26.11.25 - Soft data fuels rate cut bets

The market is once again shifting its narrative. Today’s economic data boosted hopes for an early Federal Reserve rate cut, pushing the probability of a 25bps cut in December to 85%, up from below 30% just one week ago.

Weekly initial jobless claims came in at 216,000 for the week ending November 22 — lower than the expected 225,000.
This is hardly a sign of a weakening labor market. In fact, it's uncomfortably resilient for a market betting on imminent rate cuts.

Markets: FOMO before the holiday

• Equities higher

• US 10-year yield unchanged at 4.0%

• Gold: pushing above USD 4’150/oz

• USD: continued pressure

• Cryptos: lifted by the same momentum, Bitcoin rising towards USD 90k

• Volatility: VIX slipping further to 17

My View: The current optimism on Wall Street is built more on hope than on evidence.

America’s economy is providing just the right amount of disappointment to fuel dovish dreams — softening retail sales, moderating inflation prints, and now a mixed bag of labor indicators. Markets welcome every negative surprise as a positive for policy.
It’s a remarkable turnaround, and a clear sign of how quickly sentiment can flip when investors are desperate for good news.

This optimism was sparked by softer-than-expected data, reinforcing the idea that the U.S. economy is cooling just enough to justify easier monetary policy. But beneath the surface, not everything aligns with that story.
The jobless claims do hardly give a sign of a weakening labor market. In fact, it's uncomfortably resilient for a market betting on imminent rate cuts. Today’s number may give the Fed a reason to pause and reassess, especially as policymakers remain focused on labor-market softness as a key precondition for easing.

Add the political rumor mill, including the potential appointment of Kevin Hassett, a Trump-aligned economist known for dovish tendencies, to lead the Fed, and investors are pricing in a kind of early Christmas present.

But today’s jobless claims number is a reminder: The labor market is not breaking.
And without clearer signs of weakness, the Fed may still decide to wait.

For now, markets are ignoring that nuance. FOMO is running the show, and that always increases the risk of exaggerated moves in both directions.

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