For much of the year, bigger has been better in terms of performance based on market cap. But the smallest tier of firms (micro-caps) are suddenly giving the biggest names (mega caps) a run for their money in year-to-date terms, based on a set of ETFs through Friday’s close (Sep. 19).

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Markets signal more Fed rates cuts ahead. After the Federal Reserve cut interest rates last week, Fed funds futures are pricing in high odds that the central bank will ease monetary policy again at the next two policy meetings remaining in 2025. The policy-sensitive 2-year yield is trading well below the current target-rate range, which equates with expectations for more rate cuts. Meanwhile, TMC Research’s Fed funds model is indicating that policy remains moderately tight, which implies the central bank will continue to ease.

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