Exclusive insight for TMI subscribers! Northern Trust Asset Management share a monthly market commentary for treasurers.
Eurozone Market Update
Eurozone data pointed to steady momentum in November. Composite PMI showed growth at 52.8, consistent with annualised GDP growth near 1.5%. The country mix was more evenly spread than in previous months, as Germany softened, France improved, and Spain remained a standout on jobs, accounting for most of the bloc’s Q3 employment gains. Consumer confidence held at -14.2, still subdued, but spending data appear more resilient. Inflation continues to moderate, as headline HICP inflation eased to 2.1%, led by lower energy and food prices, while core held at 2.4% amid persistent services pressures. The commentary from the ECB’s October meeting revealed a split: one camp saw rates as sufficiently restrictive, while others were open to cuts if the data warranted them. Board member Isabel Schnabel noted inflation is “in a good place,” but warned of upside risks from services and global fragmentation.
Source: Bloomberg, data as of 28 November 2025
UK Market Update
At its November meeting, the BoE held the Bank Rate at 4% following a finely balanced 5-4 vote, with Governor Andrew Bailey breaking the tie. Disinflation is progressing, with October CPI slowing to 3.6%, but services prices and wage dynamics remain too elevated for the majority to support easing. Four dissenters warned that policy is becoming too restrictive amid a softening labour market and fading growth momentum. Bailey acknowledged the recent downside surprises in inflation, but noted that “more than one or two prints” are required to validate cutting rates. Markets now see the December meeting as live, with approximately 50 bps of cuts priced by mid-2026. Elsewhere, Chancellor Rachel Reeves’ Autumn Budget brought limited surprises. The OBR’s £26bn headroom eased near-term gilt supply concerns, driving a brief rally. But the back-loaded tax measures and modest spending shifts were seen as incremental rather than game-changing. Markets welcomed fiscal stability but remain unconvinced on long-term sustainability.
Source: Bloomberg, data as of 28 November 2025
US Market Update
Although the US government shutdown ended in November, the record 43-day closure continued to limit data availability, forcing markets to rely on private indicators and amplifying the impact of each release. The delayed September payrolls report showed 119,000 jobs added against expectations of 51,000, but prior months were revised down by 33,000. Unemployment rose to 4.4%, the highest since 2021. Consumer data underwhelmed as retail sales rose just 0.2%, the Conference Board index fell to 88.7, and University of Michigan sentiment hit its lowest since 2022, with one-year inflation expectations up to 4.7%. Inflation data were mixed, with PPI steady at 0.3% but survey-based expectations firm. Fed commentary revealed division among members, while the October FOMC minutes signalled increasing scepticism about the need for a December cut, but did not go as far as a firm rejection.
Source: Bloomberg, data as of 28 November 2025
Looking Ahead
As we move through December, markets are contending with tighter year-end funding conditions and elevated repo rates. Balance-sheet constraints are already lifting USD and GBP repo levels, which are expected to stay high into year-end, pushing up money market yields. The final central bank meetings of the year are pivotal. The Fed faces stable disinflation and softer labour data; with markets pricing a December cut and no pushback ahead of the blackout period, a move this month looks likely. If not, January becomes the default. The ECB should maintain its cautious easing path amid weak growth and contained inflation. The BoE is expected to cut rates, supported by softer growth and employment data and a disinflation trend broadly in line with its own forecasts, which will guide policy lower into early 2026.
Chart of the Month
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