Inflation in the U.S. rose to 2.4% year-on-year in November, while month-on-month inflation slowed to 0.1%. Despite this uptick, the Federal Reserve cut interest rates by 25 basis points, with concerns about future inflation driven by potential tariffs under President-elect Trump. The Fed now anticipates inflation will not reach its 2% target until late 2026.
The Federal Reserve is poised to cut interest rates in December, driven by a solid jobs report and easing financial conditions, despite concerns over inflation and potential speculative bubbles. Policymakers are debating the pace of future cuts, with some advocating for caution amid robust wage growth and a strong economy. The upcoming consumer and producer price reports may influence the final decision.
US stocks reached all-time highs following positive jobs data, with the S&P 500 on track for its best annual return since 2019. The labor market remains stable, supporting expectations for a Federal Reserve rate cut in December, while inflation data next week will be crucial for future policy decisions. Corporate highlights include Lululemon's significant stock gain, DocuSign's revenue forecast boost, and Victoria's Secret raising its outlook after strong sales.
Federal Reserve Bank of Cleveland President Beth Hammack indicated that the central bank is "at or near" the point of slowing interest-rate cuts, citing a robust economy and persistent inflation. She supports market expectations for one more rate cut by January and a few additional reductions by the end of next year, while stressing that future decisions will depend on incoming data.
The 10-year Treasury yield fell to 4.390% as investors await key economic data and speeches from Federal Reserve officials. The market is closely watching developments in the Russia-Ukraine conflict and potential Treasury secretary candidates under President-elect Donald Trump. Upcoming data includes jobless claims and the Philadelphia Fed manufacturing index, while Fed officials express concerns about inflation progress.
The yield on the 10-year Treasury dipped to 4.19% after reaching a three-month high of 4.25% earlier in the week. Traders are closely watching Federal Reserve commentary, with a 97% probability of a 25-basis-point rate cut in November, as policymakers emphasize a cautious approach to inflation. Data on durable goods orders is set to be released on Friday.
The yield on the 10-year Treasury fell to 4.1958%, reversing gains after surpassing 4.25% in the previous session, as traders assess the outlook for interest rate cuts. The 2-year Treasury yield also declined to 4.0466%. Investors are awaiting initial jobless claims and PMI data, along with insights from Federal Reserve policymaker Beth Hammack regarding future interest rate decisions.
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