Weekly Update 11/26/2025: All Eyes are on December Fed Meeting as US Economic Data Begins to Trickle Out
- Alphabet releases Gemini 3 to critical acclaim
- Elevance releases shares rally on news Affordable Care Act subsidies may be extended
- Deere releases earnings beating profit and revenue expectations
- Dick’s Sporting Goods releases earnings beating profit and revenue expectations
Domestic Economic News
US stocks rose in early trading Wednesday as elevated expectations for US interest-rate cuts helped sustain traders’ newfound optimism into the Thanksgiving holiday. The US benchmark also drew technical support as it moved back above its 50-day moving average. The dollar headed for back-to- back losses, while Treasuries eased. Equities were regaining momentum after early-November jitters over stretched artificial-intelligence valuations prompted investors to pull back from risk. Sentiment improved this week as dovish remarks by Federal Reserve officials revived bets for a December cut. Those expectations got another lift after reports that White House National Economic Council Director Kevin Hassett is the leading contender for the next Fed chair — a pick investors see as aligned with President Donald Trump’s push for lower rates. Money markets are now pricing an 80% chance of a Fed quarter-point cut next month and favor three more by year-end 2026. A week ago, traders expected only three cuts in total.
US consumer confidence slid in November by the most in seven months on growing anxiety about the labor market and the economy. The Conference Board’s gauge decreased 6.8 points to 88.7, data out Tuesday showed. The figure was weaker than all estimates in a Bloomberg survey of economists. A gauge of expectations for the next six months declined to the lowest level since April, while measure of present conditions slumped to a more than one-year low. The ongoing slide in consumer sentiment reflects lingering concerns about the impact of persistently high prices and a cooling labor market on Americans’ finances as well as the broader economy. Recent hiring has largely been concentrated in just two industries — health care and hospitality — and the unemployment rate has steadily ticked higher. Companies announced a wave of layoffs in October, fueling consumers’ anxiety about their jobs.
Pending sales of previously owned US homes rose in October by more than forecast as buyers took advantage of a decline in mortgage rates. An index of contract signings increased 1.9% to 76.3, the highest in nearly a year, according to data issued Tuesday by the National Association of Realtors. The median projection in a Bloomberg survey was for a 0.2% gain. A decline in mortgage rates to a one-year low during the month, along with a pickup in inventory this year, helped encourage potential buyers to step off the sidelines. At the same time, the path forward for the housing market may prove challenging without a further decline in home financing costs as prices stay elevated. The 30-year fixed rate is currently hovering just under 6.4% after falling in October to a low of 6.3%. A slight pickup in mortgage applications for purchases suggests sales will gradually improve over the next several months, Charlie Dougherty, senior economist at Wells Fargo & Co., said in a note last week. “While there is further scope for improvement in the months ahead, we do not anticipate a strong rebound as elevated homeownership costs remain a constraint,” Dougherty said. “What’s more, the bulk of mortgaged homeowners still hold sub-5% mortgage rates, well below where mortgage rates currently prevail.” The NAR’s report showed contract signings rose in three of four US regions, led by a 5.3% increase in the Midwest. Pending sales climbed 1.4% in the South, the biggest home-selling region, but fell in the West. Pending-homes sales tend to be a leading indicator for previously owned homes, as houses typically go under contract a month or two before they’re sold.
US wholesale inflation picked up in September from a month earlier on higher energy and food costs that offset more modest advances in other consumer goods. The producer price index rose 0.3% from a month earlier after easing in August, according to the Bureau of Labor Statistics. The increase matched the median projection in a Bloomberg survey of economists. Excluding food and energy, the PPI rose by less than forecast from August and climbed 2.6% from a year ago — the smallest gain since July 2024. The report out Tuesday, originally scheduled for Oct. 16 release, was delayed by the government shutdown. BLS did not announce a date for the October PPI in Tuesday’s release. The wholesale price data surface a month after the September consumer price index, which showed softer-than-expected inflation. The PPI suggests companies, worried that steeper costs risk driving customers away, were limiting the degree of price hikes to compensate for higher import duties. Wholesale goods prices rose 0.9%, with 60% of the increase due to higher gasoline costs. Consumer goods prices minus food and energy posted the smallest advance since March. Services costs were unchanged after declining a month earlier, the PPI report showed. Margins shrank for machinery and equipment wholesalers and rose at food wholesalers. Airline passenger services also picked up. Economists and investors closely track the PPI because several of its components feed into the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index. In addition to airfares, those categories were mixed. Portfolio management fees and hospital outpatient care decreased, while the cost of nursing home care picked up. The Bureau of Economic Analysis said Monday that on Dec. 5 it will issue September PCE price data, along with income and spending figures. In separate government data, retail sales rose modestly in September, suggesting some consumers hit pause after several months of robust spending. A less-volatile PPI measure that excludes food, energy and trade services edged up 0.1%, the smallest gain in three months. The September PPI and PCE reports will be among the last key inflation readings the Fed will have on hand by the time officials next meet on Dec. 9–10. Policymakers remain divided over whether to cut interest rates as they debate the employment outlook with inflation still running above their goal.
Applications for US unemployment benefits unexpectedly fell last week to the lowest since mid-April, remaining relatively subdued amid economic uncertainty. Initial claims decreased by 6,000 to 216,000 in the week ended Nov. 22. The median forecast in a Bloomberg survey of economists called for 225,000 applications. Continuing claims, a proxy for the number of people receiving benefits, edged up to 1.96 million in the previous week, according to Labor Department data released Wednesday. Wednesday’s figures indicate employers are still largely retaining current employees as they have pulled back on bringing in new hires. Though there have been an increasing number of job cut announcements by large companies in recent weeks, including Verizon Communications Inc. and Amazon.com Inc., there hasn’t been a notable pickup in actual layoffs yet. Recurring claims have largely trended upward since September and remain near levels last seen when the labor market was recovering from the pandemic. Though the level of initial applications remains subdued, it has become harder for those who are already unemployed to find a new job. The weekly claims data are prone to swings around holidays, such as Thanksgiving. On an unadjusted basis, initial claims jumped last week.
