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The odds of a second consecutive interest rate cut from the Federal Reserve in December have shrunk to around 30% from near certainty a month ago and a coin flip at the beginning of November, according to Bloomberg data.
Investors lowered their bets following the release of a new employment data schedule on 19 November which saw the cancellation of the October jobs report, due to the government shutdown.
The November non-farm payrolls report will now be released on 16 December, after the final Federal Reserve meeting of 2025 on 10 December, depriving policy makers of a read on the labour market.
Meanwhile, minutes from the October Fed meeting, also released on 19 November, confirmed a divided committee with several policy members voting against October’s interest rate cut.
A December cut in rates is still possible but looks unlikely given the lack of unity among policy makers and untimely data releases. Many Fed officials said it was appropriate to keep rates steady for the rest of 2025.
However, looking into 2026 most policy makers saw further scope for further interest rate cuts.
Delayed report further muddies the waters
The delayed September non-farm payrolls report which landed on 20 November gave encouragement to both hawks and doves on the Fed committee.
There was an upside surprise in the number of jobs created which came in at 119,000 compared with 51,000 expected, suggesting a resilient labour market.
On the other hand, the unemployment rate ticked up to 4.4% from 4.3%, higher than forecast and reaching a four-year high.
In addition, the Bureau of Labor Statistics also revealed the economy lost 4,000 jobs in August rather than adding 21,000 as initially reported, giving more ammunition to Fed policy makers more worries about a softening labour market.
The Fed has known for some time that US households, particularly low and middle-income earners, have faced mounting financial stress from sticky inflation and a tougher jobs market.
Walmart raises outlook
Traditionally, retail bellwether Walmart has benefitted from consumers trading down, so when the big-box retailer is performing well investors often see it as a bad sign for the state of the general economy.
On that basis the latest quarterly results from Walmart, released on 20 November, may give investors and Fed officials pause for thought.
Walmart revealed better than expected earnings and raised its full year outlook, driven by strong online sales growth. The retailer saw an increase in the number of customer visits and higher spending, driving market share gains.
“We’re well positioned for a strong finish to the year and beyond that,” commented CEO Dough McMillion, who is set to retire in February 2026 after 11 years at the helm.
McMillion will be succeeded by John Furner who heads up Walmart’s US operations.
The company also announced a move of its listing to the Nasdaq from the New York Stock Exchange, effective from 9 December.
Martin Gamble: Shares and Markets Writer
Martin Gamble is Shares and Markets writer at AJ Bell. He was previously the Education Editor of Shares Magazine. He has been with the business since 2019.
Martin graduated from the University of Kent in...
