Investor focus shifts to Fed rate outlook

November 17th 2025

This article was authored and provided by Russell Investments, it is published with their permission. Russell Investments is the trading name of Russell Investment Management Ltd ABN 53 068 338 974, AFS 247185.

This content is intended to provide general information only. No representation is given, warranty made, or responsibility taken about the accuracy, timeliness or completeness of information sourced from third parties.  Because of this, we recommend you consider, with or without the assistance of a licensed financial adviser, whether the information is appropriate regarding your particular circumstances.

“Market Week in Review” is a weekly market update produced by Russell Investments, offering global investment insights in a short video format. We hope you enjoy.

Key takeaways

• Markets reassess odds of December Fed cut
• Chinese credit data remains soft 
• Australian labor market rebounds

Markets wobble on rate uncertainty

It was a relatively light week for U.S. economic data, with optimism over the end of the government shutdown helping lift equities earlier in the week. However, that momentum faded with a modest selloff on Thursday—particularly in small caps and the tech-heavy Nasdaq—as investors reassessed the likelihood of a Federal Reserve rate cut in December.

From our perspective, the U.S. macro environment remains healthy. While the labor market has been relatively stagnant—characterized by a “low-hire, low-fire” dynamic—business investment and consumer spending continue to look robust. We believe this imbalance between the two will gradually resolve over the next year as the labor market begins to catch up with broader economic activity, setting the stage for a more constructive environment through 2026.

China’s economy remains soft

China’s latest inflation and credit releases painted a mixed picture. Consumer prices ticked slightly higher, but overall inflation remains muted. Credit data was subdued, with both corporate and household lending still weak. Government bond issuance provided some offset, but broader economic conditions remain soft.

We believe the underlying structural challenges—particularly in the property sector and among cautious consumers—will continue to weigh on China’s growth outlook into 2026.

Rate-cut timeline pushed back in Australia

Australia’s latest employment numbers came in stronger than expected, rebounding after a few softer months. That strength has prompted markets to dial back expectations for a Reserve Bank of Australia (RBA) rate cut. Three months ago, the consensus was for an additional cut by year-end.

With the Australian economy running a little below trend and inflation moderating, we still anticipate another rate cut—but probably not until the first half of 2026. From a fixed-income perspective, we think Australian government bonds continue to look attractive—both on an absolute basis and relative to U.S. Treasuries, with yield spreads remaining compelling.

Watch the video here. Listen to the podcast here.

If you have any questions about this, please contact us.

Source: Russel Investments