Stocks and Yields Waver as Fed Caution Lingers: Markets Wrap
(Bloomberg) — Stocks wavered while US Treasury yields hovered near a two-month high as traders held off on making big bets ahead of the Federal Reserve’s final interest-rate decision of 2025.
S&P 500 futures were little changed after the benchmark halted a four-day rally. The rate on 10-year Treasuries held steady at 4.16% after rising to the highest since late September. The dollar traded flat, while Bitcoin retreated toward $90,000.
A dayslong slump in US government debt has curbed risk appetite as traders grow cautious about the pace of monetary easing beyond Wednesday’s meeting. Money markets now see two cuts in 2026 after a likely 25-basis-point reduction tomorrow — a retreat from more optimistic forecasts in recent weeks.
“Given all the tension in global bond markets at the moment, the meeting of the Fed could potentially add fuel to the fire,” said Vincent Juvyns, chief investment strategist at ING in Brussels. “Investors will also be watching very closely the results of Oracle and Broadcom. There’s a lot at stake this week.”
Among premarket movers, Nvidia Corp. advanced nearly 1% after President Donald Trump granted the chipmaker permission to ship its H200 artificial intelligence chip to China. Paramount Skydance Corp. extended gains following its hostile takeover bid for Warner Bros. Discovery Inc. Netflix Inc. firmed.
For now, the Fed’s decision and its guidance for 2026 remain the main focus for markets. US stocks may turn more volatile after tomorrow’s meeting than after other recent decisions, with Bloomberg options data showing an implied move of 0.7% in either direction.
Data due later Tuesday, including the Job Openings and Labor Turnover Survey, will round out economic releases before the announcement. The JOLTS report is expected to show that the labor market softened modestly in September and October, according to Bloomberg Economics.
Globally, bond markets have been under pressure as central bankers signal that their easing cycles are coming to an end. On Tuesday, Australia’s Michele Bullock declared her country’s easing phase over, following comments from the European Central Bank’s Isabel Schnabel that she’s comfortable with the next move being higher. The Bank of Japan is expected to hike next week.
While the Fed’s easing cycle remains intact, investors must still contend with a policy committee that has grown fractious, limited economic data after the government shutdown and uncertainty over the stance of Chair Jerome Powell’s successor when his term ends in May.
“A more politicized Fed would likely push front-end yields lower via more aggressive rate-cut expectations,” noted Filip Andersson of Danske Bank A/S. “Higher long-term inflation expectations could lift the inflation risk premium, supporting long-end yields and adding steepening pressure.”
“Slowly but steadily, central banks around the world are starting to tilt away from the idea of lower interest rates, upending yields. …Federal Reserve is expected to reduce interest rates, but even there traders are trimming bets on how far and how fast that will be done.”
— Ven Ram, macro strategist. For full analysis, click here.
Corporate News:
Trafigura Group reported a “strong” year for both its oil and metals divisions as the commodities trading giant boosted payouts to staff and profit remained resilient. A Bloomberg basket of European defense stocks rose as German lawmakers prepare to approve a record €52 billion ($61 billion) in military procurement contracts. Home Depot Inc. is offering cautious preliminary guidance for next year, a sign that the home-improvement retailer doesn’t anticipate the housing market to rebound in the short term. Google has been hit by a European Union investigation over fears it may have abused its dominance by using its own artificial intelligence tools to squeeze out competition. PepsiCo Inc. reached an agreement with activist investor Elliott Investment Management that includes a 20% reduction in its US product lineup and a sharper focus on affordability, while the soda and snacks company also plans layoffs as part of cost reduction efforts. China Vanke Co.’s offshore creditors have started fielding requests for talks with potential advisors, a sign that investors are preparing for a worsening of the developer’s debt crisis. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 7:10 a.m. New York time Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average were little changed The Stoxx Europe 600 was little changed The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1636 The British pound was little changed at $1.3324 The Japanese yen fell 0.2% to 156.26 per dollar Cryptocurrencies
Bitcoin fell 1% to $90,380.85 Ether fell 1% to $3,117.55 Bonds
The yield on 10-year Treasuries was little changed at 4.16% Germany’s 10-year yield declined one basis point to 2.85% Britain’s 10-year yield was little changed at 4.52% Commodities
West Texas Intermediate crude rose 0.4% to $59.12 a barrel Spot gold rose 0.3% to $4,202.68 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling.
©2025 Bloomberg L.P.
