Last week, a mix of significant economic data, comments from Fed Chair Powell on interest rates, and anticipation over the new names expected to join Trump’s cabinet drove risk assets lower. The S&P 500 equity index closed approximately 2% down. Treasury bonds remained volatile, finishing the week 10-15 basis points wider, while credit spreads also widened by 2 to 10 basis points.
In the US, economic data was somewhat mixed. The consumer price index (CPI) and producer price index (PPI) aligned with expectations but ticked higher on a month-over-month basis. Retail sales and Empire Manufacturing came in stronger than expected, though some analysts noted that these improvements might reflect demand being pulled forward in anticipation of next year’s tariffs.
Fed Chair Jerome Powell adopted a more cautious tone regarding the rate-cutting cycle during a speech last week. In response, the market quickly adjusted its expectations for a 25 basis point cut in December, with the probability dropping to 55% from nearly 100% at the start of the week.
This week, market drivers include a potential announcement of the next US Treasury Secretary, NVIDIA earnings, and additional comments from Federal Reserve members, which may offer further insights into the future direction of interest rates.
