NY Fed President Calls for Dec. Rate Cut

• While Nvidia’s blowout earnings weren’t enough to keep risk markets higher, perhaps the words from a Fed official who is closely aligned with Chair Powell calling for a December rate cut will. NY Fed President John Williams (FOMC voter), speaking to a central bank conference in Chile this morning offered up this, “I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals.” That Waller-like comment flipped odds for a rate cut back over 60% (see graph below). Without a consequential report today, investors will continue to mull the September jobs report, and, apparently, the latest Fed speak. Currently, the 10yr Treasury is yielding 4.07%, down 3bps on the day, while the 2yr note yields 3.52%, down 4bps in early trading.  

 

• The long-awaited September jobs report was released yesterday, and the headline beat seemed to put the final nail in the December rate cut coffin, but not so fast! Yes, the headline jobs gain of 119k vs. 50k expected and -4k (adjusted down 26k) was probably impressive to the no-cut hawks on the FOMC. However, yet again revisions were to the downside with both August and July adjusted lower by a combined 33k. Then, there is the unemployment rate which ticked up from an expected unchanged 4.3% to 4.4% (4.32% vs. 4.44% unrounded). Notice the unrounded number, ever-so-close to rounding up to 4.5%. Also, I will mention wage growth was underwhelming at 0.2% MoM vs. an expected unchanged print of 0.3% with the YoY rate unchanged at 3.8%..

 

• One has to assume that October and November, hit by the uncertainty of the government shutdown, will be weaker reads on the labor market but alas the FOMC won’t see those numbers until December 16^th, nearly a week after the December 10^th FOMC rate decision. Thus, the doves will carry a fair amount of ammo into the meeting with Messrs. Powell and Waller, and now Williams, leading the rate-cutting arguments. The hawks will argue the unemployment rise came from a 470k expansion of the labor market, not workers being laid off, surely a healthy development in the face of ongoing deportations and immigration restrictions. Still, one can argue that while a growing labor force is good, in this low-hire environment how high will the unemployment rate climb if that labor force growth continues?

 

• In the Fed’s September Summary of Economic Projections, they had unemployment ending 2026 at 4.4%. We are already there with a pretty clear path for continued upward moves. In addition, wage gains decelerating on a MoM basis doesn’t feed the wage-price spiral narrative for the inflation hawks. And if tariffs are indeed a one-time price hike, albeit spread across items at varying times, it’s hard to make a case for ongoing inflationary threats. Thus, we take this report and still see the likelihood of a rate cut next month despite the October FOMC minutes showing more concern over inflation than jobs.

 

• For the week ending November 15, 2025, initial jobless claims decreased by 8,000 to 220,000, with a 4-week moving average of 224,250, down by 3,000. For the week ending November 8, continuing claims increased by 28,000 to 1,974,000, marking the highest level since November 2021. What’s more, the 4-week moving average for continuing claims increased to 1,960,250, also the highest since November 2021. Initial claims by former Federal employees totaled 5,719 in the week ending November 8, a decrease of 1,763 from the prior week. There were 38,867 continued weeks claimed filed by former Federal employees the week ending November 1, an increase of 8,218 from the previous week. In summary, a very familiar picture on initial claims while continuing claims continue to edge higher in another indication that the low hire environment is persisting.

 

• Also yesterday, the National Association of Realtors reported that sales of existing homes rose 1.2% from the prior month to a seasonally adjusted annual rate of 4.1 million, the highest level since February. That beat the 1/2% expected increase. The October sales figure reflects home-shopping activity in August and September when mortgage rates dropped to an 11-month low. Rates have ticked a bit higher in recent weeks but have remained below 6.3%. Prices are falling in some southern and western markets where inventory has risen with buyers in many markets able to negotiate price cuts and other concessions in a sign of seller fatigue.

 

• Later this morning we’ll get the S&P Global Preliminary PMI series for November. Expectations are that manufacturing will dip slightly from 52.5 in October to 52.0 and services will also slightly dip from 54.8 to 54.6. Obviously, both readings have been well above the 50 dividing line, unlike the ISM series. Any surprise to the downside, however, could elicit more odds for a December rate cut, but the next report that’s more likely to have an influence on the FOMC will be next Tuesday’s delayed release of September Retail Sales. Any softening in consumption prior to the government shutdown would definitely spook the doves on the Committee, however, expectations are for a decent report.

---

Futures Back over 60% for December Rate Cut after Williams Rate-Cutting Comments

Source: CME Group

---

September Nonfarm Payrolls Beat Expectations, but Negative Revisions Persist

---

Unemployment Rate Ticks Higher (4.44%) – Nearing Powell’s 4.5% Danger Zone

---

Initial Jobless Claims Stable at 220K but Continuing Claims Move to New Cycle High (1.974 Million)