Today's War Room Trading Recap

Market Recap — What Drove Momentum

September 11, 2025

1. Inflation Surprises Still in the Mix
   U.S. CPI data for August printed a +0.4% month-over‐month increase — higher than many expected.  Core inflation was more stable (food and energy excluded), which helped temper the reaction somewhat. 

2. Labor Market Showing Signs of Softening
   Weekly jobless claims surged to about 263,000 — the highest level in several years.  That weaker labor picture is fueling expectations that the Fed may shift toward easing or cutting rates. 

3. Rate Cut Expectations Remain a Key Driver
   Despite the hotter inflation reading, markets are holding onto bets for lower rates in the coming months. The soft labor data and easing wholesale price pressures (Producer Price Index having softened) give ammunition to the view that inflation may be cooling enough to allow for gradual Fed easing. 

4. Equities React — Risk Sentiment Up
   With inflation somewhat contained (or at least not exploding), and labor showing some cracks, U.S. markets pushed higher. The S&P 500 and Nasdaq pushed to new record highs.  Sectors like tech, discretionary, and parts of financials saw strength. 

5. Bond & Yield Dynamics
   Treasury yields eased a bit as rate‐cut hopes were supported by weaker labor data. Lower yields tend to help growth and tech stocks (and risk assets in general), which helped fuel the equity upside. 

6. Risks & Tensions Still in Play
   There’s still a tug of war: inflation isn’t fully behind us; tariffs and policy uncertainty remain headwinds. The IMF and other observers are pointing out strains in domestic demand, which adds to the case for being cautious even amid the positive momentum. 

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What This Means for Traders

• Favor trend-aligned trades — Stocks benefiting from lower yield expectations and softening labor conditions are likely to continue catching upside momentum.

• Watch for key inflection points — Inflation prints, Fed commentary, and employment data will remain major market movers. Surprise in any direction could shift expectations quickly.

• Don’t fight the tide — When rate cuts become more certain, risk assets tend to outperform. Trying to short stocks on strength might be alluring, but the market is giving fewer signals that that’s the high-probability path right now.

• Manage exposure — Volatility may increase as traders position for upcoming data and Fed moves. Using well-defined support/resistance, stop zones, and sector rotation can help.