Wednesday’s FOMC meeting will be the main focus this week amidst a somewhat sparse data docket. We expect the Fed to close out 2025 with a hawkish 25bps cut. The decision will not be unanimous and is likely to feature dissents in both a hawkish and dovish direction. This is likely to be the last cut under Powell’s leadership. We expect two quarterly rate cuts next year, at the June and September meetings under the new Fed chair. Our terminal rate forecast remains unchanged at 3.125%. The dot plot is likely to show even greater “tacit dissent,” with 8-9 officials likely to submit a 2025 dot of 3.875% (signalling they preferred no cut at this meeting). In US macro data this week. we have trade balance, JOLTs for Oct & Sep & Employment cost index for Q3CY25. In UST dated supply this week, we have $58 BN of 3 year notes on Monday, $39 BN of 10 year bonds on Tuesday & $22 BN of 30 year bonds on Thursday. Fed speak is light this week & there are only 2 Fed speakers on Friday post FOMC. In RoW events, we have BoC policy decision on Wednesday which is likely a status quo. Data since October support holding rates, with labor markets recovering and inflation near the top of the BoC’s target range of 1-3%. We believe the next BoC move is more likely to be a hike than a cut. We also have SNB policy decision on Thursday which is likely a status quo. SNB purchased CHF5.1bn of FX in Q2, following limited interventions in 2024, demonstrating that it remains willing to use this policy tool to curb disinflation.
