Week Ahead: Markets Shift Focus to US PPI & GDP as Rate-Cut Bets Rise

Key Points

• Market attention turns to the 10 December FOMC meeting for clarity on a possible 25 bps rate cut.
• USD softens as FedWatch now shows a 71% probability of easing.
• Risk sentiment improves, with gold finding strong support around $4,020.

Recent labor data continues to paint a mixed but pivotal picture for policymakers. The delayed September NFP report showed 119,000 new jobs, nearly twice the expected number, but the unemployment rate climbed to 4.4%, the highest in four years. Meanwhile, downward revisions to July and August emphasize a gradual cooling in job creation.

This contrast reflects a labor market that is slowing but still resilient, with solid hiring in healthcare and education offset by rising continuing claims. Traders are increasingly viewing this divergence as a sign that inflation may be easing more rapidly than employment pressures.

Traders Lean Toward a December Cut

Market sentiment shifted dramatically last week. FedWatch probabilities surged, pricing in a 71% chance of a 25 bp rate cut at the December FOMC meeting, up from just 39% the day before. Looking further ahead, traders see a 58% likelihood of another cut in January 2026.

As yields retreated, equities strengthened, and the dollar weakened. The 2-year Treasury yield slipped toward 3.5%, while tech names led the upside. Crypto markets, previously under pressure, have begun to stabilize as expectations shift toward an earlier easing.

Risk Appetite Returns

The S&P 500 bounced after two weeks of losses, supported by the softer policy outlook and strong Q3 earnings, with over 80% of companies beating profit expectations. Tech and healthcare were the strongest contributors to upside momentum.

Elsewhere, oil prices held steady after recovering from the $57.60 support region, and gold hovered around $4,000 as a softer USD provided support.

Key Symbols to Watch

XAUUSD
USDX
SP500
BTCUSD
USOil

Upcoming Events

Key Movements of the Week

Gold (XAUUSD)

• Recovered from $4,020 and remains within the broader $3,940–$4,075 range.
• Support around $4,000 remains firm amid falling yields.
• A break below $3,940 opens the door to deeper downside; resistance stands near $4,075.

S&P 500 (SP500)

• The index rebounded strongly on renewed rate-cut expectations.
• Key resistance sits near 6,760; a sustained push above 6,700 may fuel a year-end rally.

USD Index (USDX)

• USDX pulled back toward 99.65 support.
• A reversal is possible if the Fed dampens aggressive cut expectations.
• Further downside toward 99.45 remains likely if PCE softens.

Bitcoin (BTCUSD)

• BTC drifted lower after testing $81,700.
• Consolidation signals potential short-term weakness.
• Key levels: support at $80,000 and resistance near $84,000.

US Oil (USOIL)

• Crude climbed from $57.60 toward $59.80 amid improved sentiment.
• Resistance stands at $61.05; pullbacks may find support around $59.05.

Bottom Line

Market optimism is being driven more by the Fed’s shifting tone than by fresh macro data. Comments from Fed’s John Williams hinting that policy is now only “modestly restrictive” fuelled expectations of near-term easing, lifting risk assets across the board.

With the probability of a December rate cut climbing to 71%, traders are beginning to recalibrate the interest rate trajectory for early 2026.

The macro outlook remains mixed: job creation continues, but unemployment is creeping higher and jobless claims reflect a cooling market. Inflation risks seem to be moderating faster than growth, giving policymakers room to adjust course.

Whether the Fed cuts or pauses, the December meeting is poised to set the tone for risk sentiment into year-end, and markets are watching closely.