Structured Analytical Report: Fed Daly's December Rate Cut Support & Market Reaction

On November 24, 2025 (UTC), San Francisco Fed President Mary Daly expressed support for a December rate cut, citing fragile labor markets and easing inflation concerns. This shifted market expectations, with the CME FedWatch Tool pricing an 81% probability of a 25 basis point (bp) cut (up from 69.4% prior). US sectors saw mixed but mostly positive performance that day, with Energy leading gains. Reddit discussions highlighted debates about rate cuts’ impact on AI investments, potential AI bubble risks, and buying opportunities from panic sell-offs.

a.

: San Francisco Fed President Mary Daly supported a December rate cut, prioritizing labor market fragility over inflation risks [0].
b. : The CME FedWatch Tool showed an 81% probability of a December rate cut after Daly’s remarks, up from 69.4% the previous day [1].
c. : On November24,2025, US sectors saw mixed but mostly positive performance: Energy (+1.766%) was the top performer, while Healthcare (-0.117%) declined [2].
d. : Four key arguments emerged: rate cuts boost AI investments, high rate cut probability (81%), rate cuts prop up AI bubble, and panic sell-offs present buying opportunities [4].

• Fed Consensus Shift
  : Daly’s dovish stance, combined with similar comments from New York Fed President John Williams (a close Powell ally), suggests a 7-5 FOMC vote tally in favor of a December cut [0]. This indicates a growing consensus within the Fed to ease monetary policy amid signs of economic slowdown, including four consecutive months of declining retail sales [0].
• Sector Reaction
  : Energy’s outperformance reflects lower rate expectations reducing borrowing costs for capital-intensive projects [2]. Tech sector gains were modest (+0.149%), aligning with Reddit’s AI investment hopes but showing investor caution [2,4].
• Holiday Context
  : The empty market overview data [3] is attributed to the US Thanksgiving holiday (Nov 25), as markets closed early or had limited activity on Nov 24.

• Market Sentiment
  : The 81% cut probability improved sentiment, with 9/11 sectors posting gains [2].
• Sector-Specific Impact
  : Energy benefited most from lower rate expectations, while Tech’s modest gain suggests tempered AI optimism [2,4].
• Policy Uncertainty Reduction
  : Daly’s comments reduced ambiguity about the Fed’s December decision, though upcoming economic data (inflation, jobs) could still reverse expectations [1].

• Timing
  : The event occurred on Nov 24 (day before Thanksgiving), a low-liquidity period.
• Fed Internal Dynamics
  : The 7-5 vote tally indicates a close decision, with Powell allies (Williams, Daly) driving the shift to dovishness [0].
• Probability Threshold
  : The 81% cut probability is a significant threshold, but not yet a certainty (19% chance of no cut [1]).

1. Missing broad market index performance (S&P500, Nasdaq) for Nov24 [3].
2. No AI-related stock performance data to validate Reddit’s claims about AI investments/bubbles [4].
3. Lack of detailed labor market data cited by Daly [0].
4. No bond yield or fixed income market reaction data.
5. No post-Thanksgiving market data to assess sustained impact of Daly’s comments.

[0] Shelton Cap Weekly Fixed Income Commentary (Nov26,2025): https://www.sheltoncap.com/2025/11/26/weekly-fixed-income-commentary-nov-26th-2025/
[1] PA Daily | Probability of Fed Rate Cut in December Rises to81%: https://www.panewslab.com/en/articles/6bbba22b-568a-45a4-8a4e-ade51b4bd24a
[2] Sector Performance Analysis (2025-11-24): Tool Output (name=2)
[3] Market Overview Tool Output (2025-11-24): Tool Output (name=3)
[4] User-provided Event Content & Reddit Discussion (2025-11-24)