Weekly Commentary (9/8/25) – Tariff Questions Deepen as Labor Softens, Fed Cuts Loom

Markets spent last week balancing weaker labor data against rising policy uncertainty around tariffs and the Fed’s next move.
For the week, the DJIA slipped 0.26% while the S&P 500 rose 0.37% and the NASDAQ gained 1.16%. Small caps (Russell 2000) were up 1.07%. International stocks edged higher, with MSCI EAFE up 0.25% and MSCI EM up 1.42%. Core bonds (Bloomberg Aggregate) advanced 0.93% as the 10-Year Treasury yield fell 13 bps to 4.10%. Gold jumped 4.02% to $3,613.20/oz, while Oil fell 3.34% to $61.87.
Last week’s economic data reinforced a softer labor backdrop. August nonfarm payrolls rose just 22,000 and the unemployment rate ticked up to 4.3%, the highest in nearly four years. Wage growth moderated. Together, the figures strengthened market conviction for a September rate cut, and some desks floated the chance of a larger move. Bond yields fell on the news, consistent with a “labor-mandate” rationale for easing.  At the same time, tariff uncertainty widened—from “what rates and on whom?” to “how much can a president do without Congress?” A Federal Circuit ruling late the prior week cast doubt on broad use of IEEPA to impose new duties, keeping existing tariffs in place while appeals proceed. Regardless of the legal outcome, the episode raises uncertainty for businesses and investors. 
For the Fed, the policy calculus is tricky. Research generally finds tariffs are inflationary—especially for investment goods—yet the timing and persistence are hard to pin down. With labor cooling and inflation progress uneven, officials will be reluctant to cut and then reverse course if tariff effects re-accelerate prices. That argues for a cautious tone even if a September cut is delivered. 
Valuations remain a watch item. Forward P/Es for U.S. large caps sit well above 5- and 10-year averages, leaving equities more sensitive to earnings disappointments or rate-path surprises. Some strategists warn this leaves markets vulnerable to a correction even if the growth backdrop avoids recession. 
Looking ahead, the market will parse upcoming inflation readings and Fed communications for confirmation of a September move and clues on the path beyond. With policy and legal crosscurrents still in play, we continue to favor discipline: stick to plan, rebalance on moves, and avoid chasing headlines.
We continue to advise investors to be disciplined in adhering to their investment policy and patient when the markets’ winds are pushing against the planned course.
“You can’t predict. You can prepare.” – Howard Marks