The Weekly BluRB — Sept. 24th, 2025

The Slowdown Era 

Intro:

Welcome to the Weekly BluRB, a newsletter catered to students and professionals to get the latest news and insights on global markets. Get prepared for the week by reading four weekly stories circulating around equity markets, macro trends, geopolitics, and new business developments. And the best part: we’ll give you an informed view about where we think prices, policy, and trends are going in the near future. The content in these writings is for informational purposes only and does not constitute financial or investing advice.

U.S. Equity Markets: Rate Cut Reactions — By: Faith Spalding

Last week, we reported about growing concerns over the impact of executive overreach at the Federal Reserve on the heels of Federal Reserve Governor Lisa Cook’s firing, but last Tuesday’s Federal Open Market Committee meeting indicated that the Federal Reserve has resisted pressure from the White House for a half-point cut and continues to retain its independence. Accordingly, equity markets positively rose in response to the Federal Reserve’s first 25 point basis cut of the year. Elicited by a rapidly weakening labor market and a soft housing market, the rate cut prompted rises in the S&P 500, Dow, and Nasdaq by 1.22%, 1.05%, and 2.21%, respectively. 

Historically, equity style performance has mixed odds after cuts in both recessionary and non-recessionary cycles. Across 12 rate hike cycles since 1965, we have experienced ten yield-curve inversions and eight recessions. An inversion occurs when short-term treasury bonds have higher yields than long-term bonds, and typically signals to investors that interest rates will fall and preempts recession. Recession occurs over a sustained period of decreasing economic output accompanied by high unemployment rates. The one-month yield curve sits at 4.08% while the one-year yield curve sits at 3.629%. The spread between 10-year and 2-year treasury yields sits at 0.59 percentage points as of September 23, 2025. As such, the yield curve is positive, sloping upward. While a sustained inverted curve has long-been a recession indicator, recessions historically tend to follow the yield curve’s steepening phase after inversion — indicating the spread is still in the danger zone, especially considering the weakening U.S. economy. 

Figure 1: Historical 10-2 Treasury Yield Spread

This comes as the U.S. Federal Reserve Chair Jerome Powell has had to balance concerns about growing inflation with weakening employment rates and fewer jobs added, his Tuesday address emphasizing that “near-term risks” to inflation are “tilted to the upside” while employment risks are causing the Fed to reassess its approach to monetary policy. According to Mr. Powell, the U.S. is experiencing an “economic slowdown” in supply and demand, with uncertainty exacerbated by the Trump Administration’s wide-ranging tariff levies. Fed Governor Michelle Bowman voiced concerns that the labor market could enter a “precarious phase,” and that “a shock could tip it into sudden and significant deterioration.”

All Shock, No Awe: The H1B-Visa Situation

A potential event for shock came Friday, when the Trump Administration announced without warning that noncitizens living in the U.S. on H1-B visas would be subject to $100,000 fees. While White House Press Secretary Karoline Levitt clarified Saturday that the fees would be one-time and wouldn’t apply to current visa holders nor restrict their travel, panic broke out internationally. Visa holders reportedly rushed to book last-minute flights back to the U.S. with major companies amplifying one message to visa-holders abroad: come home immediately. While Indian IT stocks absorbed most of the damage as markets opened this Monday, major U.S. companies remain worried about the effects of the proclamations. 

JP Morgan CEO Jamie Dimon remarked that the fee hike “caught everyone off guard,” and that JP Morgan would be “engaging with stakeholders and policymakers.” JP Morgan is among the top-ten employers of H1-B visa holders, and covering the fees per employee is sure to be an unwelcome cost for the company. However lukewarm, Dimon’s comments reflect concern around the growing crackdown on immigration in the U.S., which Dimon himself called “an immigrant nation.”

These remarks also come as local economies bear the brunt of the impact of immigration raids, where reports of deportees lacking due process continue alongside decreases in workforce participation across a multitude of industries, from street vending to meatpacking. In California, the total workforce dropped by 3.1%, while the number of noncitizens showing up to work dropped by 7.2% from May to June, corresponding with the expansion of immigration worksite raids throughout the state. 

Mr. Powell’s Tuesday address echoed similar unease; when asked by reporters about possible causes for the hiring slump, he remarked, “The supply of workers has obviously come way down. There’s very little growth, if any, in the supply of workers. And at the same time, demand for workers has also come down quite sharply, and to the point where we see what I’ve called a curious balance.”  While Governor Bowman signaled that these recent cuts are a step toward neutralizing the economy, we still have no confirmation from the Fed whether rates will be cut in October. Investors are trading at 91.9% odds that the Fed board will cut rates by at least an additional quarter point to between 3.75% and 4% on October 29th, and we expect the Fed to follow suit. 

US Economy: A Shutdown Showdown and Accelerating Defense Tech — By: Lucy Cox

Will the Spending Showdown End in Shutdown?

