24.11.25 - Consumer - reality check ahead of Black Friday
The holiday-shortened week puts the spotlight firmly on the U.S. consumer. With Thanksgiving ahead and Black Friday sales underway, this is the key test of real-world spending appetite. Early indicators are not encouraging: consumer sentiment remained around its lowest level in Friday’s report, highlighting fatigue at a time when households typically accelerate purchases.
Markets briefly rallied on Friday after the odds for a December rate cut jumped from below 30% to 70%. This move was triggered by remarks from New York Federal Reserve President John Williams who hinted at room for near-term monetary easing. Investors immediately translated this into hopes for a December rate cut, lifting risk appetite away from the lowest levels.
Markets: higher market swings continue amid investors nervousness
US futures higher with Nasdaq +1% driven by Googles share price
Bonds: yields slightly lower with US 10-year yield below 4.05%
Gold: trades higher trying to reclaim USD 4’100/oz level
USD: unchanged
Cryptos: give up latest gains over weekend with Bitcoin falling from USD 88k below 86k
Volatility: VIX remains well above 20, however lower from Thursday spike
My View: Investors are ignoring the real backbone. Recent market focus has been dominated by AI, valuations, and earnings narratives. But the reality check is the consumer: nearly 70% of US GDP depends on household spending. And the signals are weakening:
Delinquencies on leasing and auto loans continue to rise, a classic warning sign of household stress.
Tariffs are slowly feeding into higher prices, making durable goods more expensive just as budgets tighten.
Savings buffers are thin, and credit card APRs are near historic highs.
All this comes at a moment when the market is highly sensitive to data and speculation. Expectations for a rate cut may provide short-term relief rallies, but the underlying consumer picture is far more important, and far more fragile.
A continued deleveraging process remains likely, with markets reacting in outsized fashion to every piece of data or Fed communication. Volatility should remain elevated. Big swings on both sides are possible as positioning remains thin and macro uncertainty high.
The AI story is still capturing the headlines. Google caught the attention by its AI model launch Gemini 3.0. But the consumer could decide the next market leg. If Black Friday fails to impress, it may confirm what sentiment and rising delinquencies are already telling us: the backbone of the US economy is showing early signs of strain.
In such an environment, elevated volatility, sharp intraday reversals, and continued deleveraging should not come as a surprise.
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