Trust Investment Management
November proved to be a volatile month for the markets. Changing expectations about what the Federal Reserve might do with interest rates created noticeable swings in stock and bond prices throughout the month. On top of that, some investors grew concerned that certain parts of the market, especially companies tied to artificial intelligence, had risen too quickly, adding another layer of uncertainty.
At the beginning of November, most investors believed the Fed was likely to cut interest rates again in December. That expectation shifted after the government released a delayed but stronger than expected jobs report. A healthier job market meant the economy was still holding up fairly well, making it less urgent for the Fed to cut rates. Additionally, minutes from recent Fed meetings showed that Fed officials had differing opinions about whether more rate cuts were necessary. This added uncertainty, and as a result, the chances of a December rate cut dropped sharply. When expectations for lower rates faded, bond yields moved higher, which put pressure on both stocks and bonds.
Toward the end of the month, the tone changed again. New York Federal Reserve President John Williams suggested that there could still be room to lower rates in the near future. Around the same time, new economic data pointed to signs that the economy might be cooling a bit. This caused investors to raise their expectations once more for a December rate cut. By month end, the CME Group’s FedWatch Tool showed the probability of a cut rising to about 87%, which helped both stocks and bonds recover from the earlier decline.
As we move forward, some market volatility is likely to continue. The Fed is watching closely to see how inflation and the job market evolve, and markets tend to react quickly to any new information. While short-term swings can be unsettling, it’s important to remember that staying diversified and focused on long-term goals remains one of the most effective ways to navigate uncertain periods.
