Money markets are now pricing in over a 70% probability of a December cut, a sharp rebound after weeks of volatile swings driven by internal divisions at the Fed and a prolonged data blackout from the US government shutdown. With policymakers increasingly signaling a shift toward accommodation, traders are treating this week’s incoming data as essential confirmation of the weakening economic backdrop.
Yet the challenge remains: most of the numbers set for release are dated. The delays mean investors are relying on September data at a time when the economy has already moved on. Even so, the figures carry significant weight as markets look for clarity ahead of next month’s meeting.
Key Data to Watch This Week
- September Retail Sales (Tuesday): Expected to soften as consumers remain pressured by elevated prices and slowing wage momentum.
- Producer Price Index & Durable Goods Orders (later in the week): Provide further clues on inflation persistence and manufacturing demand.
- Jobless Claims (Wednesday): Particularly important, as they cover the November survey week and serve as one of the few timely indicators available to policymakers.
Signs of economic sluggishness continue to accumulate, making this week’s data critical for shaping the Fed’s final decision of 2025. Traders need to remain alert even “historic” data releases have the power to shift rate expectations in a thin information environment.
Geopolitical Watch
US President Donald Trump and China’s President Xi Jinping held their first discussion since agreeing to a tariff truce last month. Talks focused on trade, Taiwan, and Russia’s war in Ukraine a reminder that geopolitical risk remains an undercurrent in global markets as year end approaches.
With rate expectations realigning and fresh data finally hitting the tape, this is shaping up to be one of the most consequential weeks before the December FOMC. For traders, staying ahead of the shifts is not optional it’s essential.
Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.