Global markets ended November 2025 on a surprisingly strong note, rallying as the probability of a Federal Reserve rate cut in December jumped from 30% to 85% in just seven days, according to CME FedWatch data released November 28. The shift—unprecedented in its speed—sent shockwaves through bond markets, lifted equities, and reignited optimism among investors who had braced for prolonged high rates. What happened? After weeks of uncertainty fueled by a 43-day U.S. government shutdown and tech stock volatility, policymakers signaled a quiet but decisive pivot. The market didn’t just react—it rejoiced.

From Shutdown Chaos to Policy Clarity

November began with markets on edge. The government shutdown, which ended on November 20, had frozen key economic data releases, leaving the Federal Reserve operating in the dark. Without fresh employment or inflation figures, officials couldn’t confidently assess the economy’s pulse. Yet, even amid the data blackout, two of the Fed’s most influential voices—Christopher Waller, a governor, and John Williams, president of the New York Fed—publicly endorsed a December cut. Their remarks, made in interviews and speeches, weren’t formal promises. But in central banking, signals matter more than speeches. Markets listened.

By November 25, the probability of a December cut had climbed to 65%. By the 28th, it hit 85%. The jump wasn’t just statistical—it was emotional. Traders who’d been sitting on the sidelines, wary of tech valuations and fading growth, suddenly poured back in. The S&P 500 gained 2.1% in the final three trading days of the month. Bitcoin, often a barometer of risk appetite, recovered slightly after a 16% plunge earlier in November, though it remained below its October peak.

Why December Matters More Than Ever

The Federal Open Market Committee meeting scheduled for December 14–15, 2025, is now the most anticipated event in global finance. A cut here would mark the first reduction since July 2024. More importantly, it would confirm what markets have been whispering: the Fed believes inflation is under control, labor markets are cooling just enough, and the risk of over-tightening outweighs the risk of being too slow.

"We had estimated a December cut of 30%, but now we are at over 80%. I think that’s a very good reason for the rally at month’s end," said Samy Chaar, economist at Lombard Odier Darier Hentsch & Cie SA in Geneva. He added that while volatility usually hits in September and October, November 2025 broke the pattern—making the rebound all the more telling.

The market’s confidence was also reflected in bond yields. The U.S. ten-year Treasury yield dipped to around 4.0%, its lowest level since early November and close to the pre-FOMC meeting level of October. That’s significant: lower yields mean cheaper borrowing, which supports corporate investment and consumer spending. "It’s not just about rates—it’s about what the Fed is signaling about the future," said one portfolio manager in London, who asked not to be named.

Currency Whiplash and Global Divergence

While the Fed pivots, other central banks are holding firm—or even tightening. The European Central Bank released minutes in late November showing policymakers were "not in a hurry" to cut rates, despite U.S. developments. That divergence is reshaping currency flows. The U.S. dollar, which had been rising through most of the month, ended November nearly flat against a basket of major currencies, on track for its biggest weekly decline since July.

The Japanese yen, battered to a 10-month low of 157.9 per dollar earlier in November, rebounded to 156.37 by month’s end. Investors are now watching for possible intervention by the Japanese government, which has repeatedly warned that currency weakness is unacceptable. "Today is also the end of the month and FX performance will often be determined by these less predictable flows," noted MUFG strategists in a client note, highlighting how month-end portfolio rebalancing can amplify moves.

Meanwhile, the Australian dollar surged 1.1% and the New Zealand dollar climbed 1.8%, as markets priced in the likelihood that both countries’ rate-cutting cycles are nearing completion. That’s a subtle but important distinction: while the U.S. may be starting to ease, Australia and New Zealand are likely nearing the end of theirs. This divergence is creating fresh opportunities—and risks—for global investors.

What Comes Next? The December Crossroads

The real test arrives December 14. Will the Fed deliver a 25-basis-point cut? Or will they hold, citing lingering inflation concerns? Analysts say a cut is now the baseline expectation. But the language matters. If the Fed signals that more cuts are coming in 2026, markets could surge. If they hint at a pause after December, the rally may stall.

Adding complexity: U.S. trade talks, which had a November 27 deadline set by the President, were later declared non-binding. "There’s no deadline," administration officials said, even as pressure continued on China and the EU. That ambiguity keeps trade-sensitive sectors like manufacturing and agriculture on edge.

Meanwhile, the September 2025 quarter is being viewed as a potential inflection point. Some analysts suggest it was "the bottom" for government subsidies and corporate investment. If that’s true, then the economy may be entering a new phase—one where private demand, not policy support, drives growth. That’s the Fed’s ideal outcome. And if they believe it’s happening, a December cut isn’t just policy—it’s a vote of confidence.