December Fed Cut Back in Play as Volatility Reignites Across Global Markets

Still, the market tone remains cautious. Volatility flared up last week as investors questioned whether the Fed truly has the scope to cut next month. And with officials still divided  Boston Fed President Susan Collins said she hasn’t decided whether a December move is appropriate, traders are reluctant to lean fully into risk just yet.

Gold slipped for a third straight day as shifting rate expectations kept bullion under pressure. Meanwhile, crude markets were driven more by geopolitics than fundamentals, with traders monitoring signals of progress toward a Ukraine-Russia peace plan that could eventually boost supply in an already well stocked oil market.

Global bond trading was muted with Japan’s market closed for a holiday, though US Treasuries found support late last week after Williams highlighted rising downside risks to employment and easing inflation pressures  a combination that strengthens the argument for a rate cut.

Equity markets, both in the US and abroad, appear poised to finish the month with some resilience now that rate cut hopes have resurfaced. Contained Treasury yields are also helping to cool the dollar’s recent strength, offering a more supportive backdrop for risk assets.

Geopolitics added another layer of complexity:

• China escalated tensions with Japan by sending a formal letter to the UN amid ongoing disputes.
• Japan reaffirmed plans to deploy missiles near Taiwan, adding to the region’s strategic pressures.
• In Europe, US Secretary of State Marco Rubio signaled that Washington’s Nov. 27 deadline for Ukraine to finalize a US-backed peace plan may slip into next week despite “progress” in weekend talks.

With Fed expectations swinging sharply, markets are likely to stay sensitive to any fresh commentary from policymakers. This week’s cross currents  from geopolitics to shifting rate bets  make this an essential period for traders to stay nimble and stay informed.