US Economy: Weekly Commentary – November 24, 2025

US Market Review

Treasury yields declined, China reduced Treasury holdings, U.S. equities weakened, technology lagged, healthcare advanced, Alphabet outperformed, Eli Lilly hit $1T, while the dollar strengthened and commodities broadly fell.

Treasury yields ended last week lower, led by declines in the belly of the curve, while long-term bonds also eased modestly. China continued reducing its exposure to U.S. Treasuries, selling $32 billion over the past three months and bringing its holdings down to $700.5 billion, the lowest level in 17 years. Since 2013, China has shed more than $600 billion of U.S. government debt, underscoring its ongoing diversification efforts and a gradual shift away from the U.S. dollar. Meanwhile, the yield spread between 30-year U.S. and Japanese government bonds has narrowed to its lowest point since March 2022. At that time, Japan was still maintaining negative rates while the U.S. had just begun its tightening cycle; today, in a higher-yield environment, the unwinding of the carry trade is gaining momentum.

U.S. equity markets closed the week in negative territory. Micro- and small-cap stocks declined 0.20% and 0.80%, respectively, while large-cap equities fell 1.95%. The “Magnificent 7” dropped 2.23%, with Alphabet Inc. the only constituent to end the week higher, supported by optimism surrounding its Gemini 3.0 chatbot and renewed questions about OpenAI’s competitive lead. Sector performance was mixed: technology led the pullback with a drop of more than 5%, while healthcare extended its upward trajectory, rising 1.87%. Eli Lilly reached a historic milestone, becoming the first pharmaceutical company to surpass a $1 trillion market capitalisation, propelled by strong demand for its weight-loss treatments.

In currency markets, the U.S. dollar appreciated 0.93% against the euro. WTI crude fell 3.29% amid optimism over a potential peace framework between Russia and Ukraine, which could lead to increased supply. Gold slipped 0.52%, while Bitcoin tumbled more than 9.5%.

US Market Views Synopsis

US job growth beat expectations but underlying momentum softened, unemployment rose, wages cooled, and consumer sentiment stayed broadly stable as high prices and weaker finances continued weighing on households.

US labour-market data for September exceeded expectations, with non-farm payrolls rising by 119,000 versus the anticipated 51,000, driven by full-time gains in leisure and hospitality, healthcare, and state and local government hiring. However, underlying momentum was softer, as downward revisions removed 33,000 jobs from previous months. The unemployment rate increased to 4.4%, reflecting a 470,000 rise in the labour force, of whom only 251,000 found work, underscoring the volatility of the household survey. Wage growth moderated to 0.2% MoM, signalling a gradual easing in labour-market tightness. With no further data releases before the 10 December FOMC meeting, the report is neither strong enough to prompt a hawkish shift nor weak enough to justify a rate cut, and the Federal Reserve is therefore likely to maintain its current policy stance. Consumer sentiment was broadly stable, with modest improvements offset by declines in personal finances, weaker buying conditions, and continued concern over elevated prices and recent equity-market losses.

Labour Market

US job growth in September exceeded expectations, led by full-time gains in leisure, healthcare, and local government, while unemployment rose to 4.4%, leaving Fed policy largely unchanged.

US job growth in September surpassed expectations, with non-farm payrolls increasing by 119,000 compared with the 51,000 anticipated, supported primarily by gains in leisure and hospitality (+47,000), private education and healthcare services (+59,000), and state and local government hiring (+25,000), while federal government employment fell by 3,000. It is important to note that federal government workers who accepted separation agreements will not be reflected in these figures until the October report, which will be combined with the November release on 16 December. Despite the firmer headline performance, underlying momentum was more mixed, with downward revisions removing 33,000 jobs from the prior two months. The composition of employment was somewhat more constructive, with September’s gains driven by full-time hiring and a shift away from part-time work, representing an improvement relative to earlier softness in the year. However, the labour market continued to show signs of easing, as the unemployment rate rose to 4.4% amid a 470,000 increase in the labour force, of whom only 251,000 found work, illustrating the volatility of the household survey compared with the establishment survey. Wage growth moderated to 0.2% MoM, further signalling a gradual reduction in labour-market tightness. With no additional labour-market data scheduled before the 10 December FOMC meeting and uncertainty surrounding the timing of forthcoming inflation releases, the September report does not provide grounds for the Federal Reserve to reconsider its recent hawkish stance, nor is it weak enough to justify a December rate cut. Consequently, market pricing continues to assign only a limited probability to a 25bp move, with expectations increasingly converging on early 2026 for the next likely policy adjustment.

We expect the Federal Reserve will maintain current rates at the December meeting, given this labour market data and the lack of additional releases ahead of the meeting.

Consumer Sentiment

Consumer sentiment was largely stable despite weaker personal finances, poorer buying conditions, and modestly easing inflation expectations, with high prices and recent stock market losses continuing to weigh on households.

Consumer sentiment was broadly stable this month, posting a 2.6-point decline from October that remains within the margin of error. While sentiment improved modestly following the conclusion of the federal shutdown, consumers continue to express frustration with persistent price pressures and softening incomes. Assessments of current personal finances and buying conditions for durable goods each fell by more than 10%, even as expectations for future economic conditions registered a slight improvement. By month-end, sentiment among consumers with the largest equity holdings had surrendered the gains seen in preliminary estimates, declining about 2 points from October in line with recent equity market weakness. Year-ahead inflation expectations eased from 4.6% to 4.5%, marking a third consecutive monthly decline but remaining above January’s 3.3% reading; long-run expectations declined from 3.9% to 3.4%, modestly exceeding the 3.2% recorded in January 2025. Despite these gradual improvements in the inflation outlook, consumers continue to report that elevated prices are weighing heavily on their current financial conditions.

We expect consumer sentiment to remain subdued in the near term, as persistent price pressures and weakening household finances continue to limit confidence despite gradual improvements in inflation expectations.