Markets Poised Ahead of Crucial Fed Decision This Week
Last Week’s Market Overview
The week began with U.S. ISM Manufacturing PMI for November coming in slightly weaker at 48.2 (vs. 48.6 expected and 48.7 previously). Markets then turned their focus to a speech from Fed Chair Powell on Tuesday.
In the Eurozone, preliminary November inflation data showed a softer mix:
- Core HICP (MoM) fell 0.5%, deeper than the prior –0.3%
- Core HICP (YoY) eased to 2.4% (vs. 2.5% expected)
- Headline inflation (MoM) dropped 0.3% after a +0.2% rise
- HICP (YoY) printed 2.2%, marginally above the 2.1% forecast
The UK also awaited remarks from BoE Governor Bailey.
On Wednesday, U.S. labour data surprised to the downside with ADP Employment Change at –32K (vs. +5K expected). However, ISM Services PMI improved to 52.6, beating expectations. In Europe, President Lagarde delivered two ECB speeches.
Thursday saw Eurozone Retail Sales rise 1.5% YoY, slightly stronger than forecast. On Friday, Eurozone Q3 GDP grew 0.3% QoQ (vs. 0.2% expected), with YoY unchanged at 1.4%.
In the U.S., Core PCE inflation—the Fed’s preferred measure—printed exactly in line at 0.2% MoM and 2.8% YoY. Consumer sentiment improved, with the Michigan Index rising to 53.3 from 51 previously.
The Week Ahead
The focus is firmly on Wednesday’s Federal Reserve meeting, where markets expect a 25 bps cut to 3.75%. The updated dot plot and economic projections will be key in shaping expectations for the 2026 rate path. Any softer tone acknowledging labour market cooling or stronger confidence in disinflation could pressure the USD, support U.S. Treasuries, and lift equities and gold.
On Thursday, attention shifts to the UK as Governor Bailey speaks, with markets seeking clues on the timing of BoE cuts amid sticky domestic inflation.
Overall, markets are likely to trade cautiously into the Fed announcement, with movement across FX, rates, and equities driven by how aggressively policymakers signal the easing cycle ahead.
| Date | Time | Region | Event | Actual | Consensus | Previous |
| Dec 10, 2025 | 7:00 PM | USD | Fed Interest Rate Decision | — | 3.75% | 4.00% |
| Dec 10, 2025 | 7:30 PM | USD | FOMC Press Conference | __ | — | — |
| Dec 11, 2025 | 9:50 AM | GBP | BoE Governor Bailey Speech | __ | — | — |
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