Congress is in recess this week. With both chambers home, you would think there isn’t anything too urgent for the nation’s most powerful legislators to be doing, right? Wrong. The federal government is expected to run out of money on September 30th. If Congress does not reach a deal, through appropriations or a stopgap spending bill, then the government will shut down. 

So far, things are not looking too good. The possibility of FY2026 appropriations bills continuing to fund the government before the deadline is virtually dead, with only two of the 12 appropriations bills necessary having passed the House. This leaves only a continuing resolution, or “CR,” which are temporary spending bills to keep the government running while appropriations bills are being approved and typically continue the level of funding from the previous year’s appropriations. Congress has made frequent use of these, as the last time all 12 appropriations bills were enacted in time for the fiscal year was 1997. 

Last Friday, Senate Democrats blocked a House Republican “clean” CR proposal that would fund the government until the end of November at levels from the previous year. Likewise, a bill backed by Congressional Democrats which would fund the government until the end of October, rollback Medicaid spending cuts in the Big Beautiful Bill, extend Obamacare subsidies set to expire at the end of the year, and restore funding for public broadcasting that was cut this summer also failed in the Senate last week. Several moderate Republicans are likely to back an Obamacare subsidies extension, but Medicaid and public broadcasting spending are off the table in the Republican-led House and Senate. 

Since Congress is out of session this week, there are currently no votes scheduled until after the government runs out of money. So unless a deal is reached, a shutdown will ensue, and a deal is looking less and less likely. After briefly agreeing to a meeting with Congressional Democrat leaders Tuesday morning, President Trump reneged on the meeting on Tuesday night citing “unserious and ridiculous demands.” In the event of a shutdown, mandatory services like Border Patrol, the Postal Service, and Social Security will continue to work, however federal workers, including the military, will go unpaid.

First F-47 in production, Collaborative Combat Aircraft usher in new wave of defense tech

Boeing has begun production on the first F-47 fighter jet, in only a few short months since its plan was announced. Air Force Chief of Staff David Allvin announced that the Air Force plans to purchase at least 185 F-47s from Boeing, replacing the entire fleet of F-22 Raptors. 

Figure 2: The F-47 announced in March 2025

The F-47 is a highly advanced sixth-generation fighter jet with a combat radius of more than 1000 nautical miles and the ability to fly at speeds greater than Mach 2 (more than 1,500 miles per hour). In comparison, the F-22 Raptor currently has a combat radius of only 590 nautical miles and the F-35A currently caps out its speed at Mach 1.6 (around 1,200 miles per hour). In addition to incredible speed and unmatched distance capabilities, the F-47 will have elite stealth capabilities, weapons, and engines, as well as accompanying autonomous drone wingmen (known as collaborative combat aircraft or CCA). These features will be incredibly useful considering growing tension across the Pacific into Asia, as fighter aircraft will need to stretch long swaths of ocean to reach targets with little opportunity for refueling.

While Boeing is spearheading the creation of the F-47 jet, the CCA will be contracted out to Anduril (a tech up-and-comer in the defense industry) as well as General Atomics, highlighting shifting norms in the defence industry away from just the prime defense contractors. The CCA will have a shorter combat radius than the F-47, and their top speed is classified at this moment, yet Anduril and General Atomics are getting a shot in the arm, as the Air Force is slated to order more than 1,000 CCAs for its new F-47s by the end of the decade.

Gen. Allvin also claimed on social media that these new CCA will herald “a new way of acquisition,” that will focus on rapid adaptation to new defense technology, and shifting away from old practices that incentivized the long use of antiquated technologies. In a “built to adapt” rather than “build to last” strategy, the move emboldening these companies and the CCAs they provide is providing encouraging signs that new defense companies like Anduril are having distinct impacts on the U.S. military in getting the force to move towards more cost-effective, yet even more innovative and accurate technologies.

Global Macro: No Sunshine and Rainbows Amidst International Tensions — By: Faith Spalding

Is India Pissed? Yes.

Tensions continue to flare between the United States and India, especially after the Trump Administration’s abrupt announcement of new fees for H1-B visa receivers. Roughly 71% of H-1B visa holders in the U.S. are Indian nationals, and the implementation of a $100,000 fee for visa applicants is renewing tensions between the two countries amidst hope for a trade deal.

Markets were quick to respond to the chaos: Indian tech stocks fell nearly 3% Monday, with nine out of ten Indian IT companies on the NIFTY sub-index experiencing losses. Software company Mphasis Limited fell nearly 4%, Persistent Systems was down 3.8% and LTIMindtree fell 3.79% . The losses come as talks between the U.S. and India continuing stalling over tariff turbulence and concerns about market access. This summer, the U.S. levied a 25% tariff on Indian exports after the two countries failed to strike a trade deal, increasing the rate to 50% as a result of India’s substantial purchases of Russian oil. 

