Market Insights: November 2025
After a year of policy pivots and economic recalibrations, markets grappled with signs of resilient growth clashing against lingering inflationary pressures. On one side, the Federal Reserve kept talking tough on inflation; on the other, the plumbing of the system continued to receive support from policy choices that are friendly to liquidity, including decisions that ease stress in short-term funding markets.
Institutional research and the hard data broadly point in the same direction: inflation looks unlikely to glide neatly back to prior targets without some real economic pain, the U.S. economy remains uneven but surprisingly resilient, and the current mix of large deficits, deregulation, and reshoring keeps medium-term growth expectations higher than a textbook late-cycle playbook would suggest. At the same time, softer readings in retail sales and consumer confidence sit alongside firm producer-price and inflation-expectation metrics, reinforcing the “sticky but not runaway” inflation story.
So November was less about a clean turning point and more about an uncomfortable combination: liquidity that still leans supportive, growth that is bending but not breaking, and inflation that refuses to fully cooperate. That’s the backdrop for the regime discussion.
Current Regime Assessment
The data suggest an environment where growth is firming while inflation remains persistent—historically consistent with risk-on behavior, but with clear inflationary undertones. Multiple macro frameworks that jointly track growth and inflation point to both running above their pre-COVID norms, though not at runaway levels. Expectations for economic expansion are still supported by robust activity in key sectors, even as interest-sensitive areas show strain.
But there are important asterisks. Short- to medium-term models that look one to three months out screen as friendlier for high-quality bonds and the U.S. dollar than for equities, commodities, or crypto, hinting that sustaining a risk-on backdrop over the next quarter is not a layup. Positioning indicators—how crowded investors are in various assets—also sit in zones that have historically preceded double-digit drawdowns when the data or policy path disappointed.
My base read: the current regime is still more risk-on than risk-off, driven by resilient growth and contained (but sticky) inflation, yet it’s a regime with meaningful left-tail risk attached.
Asset Class Observations
Equities
For equities, November highlighted a tug-of-war between supportive liquidity and late-cycle risk. Broad measures of global liquidity—central-bank balance sheets, broad money, and foreign-exchange reserves—remain on an upward trend year-over-year, and historically that has been a strong tailwind for global equity market capitalization. At the same time, firm growth data have encouraged participation beyond a narrow group of mega-caps, with cyclicals and more value-oriented areas behaving in ways that rhyme with past periods where productivity and real-economy activity picked up.
The challenge is that valuations and positioning now look more “late cycle” than “early cycle.” Several positioning indicators are as stretched as they typically are near major bull-market peaks, and those same models flag a non-trivial probability of a 10–20% drawdown over a 6–18-month window if growth or policy misstep. Historically, that combination—ample liquidity, decent growth, stretched sentiment—has been fertile ground both for sharp melt-ups and sudden air-pockets. The educational takeaway: this is the kind of environment where process usually matters more than bravado.
Fixed Income
Rate markets spent November trying to reconcile sticky inflation with a central bank juggling inflation credibility and emerging labor-market cracks. Yields reflected a tug-of-war between growth optimism and concern that inflation will not retreat neatly without further tightening in financial conditions. Several macro-linked models currently screen as more constructive on high-quality bonds than on equities over the next few months, reflecting an expectation that growth could cool at the margin while inflation pressure stops getting worse.
Credit spreads remain tight relative to history, suggesting markets still anticipate continued expansion without imminent distress. In prior cycles, that mix—supportive liquidity, cautious growth signals, tight spreads—has tended to leave credit vulnerable if the softening in activity broadens out. That is worth treating as a risk factor, rather than assuming “bonds are safe again.”
Commodities
Commodities showed a more mixed picture. Industrial metals found some support from growth narratives and ongoing investment in capacity and infrastructure, which historically has tended to lift cyclically sensitive commodities when demand expectations rise. Energy, by contrast, faced headwinds from supply dynamics and inventory builds, reminding us that even in expanding economies, the supply side can cap upside when storage and production are ample.
When global liquidity trends higher but the short-term growth “weather” softens, energy and industrial metals often chop sideways with sharp moves in both directions. Agricultural markets, meanwhile, exhibited signs of being overbought on shorter-term indicators, a setup that has often preceded consolidation rather than the start of a major secular move. For students of market history, the lesson is that this backdrop tends to favor disciplined risk sizing more than bold, one-way commodity bets.
Currencies & Alternatives
The U.S. dollar continued to be pulled between relatively firm U.S. growth and the prospect of easier policy further out. In the near term, models that tie currency behavior to growth and rate differentials still lean in favor of the dollar, consistent with the idea that growth outside the U.S. remains more fragile.
Gold held firm as inflation remained sticky and real rates failed to break meaningfully higher. Over the past year, its behavior has lined up closely with shifts in global liquidity and inflation expectations, rather than with pure growth surprises. In past episodes where liquidity stayed supportive and real rates were contained, gold has often played its traditional role as a portfolio shock absorber.
Bitcoin and broader crypto assets remained even more sensitive to liquidity conditions than gold. Correlation work from institutional research shows strong linkages between global liquidity proxies and crypto returns over multiple time horizons. That doesn’t make crypto “safe”—far from it—but it does underline how changes in policy that affect bank reserves and money supply often show up quickly in this space.
What I'm Watching
Heading into December, here's what I'm paying attention to:
- Labor market trends — Jobless claims, payrolls, and wage growth for signs that the employment backdrop is cooling enough to influence policy discussions.
- Inflation metrics — Producer prices and consumer inflation expectations to see whether pressures are easing, plateauing, or becoming more entrenched.
- Central bank communication — Guidance around the path of rates and potential balance-sheet or reserve-management tools that could extend the life of liquidity support.
- Global liquidity indicators — Central-bank balance sheets, broad money, and FX reserves to assess whether the recent loss of momentum turns into a more durable downswing.
- Positioning and sentiment — How “all-in” investors are across equities, credit, and crypto, given their historical relationship with larger drawdowns when macro data or policy choices surprise negatively.
Closing Perspective
The single most important macro theme this month is the interplay between firming growth and sticky inflation, layered on top of a policy mix that quietly supports liquidity even as central bankers talk tough. That combination—supportive liquidity, uneven but resilient growth, and inflation that refuses to die cleanly—is exactly the sort of mix that has produced both strong returns and painful shakeouts in past cycles.
Key uncertainties heading into December are straightforward: Does growth cool just enough to validate the bond market’s optimism without tipping into something worse? Do policymakers follow through on hints of tools that would institutionalize a higher floor under liquidity? And how quickly does crowded positioning adjust if the data or policy path surprise?
This is the type of environment where having a repeatable, systematic framework for reading the macro tape has historically mattered more than trying to guess the next headline. The goal isn’t to predict every wiggle, but to understand which regime we’re in, what could change it, and how quickly conditions can shift when liquidity, growth, and inflation stop pulling in the same direction.