Pre Fed Jitters? Not Exactly
Summary:
On December 8, 2025, both stocks and bonds experienced a sell-off shortly after the NYSE opened, a pattern often associated with deteriorating Fed rate cut expectations. However, Fed Funds Futures and other data did not support this narrative, leaving analysts to attribute the volatility to random market fluctuations typical between Thanksgiving and New Year’s. This occurrence highlights the challenges of predicting market movements during periods of low liquidity and high uncertainty. Understanding this dynamic is crucial for investors navigating end-of-year trading.
What This Means for You:
- Expect increased market volatility during the holiday season, which can impact both stocks and bonds.
- Monitor Fed Funds Futures and economic indicators to avoid misinterpreting market movements.
- Consider adjusting your portfolio strategy to account for unpredictable end-of-year trading patterns.
- Stay cautious, as Fed meetings and economic data releases can quickly shift market sentiment.
Original Post:
Pre Fed Jitters? Not Exactly
Mon, Dec 8 2025, 4:26 PM
Both stocks and bonds began to swoon moments after this morning’s 9:30am NYSE open. That sort of pervasive selling is often seen when the Fed’s rate cut outlook is deteriorating. With the Fed on deck Wednesday, it would be easy to slap “pre-Fed jitters” on the label of today’s sell-off and call it good. But Fed Funds Futures don’t corroborate that narrative. In fact, nothing does (at least not when it comes to obvious data/events/news). We’re left to lean on “elevated random volatility between Thanksgiving and New Years.” It’s our least favorite explanation, but in today’s case, it’s also the least stupid one we’ve seen.
09:39 AM
A hair weaker overnight and sideways so far. MBS down 3 ticks (.09) and 10yr up 1.2bps at 4.149
01:31 PM
drifting sideways near weakest levels. MBS down a quarter point and 10yr up 3.5bps at 4.172
03:30 PM
Off the weakest levels, but not much. MBS down 7 ticks (.22) and 10yr up 3 bps at 4.167
Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.
Extra Information:
Federal Reserve Meeting Calendar – Track upcoming Fed meetings to anticipate market reactions.
Understanding Market Volatility – Learn how to navigate volatile markets effectively.
Bloomberg Markets: Rates & Bonds – Stay updated on real-time bond and interest rate data.
People Also Ask About:
- What causes market volatility during the holiday season? – Reduced liquidity and lower trading volumes often lead to exaggerated price movements.
- How do Fed meetings impact the stock market? – Fed decisions on interest rates can significantly influence investor sentiment and market direction.
- What are Fed Funds Futures? – These are financial contracts used to predict the Federal Reserve’s interest rate changes.
- Why do bond prices fall when yields rise? – Bond prices and yields have an inverse relationship due to their fixed interest payments.
Expert Opinion:
Market volatility during the holiday season underscores the importance of disciplined investing. While short-term fluctuations can be unsettling, focusing on long-term fundamentals and staying informed about macroeconomic indicators remains the best strategy for navigating uncertain times.
Key Terms:
- Fed Funds Futures
- Market volatility patterns
- Holiday season trading
- Federal Reserve rate cuts
- End-of-year market trends
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