Weekly Macro Report, November 30 2025

1. Economic Growth & Outlook

The S&P 500 gained 13.54% year-to-date through November 28, 2025, driven by mega-cap AI stocks, though breadth remains weak with the median stock down 1.7% in October. US GDP expanded 3.8% annualized in Q2 2025, with Q3 estimates ranging from 0.6% to 3.9%. The Fed Funds effective rate stands at 3.88% as of late November, down from 4.33% in mid-2025, supporting growth while inflation pressures persist near 3%.

2. Labor Market

The U.S. unemployment rate rose to 4.4% in September 2025, the highest since October 2021, while initial unemployment claims fell to 216,000 in the week ending November 22. Continuing claims edged up to 1.96 million, indicating longer job search durations. These trends suggest a labor market with stable layoffs but slower hiring, increasing the likelihood of a Federal Reserve rate cut at the December 9-10 meeting.

3. Interest Rates

As of late November 2025, Treasury yields retreated, with the 10-year yield declining to approximately 4.00%, reflecting rising expectations for Fed rate cuts. Investment-grade corporate yields held near 4.43%, with spreads over Treasuries widening slightly, indicating cautious business borrowing conditions. Meanwhile, 30-year mortgage rates increased modestly to roughly 6.85%, sustaining affordability challenges for homebuyers despite Treasury easing. This mixed rate environment balances investor demand for safety with persistent credit risk premiums for corporations and continues to pressure household budgets.

4. Yield Spreads

As of November 26, 2025, the US Treasury yield curve displays a modest 0.55% spread between 10-year and 2-year yields, suggesting moderate growth expectations. The 10-year TIPS real yield of 1.77% reflects contained inflation expectations and a positive real return environment. These readings indicate a resilient but not exuberant economic outlook among fixed-income investors.

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5. Inflation Dynamics

As of September 2025, U.S. headline CPI increased 3.0% year-over-year, driven mainly by shelter (up 3.6%) and energy (up 2.8%), with gasoline surging 4.1% monthly. Core CPI held just below 3.0%, stable but elevated, led by shelter costs. The Producer Price Index rose to 149.78 in September, indicating a 2.7% year-over-year gain, suggesting upward pressure on consumer prices ahead. The 10-year breakeven rate as of late November 2025 reflects inflation expectations near 3.0%, pointing to sustained inflation momentum, modestly above many global peers in the OECD.

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6. Money Supply

The U.S. M2 money supply reached $22.3 trillion in October 2025, growing 4.5% year-over-year, which lags behind combined real GDP growth of 2.1% (Q2 2025) plus 3.0% CPI inflation (September 2025). CPI inflation moderated slightly to 3.0% year-over-year in November. M2 growth is driven by elevated demand deposits and money market fund balances concentrated in major asset managers. Given money supply expansion trailing nominal GDP growth, liquidity conditions appear broadly neutral with mild inflationary risks present.

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7. Consumer Sentiment

The University of Michigan Consumer Sentiment Index fell to 51.0 in November 2025, down 4.9% from October's 53.6, marking the second-lowest reading on record. Current conditions collapsed to 51.1 while expectations edged up 1.4% to 51.0, signaling households view immediate circumstances far grimmer than their forward outlook. The 10-year/2-year yield spread stood at 0.55% as of November 26, modestly positive yet historically flat, reflecting muted growth expectations that align with consumer pessimism on near-term finances despite tentative longer-term hope.

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8. Housing Market

Home prices rose 2.2% year over year in Q3 2025, but median list prices fell 0.4% in November. Existing-home sales increased 1.2% in October, while inventory climbed 12.6% year over year, with 1.1 million homes for sale. Mortgage rates hovered near 6.2%, the lowest in over a year. The market is shifting toward balance, with more supply and modest sales growth improving affordability for buyers.

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9. Stock Market Sectors

As of November 28, 2025, Utilities surged 0.54% and Technology climbed 0.50%, while Real Estate and Health Care declined marginally. The Technology rally reflects continued AI infrastructure demand, particularly in semiconductor and electrical equipment industries that power data centers. Real Estate weakness persists amid elevated valuation concerns and rising Treasury yield sensitivity, creating a clear bifurcation between growth and defensive sectors.

