Today’s market offers plenty of noise and plenty of opportunity. In this issue of Steady Investor, we look at what’s shaping investor sentiment now and how you can keep your strategy focused on long-term growth.
- Understanding the “U.S. Dollar Debasement Trade”
- Markets rise despite Government shutdown
- Refinancing surges as rates dip
Understanding the “U.S. Dollar Debasement Trade” – The rise of the so-called “debasement trade” has become one of 2025’s standout market stories, largely tied to gold’s performance.As the media frames it, investors are increasingly concerned that fiscal policy, political instability, and ballooning debt could erode the value of traditional currencies, especially the U.S. dollar. Rather than park cash in Treasurys or bank accounts, many investors are reaching for perceived alternatives like gold and silver. The appeal isn’t necessarily about inflation protection or a looming crisis. In fact, what makes this rally unique is that it’s happening during a period of relative market calm, not amid a crisis. Instead, many see it as a hedge against future policy missteps, with ever-widening deficits and growing pressure on central banks to lower rates. The question investors need to step back and ask, however, is whether the dollar is truly at risk of losing its standing.In short, we think the answer is no. The U.S. dollar remains deeply embedded in global finance. According to the Bank for International Settlements, it was on one side of nearly 90% of all foreign exchange trades so far in 2025, up slightly from previous years. That dominance has proven remarkably stable despite political shocks, tariff waves, and budget brinkmanship. Investors have not sold dollars en masse, and there is little evidence of a rapid shift away from Treasurys in global reserve portfolios. Some argue the Chinese yuan is gaining in marginal share in FX transactions, but it still accounts for less than 9% of global trade activity and less than 3% of cross-border payments, per SWIFT. In our view, the “debasement trade” likely reflects investor enthusiasm for momentum-driven assets and diversified hedges, not legitimate concern that the dollar is on the brink of collapse.1
The Market Keeps Moving. Smart Investors Stay Grounded.
Between rate-cut talk, record market levels, and political headlines, it can feel like everything’s changing at once. One day optimism is high, the next, investors are bracing for a pullback. The truth is that uncertainty is just part of the investing landscape.
That’s why we created Navigating Market Volatility2, a free guide that shares four principles every investor can use to stay grounded when markets shift. It’s built around one goal— helping you stay confident in your plan, even when the headlines feel chaotic. It also covers topics such as:
- Sharp market declines and corrections are a normal part of investing
- The best market days come unexpectedly (often within days or weeks of the worst days)
- Trying to pick market tops and bottoms is nearly impossible
- Trust your strategy and discipline, not the headlines
- Plus, more insights and assistance to help you keep your investment strategy on course
If you have $500,000 or more to invest, get your free volatility guide today!
Download Your Free Copy Today: Navigating Market Volatility: 4 Principles for Staying the Course2
The Shutdown Continues, But the Stock Market Does Not Seem to Mind – As the U.S. government shutdown stretches into its second week, markets are doing what they often do in the face of Washington gridlock: going up.Since the shutdown began on October 1, the S&P 500 has notched multiple all-time highs, which may seem counterintuitive to many readers given higher levels of uncertainty. But the market’s behavior is consistent with the history of government shutdowns. After the five-week government shutdown that ended in January 2019, the S&P 500 surged 36% over the following year. Following the 1982 shutdown, it jumped nearly 20% in 100 days. Of course, not every shutdown sees gains: In 2018, the S&P fell in the months following the standoff. But even then, losses were relatively modest.Why the resilience?Remember, markets are forward-looking. They tend to discount short-term noise, like shutdown headlines, and focus instead on long-term fundamentals. Past data show that any GDP lost during a funding lapse is typically made up once government operations resume. Meanwhile, essential functions, including interest payments on U.S. debt, continue uninterrupted.3
A Sign that Homeowners are Eager for Lower Mortgage Rates – A recent dip in mortgage rates sparked a brief but intense surge in refinancing, offering a glimpse at just how eager homeowners are to reduce their monthly payments.The average 30-year mortgage rate fell to 6.26% in mid-September, the lowest level in 11 months. In response, refinancing activity jumped 80% over three weeks, according to the Mortgage Bankers Association. That momentum quickly stalled when rates ticked back up, but the burst in activity underscored a growing sensitivity to even modest rate changes.4
30-Year Fixed Mortgage Rate
Homeowners who bought during the last few years (when borrowing costs were elevated) are especially eager to refinance. In Q2, 90% of all rate-and-term refinancings were for loans originated in 2023 and 2024. Many of these borrowers carry large mortgages and haven’t built much equity yet. Lower rates offer them meaningful monthly relief. According to ICE Mortgage Technology, the average debt-to-income ratio among Q2 refinancers dropped to 34%, easing pressure on household budgets. If rates fall to 6%, more than 5.9 million mortgage holders could refinance to save at least 0.75 percentage point, potentially cutting their monthly payments by nearly $400. The refinancing rebound could also revive activity for lenders, who have seen volumes drop sharply since the pandemic-era boom. And for the broader economy, cheaper refinancing could unlock spending power, especially if more homeowners tap equity through cash-out refis or home equity lines.
Headlines Change Fast. Don’t Let Them Shake Your Plan – Market headlines will keep shifting from rate cuts, to earnings surprises, and to policy changes. But lasting success comes from tuning out the noise and staying focused on what drives long-term growth.
Our free guide, Navigating Market Volatility6, shares practical ways to stay disciplined when uncertainty rises. Inside, you’ll learn how to keep your portfolio steady, avoid emotional decisions, and stay confident in your strategy, no matter what the next market move brings. If you have $500,000 or more to invest, get your free volatility guide today!
Disclosure
2 Zacks Investment Management reserves the right to amend the terms or rescind the free Navigating Market Volatility: 4 Principles for Staying the Course offer at any time and for any reason at its discretion.
3 Wall Street Journal. October 7, 2025. https://www.cnbc.com/2025/10/07/government-shutdowns-stock-market-performance.html
4 Wall Street Journal. October 8, 2025. https://www.wsj.com/economy/housing/homeowners-are-pouncing-on-the-tiniest-drop-in-mortgage-rates-2f66f72d?mod=economy_lead_pos4
5 Fred Economic Data. October 9, 2025. https://fred.stlouisfed.org/series/MORTGAGE30US#
6 Zacks Investment Management reserves the right to amend the terms or rescind the free Navigating Market Volatility: 4 Principles for Staying the Course offer at any time and for any reason at its discretion.
DISCLOSURE
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