Traders are very optimistic that the Federal Reserve Committee will cut interest rates at its upcoming policy meeting on December 10th. According to CME (1), a Fed watch tool, the odds are currently at 89.4% that there will be a cut.
While December is historically a strong month for the market, and some metrics have improved, there is still plenty of sentiment that the underlying economy is cracking, with concern about elevated AI spend, instability in the job and housing markets, and food prices.
Last month, Redfin reported that home sellers delisted close to 85,000 homes from the market in September (2), the highest level in almost a decade. This rise is indicative of slow demand in a soft housing market.
The Treasury market has somewhat discounted the Fed rate decision, with yields rising to 4.11% on the 10-yr and 4.76% on the 30-yr. Muni yields are slightly up across the board. As we move into 2026 and anticipate further cuts, fixed-income pullbacks could be opportunistic for bond buyers.
