Stocks steady after Monday’s rate shock; investors brace for key Fed decision and U.S. job data
MARKET INSIDER- Global markets entered Fed week on shaky footing after a sharp rise in bond yields sent equities lower, but conditions stabilized Tuesday as the U.S. Federal Reserve convened its final two-day meeting of 2025.
Monday’s rout in government debt markets — spanning U.S. Treasuries, German bunds and Japanese government bonds — was triggered by a combination of hawkish signals across central banks, heavy year-end U.S. debt issuance, and growing expectations that the Bank of Japan may hike rates next week. German yields hit their highest levels in 14 years, while commentary from ECB board member Isabel Schnabel reinforced expectations that the next ECB move could be higher, not lower.
Despite the global bond shock, currency markets held relatively stable overnight. The dollar firmed slightly versus the euro and yen but weakened against the yuan and Australian dollar.
Investors expect the Fed to cut rates on Wednesday, a widely anticipated move that has tempered volatility. October JOLTS job-openings data, due later Tuesday, will be the last major labor reading before policymakers decide, alongside a $39 billion 10-year Treasury auction that could test appetite for U.S. debt.
On Wall Street, attention remained fixed on the escalating bidding war for Warner Bros. Discovery, as Paramount Skydance mounted a $108 billion hostile offer to outbid Netflix. Paramount shares rose more than 7% Monday, Warner Bros. Discovery climbed 5.3%, while Netflix fell 4%.
Tech headlines continued to shape market sentiment. Nvidia gained 2% after President Donald Trump approved exports of its H200 AI chips to “approved” customers in China — on the condition that the U.S. government receives 25% of the proceeds. Meanwhile, the European Commission announced a fresh antitrust probe into Google, targeting its use of publisher content and YouTube videos to train AI models.
As the Fed decision approaches, analysts warn of the ECB’s new challenge: “passive easing” — the risk that falling market rates may inadvertently loosen financial conditions even as policymakers signal caution.
