Launch Pad

As expected, the Fed delivered its third straight quarter-point rate cut yesterday, lowering the federal funds rate to 3.5%–3.75%. While the cut was expected by markets, the committee appeared very divided, with a total of three dissents, the most since 2019. Policymakers disagreed over whether stubborn inflation or a weakening labour market poses the bigger risk, and despite the cut, officials maintained expectations for only one additional rate reduction next year. The Fed also revived short-term Treasury purchases to maintain enough bank reserves and adjusted its statement to signal uncertainty about the timing of future cuts. Economic forecasts showed slightly stronger growth and moderating inflation ahead, while political pressure and delayed economic data due to the government shutdown complicates the outlook. 

The BoC also delivered no surprises and held its policy rate at 2.25% yesterday, saying borrowing costs remain appropriate as the economy shows greater resilience than expected despite U.S. trade tensions. Governor Tiff Macklem noted strong recent data, including solid job gains and revised GDP figures, though policymakers still see inflation remaining near their 2% target. The bank signaled a cautious, wait-and-see stance, emphasizing elevated uncertainty, muted hiring intentions, and weakness in trade-sensitive sectors, while suggesting rate cuts are unlikely without a significant deterioration in the outlook. 

This may be a growing trend with global interest-rate expectations moving towards a more hawkish outlook. It’s not just the BoC but recent signals from other central banks, including the Reserve Bank of Australia and ECB suggests rate hikes may not be off the table next year, reversing earlier expectations of more cuts. Inflation remains elevated and growth is staying resilient, adding to this, many central banks have executed unusually quick easing cycles (outside of recession), historically a recipe for renewed overheating and further tightening. Markets, which have gotten comfortable with the recent low volatility, are now reassessing risks, putting pressure on currencies like the yen and sparking sell-offs in global bond markets, from Japan to Australia and Canada. 

China’s consumer inflation rose to a 21-month high in November due to a rebound in food prices, but underlying demand remains weak as core inflation stayed low and producer prices fell for the third straight year, signaling continued deflationary pressures. Despite meeting its 5% growth target with help from policy support and solid exports, China continues to struggle with soft domestic spending and lingering effects from the global trade war. Analysts expect deflation to continue next year and say officials must implement even more stimulus to revive demand, including supporting household consumption, stabilizing the property sector, and improving social safety nets. 

Having 10 kids is expensive, which could be why NFL great Philip Rivers is putting his cleats back on. After the Colts lost starting quarterback Daniel Jones to a torn Achilles and backup Riley Leonard for a knee injury, coaches reached out to retired quarterback Philip Rivers about a comeback. With limited alternatives, playoff hopes slipping, and a little side of desperation, Indianapolis brought the 44-year-old in for a workout, where they were surprised by his skills despite being out of the league since 2020. Rivers, now the NFL’s oldest player and a Hall of Fame semifinalist, agreed to join the practice squad despite risks to his candidacy and concerns about his conditioning (you can’t blame him for packing on a few lbs post-retirement). If all goes according to plan, Rovers will be playing this Sunday against the Seattle Seahawks. 

Gold prices are higher for a third day, just shy of a record high, after the Federal Reserve delivered a widely expected interest-rate cut yesterday, while silver climbed to a record high. The Fed lowered rates for a third straight meeting, keeping its outlook for just one more cut in 2026, but subtly changing the wording of its statement to hint at greater uncertainty around future reductions. A dovish Fed is positive for precious metals, which typically benefit from low rates as they don’t pay interest. Gold has surged more than 60% this year and silver has more than doubled, with both metals on track for their best annual performances since 1979. The scorching rallies have been underpinned by elevated central-bank buying and a retreat by investors from sovereign bonds and currencies. According to the World Gold Council, holdings in gold-backed ETFs have risen every month this year except May.