Tagli tassi Fed già scontati dalla Borsa, ma il resto del mondo li alza
December 10, 2025
FOMC Preview: Will Fed Announce Another Rate Cut? Here’s What Markets Expect
December 10, 2025Zhou Rui, reporter for Southern Finance and 21st Century Business Herald, reports from New York.
The Federal Reserve’s final interest rate meeting of 2025 is approaching. According to CME FedWatch data, the market is currently betting on an 87% to 89% probability of a 25 basis point rate cut at the FOMC meeting in December, significantly higher than a month ago.
On December 3rd local time, data released by ADP showed that the U.S. private sector unexpectedly lost approximately 32,000 jobs in November, far below market expectations of a 20,000 increase. Analysts believe this data reflects layoffs in private companies, exacerbating concerns about a weakening U.S. labor market. Based on this, the Federal Reserve may cut interest rates by another 25 basis points. In fact, the performance of U.S. stocks over the past two weeks has already priced in the Fed’s rate cut expectations.
In this complex environment of “strong stock market, moderate inflation, and solid expectations of interest rate cuts,” investors are generally concerned about: What is the real driving force behind the current market rally? Does the Fed’s December rate cut mean a longer easing cycle? Can the strength of precious metals continue into 2026? And with the new year approaching, have potential risks accumulated in the market? To address these questions, Southern Finance reporter interviewed Peter Cardillo, Chief Market Economist at Spartan Capital Securities.
US stocks remained resilient amid mixed data, with the Christmas rally acting as a driving force.
Southern Finance: First, let’s review the performance of the US stock market in the week ending December 5th. Despite mixed results in labor market data and economic indicators such as core PCE inflation, the US stock market remained quite strong overall in the first week of December. What do you think were the main factors driving the market’s resilience?
Peter Cardillo: I think the market’s resilience is partly due to the high probability of a 25 basis point rate cut by the Federal Reserve, and their stance this time may be more dovish than usual. This is mainly because the labor market is weakening, and we are seeing clear signs of weakness in some private macroeconomic indicators. Therefore, the Fed’s expectations, coupled with December’s historically strong stock market performance, have led to a typical “Christmas rally.”
Southern Finance: So, which sectors are you currently most focused on?
Peter Cardillo: I don’t actually pay much attention to specific sectors. I focus more on the overall trend, and right now the overall trend is upward.
Southern Finance: Why do you think so? Why is the overall trend still upward?
Peter Cardillo: Because we just had a strong earnings season, and the Fed is about to cut interest rates. So these factors reinforce the upward trend we usually see in the market during this period.
Precious metals rose in tandem with risk assets.
Southern Finance: Besides US stocks, metals and commodities have also performed exceptionally well recently, with gold prices jumping and copper prices strengthening. What kind of market sentiment do you think these trends convey?
Peter Cardillo: Actually, the metals market doesn’t truly reflect overall market sentiment because they typically move inversely to risk assets; it just happens to be rising in tandem with the stock market at this particular time. The reason behind this is that gold and silver have been sending a long-standing signal—the world still faces severe geopolitical risks; tariffs exert persistent inflationary pressure; and the foreign exchange market may be brewing a crisis. This risk likely stems from the USD/JPY exchange rate, which I believe is related to the unwinding or reversal of carry trades. This is the key message currently being conveyed by the metals market.
Southern Finance: Since 2025, gold has outperformed most assets. Do you think this upward trend will continue into 2026?
Peter Cardillo: Yes. And if you look at silver, it’s even stronger in percentage terms. In fact, silver closed near its year-to-date high today. Gold, on the other hand, is probably only about 2% away from its all-time high. But I expect both to have a fairly solid year-end.
Southern Finance: What is your year-end target price for gold?
Peter Cardillo: Oh, I think it’s probably closer to $4,500.
Expectations of a Fed rate cut have strengthened, suggesting the country may remain in an easing cycle until 2026.
Southern Finance: Next, I’d like to focus on the December Federal Reserve meeting. You just mentioned that the market has almost fully priced in a 25 basis point rate cut. Why do you think so? Does this imply a longer easing cycle?
Peter Cardillo: I think if you look at the current market betting, the probability of a rate cut is probably close to 85%, or at least very close, which is a very clear signal. Moreover, judging from recent public speeches by some Federal Reserve officials, they have generally been sending the same signal: now is indeed the time to cut rates.
The Fed’s current approach is not to ignore the still-existing “sticky inflation”—partly driven by price pressures from tariffs—but rather to focus on the weakening labor market.
To prevent a further deterioration in the employment situation, which could have a greater impact on consumer confidence and spending, the Federal Reserve needs to take action. Although the recently released personal income and spending data showed income slightly better than expected, spending only increased by 0.3%, a clearly weak growth rate.
The risks would be further amplified if the employment situation continued to deteriorate and unemployment continued to rise. For example, the Challenger layoff report shows that 1.1 million jobs have already been lost this year. And you’ll also notice that companies are announcing new layoff plans almost every week. Therefore, I believe the Federal Reserve wants to address these trends promptly.
Southern Finance: Do you think this easing cycle will continue into 2026?
Peter Cardillo: I think so. And I don’t think the real “surprise” in the FOMC statement will be a 25 basis point rate cut, but rather that their wording will be more dovish than in the past. This means we may see two more rate cuts next year, totaling about 50 basis points, so that in 2025 and 2026 there will probably be about 100 basis points of rate cuts.
A significant correction in US stocks is possible in 2026.
Southern Finance: Thank you very much for sharing your views on the Federal Reserve. Now, returning to the market level, across stocks, bonds, commodities, and foreign exchange, what interests you most? What should investors pay most attention to?
Peter Cardillo: I believe that investors must have hedging tools in their asset allocation. In the current environment, gold is, in my opinion, the best hedging asset. Therefore, every investment portfolio should allocate a certain proportion of precious metals as a risk buffer.
As for the stock market, I believe investors should remain in the market, but also exercise caution. I anticipate a significant market correction in 2026, likely around the end of the first quarter or the second quarter, with declines potentially reaching 12%, 15%, or even 18% to 20%.
Southern Finance: Why do you think such an adjustment will occur early next year?
Peter Cardillo: I just think that first-quarter earnings growth may be weaker due to the economic slowdown. This means valuations could be overvalued, triggering some kind of correction. But that doesn’t mean 2026 won’t end on an upward trend.
Southern Finance: You just mentioned that investors use gold as a hedge. From an asset allocation perspective, what percentage do you think gold or precious metals should account for?
Peter Cardillo: I think each portfolio should allocate at least 5% to 10%.
Source: https://m.21jingji.com/article/20251209/herald/988391b0a2c9ad6172067243c560718e.html