While both Prime Minister Narenda Modi and President Trump took to social media earlier this month to overly praise each other and reopen trade talks, the two countries have been beating around the bush when it comes to sitting down and penning an agreement. More specifically, both administrations continue failing to hit deadlines necessary to push a deal through. The two leaders have come head-to-head on important diplomatic issues. For example, President Trump has insisted he played a decisive role in mediating peace between Indian and Pakistan after armed conflict in May prompted concerns about all-out war between the two. However, these claims have frustrated New Delhi; on a call with President Trump in June, Prime Minister Modi emphasized “complete political consensus in India on this matter.” 

Russia: A League of its Own

We don’t write very much about Russia — while the country once boasted emerging market with strong potential, the Ukraine War has made the Russian economy incredibly hostile. With three years down the line of Russia’s full-scale invasion of Ukraine and still no decisive progress made by Moscow, the Russian economy is crumbling. The on-going war effort has elicited a continued demand of resources flowing to the front-line, reflected by Russia’s tripled federal defense budget 2021-2024, where estimates place costs rising from 3.6 trillion RUB in 2021 to 13 trillion RUB in 2024. In 2025, the country is set to spend at least 40% of its federal budget on defense. Russia’s federal budget expenditure rose by 21% between January and August, from 23.1 trillion RUB (approx. $278 billion USD) to 27.9 trillion RUB ($336 billion USD), while revenues have increased by just 3% to 23.7 trillion RUB ($285 billion USD). As such, Russia’s budget deficit is shocking, amounting to 1.9% of the country’s GDP.

Figure 3: Russia National Defense Budget in 2021-2024

Across the board, signs of collapse are showing. While Russia’s National Wealth Fund has acted as a cushion for some economic blowback, its liquid assets have experienced major losses, decreasing from $142 billion USD to $40 billion in just three years. As such, the National Wealth Fund can no longer offset economic shortfalls. Instead, the government is offsetting the deficit by issuing federal bonds (OFZ’s) that banks purchase and then obtain funds from the Russian Central Bank through repurchase agreements. 

While data is somewhat limited, it shows there has been a drastic slowdown in Russian production, with the Russian GDP only increasing 0.4% year-on-year in 2025. Moreover, the civilian economy is paying the price for the flailing war effort. The reported annual inflation rate stands at 9.5%, — an untenable amount. Russians are becoming poorer as a direct result of fiscal support of the war effort, with studies revealing that the share of household income spent on basic necessities rose from 69% in 2023 to 86% in 2025. 

Despite little battlefield gains this year, Russian President Vladimir Putin shows no signs of scaling back from his onslaught of Ukraine. As of Tuesday, President Trump posted on Truth Social that due to pressure on the Russian economy and the support of NATO, Ukraine could get back “the original borders from where this war started”. This is a crucial shift in the current U.S. position on the war in Ukraine, as Ukrainian President Volodymyr Zelensky and President Trump clashed at the Oval Office earlier this year about divergent ceasefire concerns. What remains abundantly clear is that the Russian economy is beyond struggling as Russian citizens continue to pay the hefty price of a needless war.  

Story of the Week: Stress in South Korea — By: Sydney Sibrian

South Korea risks falling headfirst into a financial crisis, should it comply with the United States’ investment demands. This is but one battle in a long war foreign powers are fighting against President Trump and his tariffs. In April, he invoked a “national emergency”, imposing a universal 10% tariff on all countries and additional tariffs with whom the U.S. had the largest trade deficits. His strong-arm approach leaves only one out for countries: agree to the terms. 

Japan, Korea’s neighbor to the east, conceded to President Trump’s economic agenda, agreeing to a deal that promised $550 billion towards investment in the U.S. in exchange for lower tariffs. While tariffs have lowered from 27.5% to 15%, Japan’s exports have declined for a fifth consecutive month. Japan, is no doubt hurting, and will remain so. 

South Korea, however, will face an even heavier financial burden, given its current economic standing. Negotiations regarding the U.S. trade agreement have stalled, given concerns over negative financial trade implications. Korean officials reasoned that the current package — attributing $350 billion towards U.S. investment — could compromise loans and depress the won. With the won having recently hit a 15-year low, along with an already tight leash on its currency market following a financial crisis in the 1990s, feasibility of a signed agreement relies on the possibility of a currency swap line with the U.S. The U.S. has leverage, but the fallout from a Hyundai factory raid made earlier this month has South Korean officials less conducive to negotiating. 

The largest single-site enforcement operation in Homeland Security history left a heavy fallout. DHS detained over 300 Korean workers, forcing them to eat near open toilets. Deputy Secretary of State Christopher Landau is headlining the reconciliatory efforts, traveling to South Korea and promising a “visa-working group” in the near future. This response is all meant to gloss over the fact that the administration’s new 100,000 H-1B visa fee will make it unaffordable to reach the U.S. at all. President Trump may say he wants it “both ways”, but the world, especially South Korea, is understanding that this entails America “winning” and everyone else paying the price. The ball is in South Korea’s court and brazenly negotiating the way President Trump does, unilaterally and forcefully, may just be what it takes to win.