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Market Outlook

BRIGHTER RISK OUTLOOK TODAY COURTESY BETTER FED PRICING FOR A DEC CUT

ADMIN || 24th November 2025

Dec Fed rate cut is back on the table, setting up a bright start for the week in Asian equities markets. Crypto currencies came roaring back over the weekend to drive home that point, with Bitcoin snapping out of cascading losses to extend a rebound that started Friday along with US equities.

The biggest driver for the shift in sentiment looks to be the classic dynamic of the whiff of easier monetary policy, acting like smelling salts to lift risky assets off the floor. New York Fed President Williams dramatically flipped the script by signalling support for easing next month. Meeting-dated OIS went from pricing in only 36% odds for a cut at the December meeting to anticipating a better than 60% chance.

Also supporting today’s brighter risk outlook were the headlines on the US reportedly discussing whether to let Nvidia sell H200 artificial intelligence chips to China also helped. As, perhaps, did the feeling that AI angst had gone too far, too fast, and so dip buyers had to emerge sooner rather than later. But even there the chipmaker closed down 1% on Friday to pare an initial drop of 4.3%, rather than soaring higher.

In the shorter term, Asian equities are set up for a far brighter Monday than many traders may have anticipated when they logged off on Friday amid a sea of red ink. Especially with Japanese stocks, potentially the most fragile market, closed for a holiday today, so they won’t be trading to price in concerns around heightened tensions with China. Rather, the Kospi and the Taiex have a clear runway to take off and unwind some, or quite possibly all, of last week’s hefty losses.

Even investment grade (IG) bond spreads might settle down this holiday truncated week. The spread on the Bloomberg US Investment Grade Corporate Bond Index widened a basis point Thursday last week to +84, tying with Tuesday’s widest since June. The widening came as underwriters priced a higher than forecast $47 billion in IG debt last week. There will be few deals to price ahead of Thursday’s Thanksgiving holiday. Just $5 billion to $10 billion in high grade issuance is expected this week. This should provide some much-needed stability for IG bond spreads.

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