The week kicked off on an upbeat note for the markets. 

What initially appeared to be the start of a correction in the S&P 500 and Nasdaq barely took off. Buoyed by hopes of a quick end to the record US government shutdown and Trump’s tweet hinting at “dividends” for Americans financed by trade tariffs, sentiment had already returned to risk-on by Monday.

But how solid are these drivers in the long term?

Starting with Trump’s proposal of an equivalent to helicopter money, “saying it doesn’t mean doing it.” Some suggest it may have been aimed more at boosting market confidence — and perhaps bolstering his own declining popularity — than signaling real action. Optimism based purely on expectations could be fleeting.

Given the fact that tariffs are basically an import tax, borne mainly by U.S. companies and consumers, what Trump called a “dividend” is more like government-backed cashback. The inflationary pressures that come with tariffs will not disappear.  Markets would gain much more confidence if tariffs were actually eliminated. 

As for the shutdown, Democrats caved, and the Senate passed a bill to end the longest shutdown in U.S. history. The bill, pending House approval, would fund the government through January 30, 2026, reinstate furloughed employees, and guarantee back pay. Most of this is likely already priced in by the market.

So, have the markets peaked?

That depends on how circumstances evolve. Optimism is also riding on hopes for a more dovish Fed amid a cooling labor market. In October, U.S. companies cut 153,000 jobs, almost triple last year’s number. Tech and logistics layoffs pushed total job losses in 2025 past one million, the highest since the pandemic.

If Fed members signal in upcoming speeches that a larger rate cut may be necessary at the December meeting, it could boost not only gold prices but also overall market sentiment. On the other hand, if they insist that more data is needed before taking action, risk appetite could cool, punishing risky assets.

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