#monetary-policy

#monetary-policy

Ray Dalio never misses an opportunity to cut to the chase. On Wednesday at Davos, speaking to Kamal Ahmed, Fortune's Executive Editorial Director for the UK and Europe, he had a blunt assessment of the landscape leaders and CEOs are facing at the moment. "What always scares me is the lack of realism," among leaders, he said as he reeled off the historic economic, climate, and political threats the world is grappling with. "Will law prevail? Everyone is having to deal with that question."

They pay testament to Powell's integrity, and unwavering commitment to the public interest, calling him a respected colleague who is held in the highest regard by all who have worked with him. Trump has repeatedly criticised Powell, whom he appointed in 2018, for failing to cut interest rates fast enough. But the clash between the two men took a dramatic turn earlier this week when Powell issued a strongly worded video statement, saying he was being prosecuted by the US Department of Justice.

"The executive branch is getting very creative using the pockets of money at their disposal with no congressional oversight," Ed Al-Hussainy, portfolio manager at Columbia Threadneedle, tells Axios.

After strong performance in 2025, the index is showing signs that future gains will depend less on liquidity and more on earnings quality and valuation resilience. "The market has shifted from being liquidity-driven to earnings-sensitive," said Saqib Iqbal, market analyst at Becoin.net. "With multiple rate cuts behind us and macro data softening, Nasdaq performance is now tied to profit growth and cash-flow resilience, rather than just cheap money."

Global markets are nearing the year-end with striking contrasts across major asset classes, shaped by shifting rate expectations, geopolitical uncertainty, and uneven economic momentum. Nowhere was this divergence more evident than in the performance of commodities, oil, and global equities. Gold led with a gain of more than 60%, its strongest annual advance in over a decade, while silver outperformed even that, surging nearly 100% over the year. Both precious metals benefited from expectations of global monetary easing, persistent geopolitical tensions,

If November's fickle rates are a sign of what's to come, mortgage rates will likely rise in December. Analysts went into this month with a growing sense that the Federal Reserve would vote to lower the federal funds rate at its Dec. 9-10 meeting. However, any cuts to mortgage rates related to this month's meeting will be relegated to the first week or so of December.

Numerous reasons for the selling on Monday, not the least of which is that the market is still way overbought, and while most expect the Federal Reserve to lower rates by 25 basis points next week, there is still a chance they push the next cut out to January. One thing is for sure: if National Economic Council Director Kevin Hassett becomes the next Fed Chairman, we could see rates go much lower in 2026.

USDJPY at one point moved toward 157.9 last week, reflecting the sharp divergence in monetary policy between the United States and Japan. However, the pair has retreated this week as the market is adjusting its expectations regarding both the Fed and the BoJ. The short-term trend of USDJPY is beginning to show signs of slowing. The key factors impacting the exchange rate are not only U.S. Treasury yields or policy differentials, but also Japan's expected policy adjustments and the clearly rising risk of foreign-exchange intervention.