"Global financial markets caught in a struggle as the Federal Reserve weighs concerns over inflation against the need for liquidity"

Bitget-RWA2025/11/14 22:58

By:Bitget-RWA

- Fed officials' divided views on rate cuts triggered global market declines, with Asian and European indices falling amid inflation concerns. - UK unemployment rose to 5.0% while Switzerland secured a 15% US tariff cut, boosting growth projections and bilateral investments. - Data gaps before the Fed's December meeting intensified uncertainty, with investors pricing in shifting cut probabilities and hoarding $7.535T in cash. - Central banks face balancing acts as 10-year Treasury yields climbed to 4.125%,

This week, both European and American markets experienced fresh volatility as Federal Reserve officials expressed differing opinions on future interest rate moves, heightening investor uncertainty. Stock markets worldwide, including major Asian indices such as Japan’s Nikkei and South Korea’s Kospi, declined following

assertive remarks from Fed officials

, who warned against lowering rates too soon despite ongoing inflationary pressures. The Fed’s upcoming meeting on December 9-10 is now seen as increasingly crucial, with

traders now assigning a 51% probability

to a rate cut—down from 63% just the previous day—as the release of key economic indicators is postponed due to concerns over a possible government shutdown.

The downturn also affected European stocks, where the STOXX 600 index showed mixed results. Although

Adyen increased its 2028 EBITDA margin goal

to above 55%, broader indices like Germany’s DAX and France’s CAC 40 dropped by 1.6% and 2.1%, respectively.

Adyen’s strong performance, fueled by its growth

in North America and Asia, demonstrates how certain companies are leveraging changing market conditions despite widespread instability.

At the same time, the U.K.’s unemployment rate rose to 5.0% in the third quarter, reaching its highest level since early 2021,

increasing the pressure on the Bank of England

to consider a rate cut in December.

Yields on U.S. Treasuries moved higher as investors adjusted their expectations for the Fed’s next steps. The 10-year yield climbed to 4.125%, while the 2-year yield remained at 3.597%, highlighting the ongoing struggle between inflation threats and the need for short-term funds

as investors reassess their outlook

. Over in Asia, Chinese investors awaited October’s economic reports, which had already

revealed sluggish lending numbers

and a growing reluctance among households and businesses to take on new debt.

Despite the prevailing uncertainty, there were some positive trade developments. Switzerland

achieved a 15% reduction in tariffs

on exports to the U.S., a move expected to lift its economic growth above 1% in 2026 and attract $200 billion in American investment. The agreement,

reached after several weeks of talks

, was praised by Swiss business leaders as a vital measure to regain competitiveness against other European nations.

The Fed’s future decisions remain uncertain due to missing data, as inflation and employment figures for October and November are likely to be unavailable before the December meeting

with data gaps adding to the uncertainty

. Minneapolis Fed President Neel Kashkari and other officials have urged prudence, stressing the importance of consistent progress on inflation before easing policy

as policymakers stress caution

With markets preparing for more swings, analysts are monitoring how central banks will juggle their desire to lower rates with the risk of sparking renewed inflation. In the meantime, the lack of clear direction has led investors to play it safe, pushing money market fund holdings

to a record high of $7.535 trillion

as cash accumulation accelerates.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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"Global financial markets caught in a struggle as the Federal Reserve weighs concerns over inflation against the need for liquidity"

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