Market Musings 12/9/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
Will the Fed increase 2026 #RateCuts expectations?
Markets rallied hard on December #RateCuts hype, but now they want more…
After that big surge a couple weeks ago, it’s been noticeably quieter with investors asking: What’s next? So, let’s talk about this week’s Fed meeting.
December #RateCuts are expected to be a lock with odds sitting near 90%. Meanwhile, January’s only at 24%, but markets are already pricing-in 2 more next year… just later. So, what are investors watching?
First, #LaborMarkets. That’s what kicked off this #RateCuts cycle in the first place. We haven’t seen an official jobs report since September with October canceled due to the shutdown. As a proxy, ADP payrolls have been mixed showing softness, but not a collapse.
We’ll, however, get the delayed November jobs report mid-month and hopefully December gets back on schedule in early January.
Next, #Inflation. September came in cooler than expected across CPI, PPI, and PCE. It was a big reason why December #RateCuts expectation surged.
But again, we’re flying a little blind. The government canceled the October inflation reports and we won’t get the delayed November data until the week before Christmas.
And finally, the Fed’s dot plot. This is the rate forecast they update every other meeting.
Back in September, the Fed already projected the three #RateCuts for this year, but only one for next year. Investors are already pricing-in that to shift to 2 for 2026.
So overall, markets are trading more cautiously heading into this week’s meeting. Investors just aren’t sure what the next catalyst is. It could be more rising #RateCuts expectation… or lower and spark a pullback.
We’ll see what the Fed says midweek on #RateCuts before eyes turn toward the delayed November data on #LaborMarkets & #Inflation later this month.
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Original Photo by Pixabay.