Separate data out Wednesday showed a proxy for business investment in equipment posted a solid advance for a third straight month. The value of core capital goods orders, excluding defense hardware and aircraft, increased 0.9% in September after a similar gain a month earlier, according to the Census Bureau. Nondefense capital goods shipments minus aircraft, which feed into the equipment investment portion of the gross domestic product report, also rose 0.9%.
It was great to actually begin receiving economic data again after the government shutdown!
Interest Rate Insight and the Fed
Federal Reserve Governor Christopher Waller said he’s advocating an interest-rate cut in December, though the US central bank can probably take more of a meeting-by-meeting approach starting in January once it receives a flood of economic data. “My concern is mainly labor market, in terms of our dual mandate. So I’m advocating for a rate cut at the next meeting,” Waller said Monday on the Fox Business Network. “You may see a more of a meeting-by-meeting approach once you get to January.” Investors put the chances of a rate cut at the Fed’s upcoming Dec. 9-10 policy meeting at about 70%, according to futures contracts. Fed officials appear deeply divided over whether another reduction will be appropriate following cuts in September and October. Waller said the latest data suggest the labor market remains weak, though he added a flood of delayed economic reports to be released after the December gathering could make the January decision “a little trickier.” Employment statistics for October and November are set to be released on Dec. 16, and November data on consumer prices are due Dec. 18. “If it suddenly shows a rebound in inflation or jobs, or the economy’s taking off, then it might give concern,” he said. “I still don’t think the labor market is going to turn around in the next six weeks to eight weeks.” Waller is currently under consideration by the Trump administration as a candidate to succeed Jerome Powell as Fed chair next year. He said he had a “great meeting” with Treasury Secretary Scott Bessent, who is leading the interview process, about 10 days ago. “He and I seem to hit it off very well, talking about economics, the economy, financial markets,” Waller said. “They’ve never been political. They’re straight about economics, and that’s just been a great time, for me to sit and talk with him.”
US regulators moved to relax capital requirements that lenders have said limit their ability to act as intermediaries in the Treasuries market during times of stress. Officials from the Federal Deposit Insurance Corp. voted to adopt a final plan to ease what’s known as the enhanced supplementary leverage ratio. The final measure, which would see the largest US lenders like Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc. hold less capital relative to total assets, is expected to be largely in line with a proposal unveiled in June. In April, President Donald Trump’s unveiling of new tariffs rattled the markets, increasing focus on the standards. The adoption of the measure is a win for Wall Street banking giants, as Trump-era officials look to soften several capital measures established in the wake of the 2008 global financial crisis. The Federal Reserve and the Office of the Comptroller of the Currency have not yet announced votes on a finalized version of the plan.
Impactful International News
US President Donald Trump and Chinese President Xi Jinping on Monday held their first talks since agreeing to a tariff truce last month, discussing trade, Taiwan and Russia’s invasion of Ukraine. Trump said the telephone call was “very good” and that the leaders spoke about purchases of soybeans and other farm products as well as curbing shipments of illegal fentanyl. The US president said he agreed to visit Beijing in April, and that he had invited Xi for a state visit next year. “Our relationship with China is extremely strong!” Trump posted on social media. “There has been significant progress on both sides in keeping our agreements current and accurate. Now we can set our sights on the big picture.” Xi told Trump that the return of Taiwan to China is a key part of the post-World War II international order, according to a Chinese Foreign Ministry statement. The Chinese leader also said the two countries should keep the positive momentum generated during their meeting last month in South Korea and expand cooperation, the statement said. The leaders also spoke about Russia’s invasion of Ukraine and Xi expressed hope for the two sides to reach a binding peace agreement, the ministry said. An ongoing row between Japan and China centered around Taiwan threatens to inject fresh tensions into the Trump-Xi relationship and complicate ties, after the world’s two largest economies reached their trade truce in October. Japan is a key US ally in Asia. That deal saw Washington lower fentanyl-related tariffs on Chinese goods and Beijing agree to remove certain restrictions on the export of rare earths. Any flare-up between the US and China could cause further uncertainty for markets and business leaders.
German business confidence unexpectedly dipped in November, a fresh sign of the challenge to overcome stagnation even as the government ramps up spending. An expectations index by the Ifo institute dropped to 90.6 in November from 91.6 the previous month, a release Monday showed. Analysts in a Bloomberg survey had predicted an unchanged reading. A measure of existing conditions edged higher. “Companies assessed their current situation as somewhat more positive,” Ifo President Clemens Fuest said. “They have little faith that a recovery is coming anytime soon,” however, with the outlook among manufacturers taking a “significant hit.” The data underscore doubts about the government’s plan to restore growth by investing in infrastructure and defense. While the Bundesbank and most other forecasters expect output to expand in the fourth quarter after a volatile 2025, some have recently scaled back their predictions. Chancellor Friedrich Merz’s economic advisers this month lowered their growth forecast for next year to less than 1%, while warning that the government must ensure outlays are targeted at additional and productive investments. Otherwise, the chance to address deep-seated challenges and restore longer-term growth could be squandered, they said.
Company Events
SGK writes additional weekly commentary for clients of the firm detailing recent events and earnings of core equity holdings.
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Steigerwald, Gordon & Koch, Inc. [“SGK”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from SGK. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. SGK is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the SGK’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.sgkwealthadvisors.com. Please Note: SGK does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to SGK’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a SGK client, please contact SGK, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.