Weekly Market Commentary - September 15, 2025

Week In Review

Downward revisions to job growth and relatively benign inflation reports boosted the odds for a Fed rate cut above 90%. 3 U.S. equity indices found support from a surprise revenue revelation from Oracle that validated AI infrastructure projections. The news drove the S&P 500 higher, up +1.6%.

This Week

The highlight will be the FOMC interest rate decision and post-meeting presser with Federal Reserve Chairman Jerome Powell. Since the risk has seemingly shifted to a slowing labor market, a 25-basis-point cut to the federal funds rate is widely expected. The updated Summary of Economic Projections that provides a forecast for the federal funds rate, inflation, employment and economic growth will also command investor attention.

Portfolio Theme

Municipal bonds are issued by state government authorities to fund public projects and interest income is generally exempt from federal taxation. Investment grade municipal bonds are ostensibly attractive, particularly with the term premium at the long end of the curve, as yields are currently in the 95th percentile of their past decade range.4 For example, 20-year maturity bonds that carry a AAA rating offer a tax-equivalent yield of 7.31% that is about 48% above the comparable U.S. Treasury note yield.5 Historically, AAA-rated municipal bonds have had an exemplary record of credit worthiness, with near-zero defaults, providing a high level of safety for risk-averse investors. The opportunity can be even more satisfying. For in-state municipal bond investors, interest earned provides a triple tax advantage, as the income is exempt from federal, state and local taxation. Simplicity offers municipal bond portfolios that provide a chance to lock in compelling current yields and lower the risk of holding too much cash. Investors not only receive financial benefits from municipal bonds but gain civic pride by supporting projects that may benefit their local community.

_________________________________________

Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from Invesco.

1 Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums. Indices are not typically available for direct investment, are unmanaged, and do not incur fees or expenses.

2 Index Statistics: P/E Ratio – Displays the forecasted P/E ratio of the representative index ETF. Yield - Dividend-per-share divided by current share price. Table statistics are updated weekly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX).

3 CME FedWatch.

4 First Trust Advisors.

5 Invesco.

Past performance does not guarantee future results. Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.