The dome of the U.S. Capitol is seen beyond a chain fence during the partial government shutdown in Washington, U.S., January 8, 2019. REUTERS/Kevin Lamarque
Index Performance
At the close of LSEG Lipper’s fund-flows ending October 1, 2025, U.S. broad-based indices were positive across the board: S&P 500 TR (+1.11%), Nasdaq (+1.32%), Russell 2000 (+0.41%), and DJIA (1.01%).
Macro Viewpoint
The shutdown is here—it became official just after midnight on October 1. What was once considered a rare political standoff has, over the past decade, become an increasingly familiar occurrence. Nonessential federal works have been furloughed, and several key agencies including the Department of Labor—which houses the Bureau of Labor Statistics—have suspended operations. As a result, the release of the prior month’s employment data will be delayed, adding yet another layer of uncertainty to the Federal Reserve’s “wait-and-see” approach.
Despite the disruption, U.S. markets have shown remarkable resilience. Equities initially dipped on the headlines, but quickly recovered, extending gains as investors looked past the noise in Washington. While no clear timeline has been provided, history has shown us that shutdowns can linger for up to a month. For now, markets appear to be betting that the shutdown is short-lived, but just as people can lose patience, so too can the markets.
The question now is whether the resilience has solid traction to weather the storm. Will investors begin to lose conviction as the shutdown drags on, causing momentum to fade and risk appetite to dwindle, or will investor optimism and the artificial intelligence boom propel the markets to new heights? For now, the markets’ tone remains cautious, but history reminds us that sentiment can shift in the blink of an eye.
Fund Flows by Asset Type
The race was close between U.S. money market and U.S. equity funds, but cash ultimately took the lead. Money market funds posted a robust $46.6 billion in net inflows, edging out U.S. equity funds, which attracted $42.3 billion. The move marked a sharp acceleration from the prior week, when money market funds drew only $26.8 billion and equity funds attracted $10.0 billion.
Within the fixed income universe, momentum stalled. U.S. taxable bond funds swung from a $12.1 billion inflow the previous week to a marginal $1.9 billion outflow, while U.S. municipal bond funds managed a modest $1.1 billion inflow. Alternative investment flows also lost steam, slipping from $1.0 billion in the prior week to $397 million this week. Commodity funds remained steady, recording $4.0 billion in net inflows versus $4.2 billion previously. Meanwhile, U.S. mixed-assets funds continued to lag the broader universe, posting $369 million in outflows.
Performance by Lipper U.S. Classifications
Within the equity universe, Precious Metals Equity Funds led the charge, advancing 6.12% as investors sought refuge in precious metals amid economic uncertainty. Global Health/Biotechnology followed with a 4.33% gain, while Alternative Energy Funds climbed 3.63%, driven by renewed interest in the clean energy space. On the opposite end of the spectrum, U.S. Financial Services Funds declined 1.15%, trailed by Global Financial Services (0.88%) and the India Region (0.87%) as volatility weighed on sentiment.
Within the fixed income universe, U.S. Treasury Funds led the race, rising 0.45%, amid heightened macro uncertainty. GNMA Funds followed with a 0.26% gain, while U.S. Government Funds added 0.25%. On the lagging side, Short-Intermediate Municipal Funds slipped 0.11%, trailed by Short Municipal Funds (0.09%) and High Yield Leveraged Funds (0.03%), as demand for riskier debt softened.
