Fed's Collins Hesitates on December Rate Cut: Policy Uncertainty Shapes Market Expectations

On November 22, 2025, Federal Reserve Bank of Boston President Susan Collins stated she is leaning against a December rate cut, noting monetary policy is in a mildly restrictive range post-September/October cuts and highlighting ongoing risks to inflation and job mandates [1]. This shifted market expectations: CME FedWatch probabilities of a December rate cut dropped from 71% (earlier in the week) to ~41% [2]. E-mini S&P futures (ES=F) rose 0.96% to 6620.25 [0], while defensive sectors like Healthcare (+1.73%) outperformed and rate-sensitive Utilities (-0.88%) underperformed [0]. The 10-year Treasury yield edged down to 4.07% [3].

1. Policy Split
   : Collins’ caution aligns with inflation-focused Fed officials, contrasting with dovish signals from others (e.g., John Williams), creating significant policy uncertainty [1,4].
2. Sector Rotation
   : Defensive sectors benefit from rate ambiguity, while rate-sensitive assets face headwinds amid higher-for-longer rate expectations [0].
3. Data Dependency
   : The December FOMC decision will heavily depend on upcoming CPI/PCE inflation reports and non-farm payroll data [5].

• Policy uncertainty could trigger market volatility if the Fed’s December decision surprises investors [0].
• Delayed rate cuts may weigh on growth stocks and rate-sensitive sectors like Real Estate and Utilities [4].

• Defensive sectors such as Healthcare offer potential hedges against policy-driven market volatility [0].

Collins’ statement underscores the Fed’s cautious approach to rate cuts amid ongoing economic risks. Key metrics include: E-mini S&P futures up 0.96%, Healthcare leading sector performance (+1.73%), 10-year Treasury yield at 4.07%, and December rate cut probability at ~41%. Critical factors to monitor include upcoming inflation/payroll data, additional Fed speeches, and updated rate cut probabilities [0,1,2,3,5].