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Markets rallied to near all-time highs last week as investors welcomed signals of a potential December rate cut and the emergence of dovish Kevin Hassett as a leading Fed Chair candidate.

What caught our eyes this week

Black Friday bargain hunting

Both shoppers and investors went on a buying spree last week. In a shortened trading week, major market indexes shot back to near all-time highs. This came with shifting expectations for near-term monetary policy after New York Fed President John Williams and Fed whisperer Nick Timiraos of the “Wall Street Journal” hinted that another cut may come in December. Ultra-dove Kevin Hassett emerged as front-runner for the next Fed Chair, which was welcome news to stocks and bonds that had been wobbling since Fed Chair Jerome Powell threw cold water on the outlook for rate cuts at the October meeting. Longer-term Treasury yields and inflation expectations remain contained, evidence that markets view lower rates as not politically driven, but necessary for the employment side of the Fed mandate. If economic activity reaccelerates and inflation pressures build, the reaction to a dovish Fed may change as central bank credibility questions arise. For now, markets are comfortable with looser policy and spent the last week repricing the risk of labor market softening spiraling out of control.

Odds of a December Rate Cut Since the October Federal Open Market Committee Meeting

CHART OF THE WEEK: Cerity Partners, CME FedWatch, November 28, 2025

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