clearnomics,
Bureau of Labor Statistics
Statistic of the Week:
Financial Times
Global Perspective:
The White House
Commentary:
1. Bloomberg
2. Bloomberg
3. Bloomberg, Investor’s Business Daily
4. MarketWatch.com
5. Investor’s Business Daily