US Economy: Weekly Commentary – November 10, 2025

US Market Review

U.S. Treasury bonds were mixed. Long-term yields rose. Short-term bonds rallied. Equities fell. Dollar weakened. Oil and gold declined. Bitcoin dropped. Energy and healthcare gained slightly.

U.S. Treasury bonds delivered a mixed performance last week. Long-term maturities underperformed, closing with higher yields, while short-term bonds rallied sharply. Overall, credit markets saw wider spreads during the period. The most notable movement occurred at the short end, where expectations of rate cuts had a stronger impact on 1–2-year maturities. While the Federal Reserve directly controls overnight rates, longer-term yields, which are key drivers of the cost of new and refinanced U.S. debt, remain influenced primarily by market forces.

U.S. equities finished the week in negative territory. Micro- and small-cap stocks dropped 4.45% and 1.90%, respectively, while large caps fell 1.60%. The “Magnificent 7” declined 3.40%, with Nvidia posting the largest loss and wiping out billions in market capitalization. Sector performance was mixed: technology led the downturn with a 4% decline, followed by communications at -2.35%, while energy and healthcare advanced 1.60% and 1.30%, respectively.

In currency markets, the U.S. dollar weakened by 0.26% against the euro. WTI crude oil dropped 1.72% as rising U.S. and OPEC+ production fuelled concerns about potential oversupply. Sentiment was further pressured by Saudi Arabia’s decision to cut December prices for Asian buyers, reflecting softer demand, particularly from China. Gold edged down 0.14% but held above the $4,000 mark. Despite recent outflows from gold funds, ETF demand remains resilient, totalling 619 tons in 2025, with third-quarter holdings up 134% YoY to 222 tons, the second-highest quarterly level since 2021. Bitcoin declined 6.9%.

US Market Views Synopsis

US manufacturing weakens amid tariffs and low demand, while services rebound. Consumer sentiment drops on government shutdown and inflation concerns, supporting the Fed’s cautious stance.

US manufacturing remains under pressure, with the ISM Manufacturing Index falling to 48.7 in October, marking its eighth month of contraction amid tariffs, weak global demand, and declining employment. Production, new orders, and exports all weakened, while easing inflationary pressures offer little relief for the sector. In contrast, the services industry showed renewed momentum as the ISM Services PMI rose to 52.4, supported by stronger new orders and business activity despite mild job losses and ongoing price pressures. This divergence highlights a mixed economic outlook that supports the Federal Reserve’s cautious, data-driven stance. Meanwhile, consumer sentiment fell 6% in November due to the prolonged government shutdown, with notable declines in personal finance assessments and business expectations. Confidence improved only among households with higher stock ownership, buoyed by market strength. Short-term inflation expectations edged slightly higher while long-term expectations eased, suggesting households remain wary amid uncertainty and persistent inflation concerns likely to weigh on sentiment in the months ahead.

Business Activity

US manufacturing remains weak amid tariffs and soft demand. Services show resilience with stronger new orders and activity. The trend supports the Fed’s cautious, data-driven stance.

US manufacturing remains under significant strain, as the latest ISM Manufacturing Index indicates continued contraction and persistent uncertainty tied to tariffs and sluggish economic growth. The index fell to 48.7 in October from 49.1 in September, marking the eighth consecutive month of decline and remaining below the 50 threshold that separates expansion from contraction. While regional indicators had hinted at improvement, the absence of West Coast data likely masked additional weakness. Production and new orders both contracted further, and with backlogs, exports, and inventories all below 50, prospects for a near-term rebound appear limited. Employment within the sector also continues to decline, reflecting broader caution amid an unpredictable global trade environment. The only mildly positive sign is that inflationary pressures are easing, with the prices paid component dropping to 58.0. However, this is unlikely to significantly influence the more hawkish members of the Federal Reserve ahead of the December policy meeting.

In contrast, the US services sector presents a more resilient picture. The ISM Services PMI rose to 52.4 in October from 50.0 in September, surpassing expectations and signalling renewed momentum in the largest segment of the economy. Strong gains in new orders, which climbed to 56.2, and business activity suggest that domestic demand remains robust, even as the employment index continues to indicate mild contraction at 48.2. Price pressures persist, with the prices paid index increasing slightly to 70.0, highlighting ongoing cost challenges. The ISM survey also noted that tariffs and government disruptions are weighing on confidence and business planning. Overall, while manufacturing continues to face headwinds from global uncertainty and weak demand, the services sector’s recovery offers some balance, supporting a cautious but data-driven approach from the Federal Reserve.

We expect US manufacturing softness to persist amid external headwinds, while resilient services underpin overall growth. The Federal Reserve is likely to maintain a prudent, data-dependent policy stance.

Consumer sentiment

Consumer sentiment declined 6% in November amid concerns over the prolonged government shutdown. Inflation expectations edged up short-term but fell long-term, highlighting mixed economic confidence.

Consumer sentiment declined by approximately 6% in November, driven primarily by a 17% decrease in assessments of current personal finances and an 11% reduction in expectations for business conditions over the next year. The ongoing federal government shutdown, now extending beyond a month, has heightened consumer concerns about its potential adverse effects on the broader economy. This decline in sentiment was broadly observed across demographic and political groups, with one notable exception: consumers in the highest tercile of stock ownership reported an 11% increase in confidence, buoyed by continued strength in equity markets. Interviews for this report concluded prior to Tuesday’s elections. Year-ahead inflation expectations edged up slightly from 4.6% to 4.7%, remaining well below the elevated levels recorded in May following major tariff announcements, while long-term inflation expectations eased from 3.9% to 3.6%, settling below the midpoint between last year’s figures and the April 2025 peak.

We expect consumer sentiment to remain subdued in the coming months, as prolonged government uncertainty and persistent inflation concerns continue to weigh on household confidence and economic outlooks.