FOMC Meeting and Bond Market Signals
We are heading to what will likely be the most decisive week for crypto of the month. December 8-12 will present key information about the future of monetary policy in the U.S. — as well as give investors a sense of what to expect in 2026. From interest rate decisions to an update in the Federal Reserve’s economic projections, the week will set the tone for risk assets heading into year-end.
JOLTS Jobs Opening
On Tuesday, the Bureau of Labor Statistics will release the JOLTS data for October, giving investors an important insight into the conditions of the U.S. labor market. This dataset is particularly important right now because it helps confirm whether the cooling trend seen in payrolls and unemployment claims is broad‑based.
Forecasts see a 7.200M figure for October, down from 7.227M in September. A stronger-than-expected reading would be bullish for the U.S. Dollar and bearish for speculative markets. However, whatever the outcome is, the data is unlikely to move the Fed away from its most important decision of the month.
Interest Rate Decision
Kicking off with the elephant in the room, the Federal Open Market Committee is getting together for one last time in 2025 on December 9-10 to decide the new (or old) Federal Funds target range.
While the Fed is expected to lower rates again, by 0.25%, the path the Committee had to go to get here was as rocky as it gets. The longest government shutdown in history got in the way, blocking the Fed from accessing up-to-date economic data.
Only a few weeks ago, the Commission, led by a notoriously risk-averse head in Jerome Powell, was expected to push the idea of another cut to January due to the lack of inflation and jobs reports.
However, the tide shifted quickly once delayed data releases finally came through. While inflation remained stable in September, growing as expected, reports like the latest ADP report showed that private payroll growth slowed significantly, hinting at a cooling labor market.
Futures markets are heavily pricing in favor of another cut on December 10, according to the CME FedWatch tool.
Another cut would mark a third consecutive slash at the last 3 meetings of the year, a pivot that may feel unexpected when considering the Fed’s hesitance at the start of 2025. If the forecasts come true, the Federal Funds target range will come down to 3.75-3.50% — the lowest interest rate since mid-2022.
And while this feels like celebration time for cryptocurrency investors. It’s important to note that markets tend to price cuts ahead of the date, rather than after. With that in mind, recent reactions in the bond market indicate that markets could be expecting an end to dovish momentum at the start of 2026.
Treasury Yields in Check
Rising yields may pour water on the optimism surrounding rate cuts next year. Even as Committee members signal easing, the bond market has been reluctant to follow suit.
This Monday, the U.S. Treasury held a 3‑year note auction, where $58 billion of Treasury notes cleared at a high yield of roughly 3.614% — a spike from the last auction at 3.579%. The week will feature two additional auctions: the 10‑year note on Tuesday and the 30‑year bond on Thursday.
The fact that yields are on the rise indicates that markets are bracing for a “hawkish cut” in December, a rate reduction accompanied by Fed caution and renewed focus on inflation risks.
For traders: expect volatility around the FOMC announcement (Dec 10), but more importantly, watch how bonds respond. If yields at the secondary market spike after the cut, risk assets could face headwinds into year-end as risk-on sentiment and inflation fears turn bonds more attractive.
