Fed Debate Fuels Uncertainty
The Strategy Session for Wednesday, November 19, 2025
This week’s Strategy Session looks at the shifting tone across equities, rates, and risk assets as the Federal Reserve faces deep internal disagreements heading into December. The market is trying to price in a path forward while major data remains delayed, volatility stays firm, and investors show high confidence at a time when warning signs are everywhere.
The Federal Reserve minutes from the October meeting revealed something rarely seen—clear divisions inside the committee. The Fed cut rates to 3.75%–4% in October, but the minutes show “strongly differing views” about whether December should bring another cut or a pause. Several members want more easing, while many prefer to wait for clarity. Powell now faces one of the most divided committees in years, and the conversation is happening without key labor and inflation data. October and November jobs data arrive after the December 10 decision, and the October CPI report may never be released. Without these indicators, rate policy becomes even harder to judge.
This uncertainty is hitting the rates market. Treasury yields moved higher, with the 10-year at 4.132% and the 2-year at 3.596%. The dollar also climbed, showing a market leaning toward a December pause. Futures markets now price nearly 70% odds that the Fed holds steady.
At the same time, investor positioning looks stretched. Bank of America’s latest survey shows global fund managers holding the lowest cash levels in 15 years—just 3.7%—even while most say stocks, especially AI-linked names, are in bubble territory. Recent selloffs, bearish calls from well-known investors, and elevated volatility all signal that risks are rising. The S&P 500 is down only about 3%, but the mood beneath the surface is shifting.
The pullback remains concentrated in big tech and AI stocks. The Nasdaq is down 6.4% from its high and is close to correction territory, while the S&P 500 is down only 4%. Small- and mid-cap names are holding steadier, which shows weakness is tied to crowded trades rather than the entire market breaking down. Sectors like healthcare, industrials, and defense continue to show relative strength. Themes like U.S. reshoring also appear solid.
Still, November is shaping up to be the worst month for stocks since 2008. Heavy selling in big tech, fading AI momentum, and global investors staying near-fully invested create a tense setup. Nvidia’s earnings and new AI partnerships with major firms highlight the massive spending wave, but they also raise questions about how sustainable this growth is.
Beyond the near-term swings, investors need to think about the structure of the market. Bear markets are part of the cycle, and the past 16 years of quick rebounds may have created an unrealistic sense of stability. When downturns line up with recessions, recoveries stretch to an average of 81 months—far longer than the 21-month recovery period when the economy is stable. Long downturns clear excess and remind markets why they exist: to support real business growth, not hype.
For now, equities remain under pressure. The Russell 2000 broke its four-week low earlier this week, and the Dow futures followed today. Volume is light, volatility is elevated, and crude is falling. Over the last few sessions, buyers have stepped aside across both small caps and large caps. The VIX continues to push toward the mid-20s. Our desk sees resistance at 6775 in the E-mini S&P 500 futures and a possible move toward 6625 if weakness continues. With delayed data, a divided Fed, stressed tech leadership, and rising volatility, the market sits at a crossroads. Tactical opportunities exist, especially in overlooked sectors, but risk management remains front and center as the year winds down.
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Stephen coleman – Founder, Stipelis Global Trading LLC
The opinions expressed are those of Stipelis Global Trading LLC and are considered market commentary. They are not intended to act as investment recommendations. Individuals should make investment decisions based on their own analysis and with direct consultation with a financial advisor.
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