Rate Cuts: How Close Are We?
November 24–26
In a holiday-shortened week, U.S. labor data and inflation trends in Latin America took center stage. Expectations around the Federal Reserve’s next move are once again driving market sentiment.
United States:
- Consumer confidence fell to its lowest level since April, and layoffs continued to rise, pushing the probability of a December rate cut to 84%, up from 39% the previous week.
Europe:
- Business confidence in Germany unexpectedly weakened. In the United Kingdom, the new fiscal budget includes tax increases amid an environment of sluggish economic growth.
Japan:
- Prime Minister Sanae Takaichi heightened diplomatic tensions with China after stating that Japan could intervene if Beijing acts against Taiwan, adding uncertainty to the regional outlook.
China:
- Industrial profits fell 5.5% in October, while the government adopted a firmer stance regarding Taiwan, amplifying geopolitical risks across Asia.
Brazil:
- Annual inflation slowed to 4.50% in November, returning to the central bank’s target range for the first time since January—an outcome welcomed by markets.
Mexico:
- Inflation rose to 3.61% in the first half of November. Banxico revised its 2025 growth forecast down from 0.6% to 0.3%, while keeping its 2026 estimate unchanged at 1.1%.
“The thesis underlying everything, whether you’re an actively managed fund or a passive fund, is that the U.S. will be OK. If you don’t believe that, you shouldn’t be in the stock market.” — Peter Lynch
Key Upcoming Events:
- United States: Second estimate of Q3 2025 GDP and ISM Manufacturing — December 2
- United States: ISM Services Index — December 3
Monitor
