Fed Rate Cut Speculation: Daly's December Support & Market Implications (Nov 2025)

On Nov 24, 2025, San Francisco Fed President Mary Daly’s surprise support for a December rate cut catalyzed a surge in market expectations. Daly cited fragile labor markets and easing inflation, aligning with emerging data: ADP reported 13.5k weekly private job losses ending Nov8 [3], and economists deemed the labor market “noticeably weaker” by Nov27 [4]. Rate cut probabilities rose to 85% (CME FedWatch) by Nov28, up from 42% the prior week [1], with Polymarket showing 88% odds [2]. Easing inflation (weighing on income growth without spiraling) further justified expectations [5]. The Reddit discussion’s dominant view—rate cuts boost AI investments over jobs—aligns with market analysis: AI-driven firms benefit from lower borrowing costs [6].

1. Cross-domain Catalyst
   : Labor market weakness (macro factor) directly drove tech/AI sector optimism (micro-sector trend) via rate cut expectations.
2. Consensus Shift
   : Daly’s comments (single Fed member view) flipped market sentiment, highlighting sensitivity of rate expectations to FOMC signals.
3. Asset Class Correlation
   : Equities (4-day rally [1]) and crypto (Bitcoin at $87k-$90.9k [2]) both rallied, indicating broad risk-on sentiment tied to monetary policy.

• Risks
  : Over-reliance on rate cuts to sustain growth may mask underlying labor fragility; minority AI bubble concerns (unsupported by trends [6]) warrant monitoring.
• Opportunities
  : Tech/AI sectors gain from lower borrowing costs [6]; crypto and equities may rally if rate cut expectations hold [1,2].

• Fed Daly’s Nov24 comments supported December rate cuts (weak labor + easing inflation [1]).
• Rate cut probabilities: 85% (CME) to88% (Polymarket) by Nov28 [1,2].
• Labor weakness:13.5k weekly private job losses (ADP) + reduced job confidence [3,4].
• Market reactions:4-day equity rally, Bitcoin surge, AI sector optimism [1,2,6].