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10. Stock Market Valuation

As of late November 2025, the S&P 500 PE stands near 31, while the Shiller PE exceeds 40, levels last seen around the dot-com bubble, signaling significant overvaluation relative to its historical averages. The Buffett Indicator remains elevated, confirming that US equity valuations are materially richer than global peers, where developed markets typically trade at lower multiples. This valuation gap is driven primarily by sustained investor confidence in US mega-cap technology and AI sectors, alongside stronger earnings growth and macro stability compared to slower growth and geopolitical uncertainties abroad.

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11. Stock Market Internals

As of November 28, 2025, the VIX dropped to 16.35, down 5.0% from the prior session, reflecting declining market stress. The index fell sharply from 23.43 on November 21, signaling reduced near-term volatility expectations. This compression in the VIX, coupled with modest S&P 500 gains of 0.54% on November 28, suggests investors have regained risk appetite following earlier month turbulence.

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12. Global Equity Performance

Global equity markets surged in Q3 2025, with the S&P 500 gaining 8.1% to reach 17.81% year-to-date through November 28, while emerging markets outpaced developed peers—China rallied 20.7% in Q3 and Japan's Nikkei 225 climbed 11.0% to record highs. Technology-driven gains and Fed rate cuts in September fueled broad-based momentum, though valuations remain elevated across major indices as of late November 2025.

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13. Commodities

Gold prices have risen 57% year-to-date, trading above $4,000 per ounce in late November 2025, driven by ongoing central bank purchases and softer USD amid heightened expectations of a U.S. rate cut. Silver surged 16.6% in November alone, hitting a record $56.78 per ounce, fueled by strong investment demand and industrial use in clean energy sectors. Supply constraints and geopolitical risks underpin these trends, while sustained market volatility and inflation concerns keep precious metals sought after as safe-haven assets.

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14. Crypto Market

Bitcoin closed November 2025 at $91,285, down 2.3% for the month after reaching $118,838 earlier, signaling profit-taking following a 74% year-to-date surge. Ethereum maintained support above $3,600, outperforming in recent weeks with a 50% rally. Market sentiment remains mixed, with Polymarket data showing 64% probability Bitcoin trades between $90,000-$92,000 by month-end, reflecting consolidation after November's volatility.

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15. Currencies

In October-November 2025, the US dollar strengthened modestly, with EUR/USD near 1.15–1.18 reflecting US monetary resilience and subdued euro performance. The Japanese yen weakened sharply to 154 per USD despite BoJ’s 0.50% rate hold, pressuring Japanese exporters amid capital outflows. The British pound hovered around 1.31–1.36, while the Chinese yuan stabilized near 7.12 per USD, supported by targeted policy. Commodity-linked currencies—Canadian, Australian, and New Zealand dollars—showed slight fluctuations, mirroring global growth concerns and inflation trends. Swiss franc remained relatively stable, influencing safe-haven flows and central bank decisions.

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16. Debt Levels

As of Q2 2025, U.S. federal debt stands at 119% of GDP, with household debt at 61.7% as of December 2024. This federal debt level exceeds the Euro Area's 87% but remains below Japan's 235%. The key risk is rising interest costs, projected to reach 12% of government revenues by 2030. This dynamic requires fiscal consolidation and signals higher fiscal risk and potential market volatility for investors, necessitating adjustments to long-term rate expectations.

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17. Economic Calendar

In the month ahead, the December 10 Consumer Price Index report will be a key inflation gauge; a reading above 2.5% could prompt the Fed to delay rate cuts. The December 5 Employment Situation report will provide a timely view of labor market strength. The Federal Reserve's December 17 meeting will weigh these data points to determine if conditions warrant a change in the current federal funds rate.

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An error appeared while loading the data. Maybe there is a technical problem with the data source. Please let me know if this happens regularly @silvan_frank.