November brought a range of headlines, from economic to political to market based. In the United States the longest ever government shutdown ended (after 43 days) in a whimper rather than a bang, and in the United Kingdom the long-awaited budget arrived to similar effect. In markets, we saw a divergence in the fortunes of technology stocks and crypto assets. Lastly the US and Russian governments put forward a controversial peace proposal for the war in Ukraine.

Starting with the US economy, the shutdown means that some data, such as the October consumer price inflation (CPI), we will never know. However, the data that we did get revealed an economy that is moderating but not crashing. The delayed labour report showed that job growth has stabilised at a better rate than feared, although the unemployment rate still rose to 4.4% (1% above its most recent low). Although consumer confidence fell again, retail sales and credit card data showed that Americans continued to spend, and business surveys showed that companies continue to expand in services rather than manufacturing. The Federal Reserve (the Fed) will get no more big data points before their next meeting on December 10th, but markets sense a change. Recent comments from Fed board members indicated they were more likely to cut rates than was expected after chair Powell’s cautionary comments last month. On top of tax cuts and enormous expenditure on AI (artificial intelligence), rate cuts should keep the US economy out of recession for the next few quarters.

Figure 1: Consumer inflation across major economies

Source: Bloomberg. % year-on-year inflation measured in local currencies.

In Europe, the UK government was in the news as they agonised over another difficult budget. After all the fuss, Labour chancellor Reeves delivered more tweaks and tax rises, which are unlikely to make much difference to the overall economy. Bond markets were reassured that fiscal buffers were increased, and no unnecessary risks were taken. More good news for the Bank of England (BOE) was the drop in UK consumer inflation to 3.6%. In the Eurozone, inflation dipped slightly to 2.1%, and business surveys showed continued expansion in the services economy.

Further afield, data from Tokyo showed persistent price pressures in the Japanese economy. The Bank of Japan (BOJ) will want to coordinate their monetary policy with the growth plans of new prime minister Takaishi, however we still expect Japanese rates to rise next year, which may impact exchange rates and bond yields worldwide, as Japanese investors are active in global bond markets.

Figure 2: Interest rate expectations in the US and Europe

Source: Bloomberg. The square dots represent the most recent central bank meeting. The diamond dots represent future central bank meetings. OIS - Overnight Interest Swap

Speaking of bond markets, yields initially rose on the month on concerns over US inflation and monetary policy, and the UK budget. Then the change in tone from US Fed speakers and the uneventful UK budget saw them ease to end the month almost exactly where they started. As a result, global bond indices were up very slightly on the month. The softer Fed stance led to a small decline in the US dollar versus the euro and the pound, while the Japanese yen weakened on the potential delay to the next BOJ rate hike. After the volatility in October, gold and silver both rallied in November, with silver reaching another new all-time high.

Moving to the stock market, here volatility jumped in the middle of the month when talk of an AI bubble led to a pullback in technology stocks. Even a huge earnings report from Nvidia, the super-star AI chipmaker, with another record profit quarter and a strong outlook for 2026, wasn’t enough to stop the drop initially. The stronger macro prospects, including easier Fed policy, did help to calm the market, lowering the volatility and letting the world index finish almost flat on the month (in US dollar terms). There was still significant dispersion across sectors though, with tech finishing down almost 5% and defensive sectors like healthcare and staples up 8% and 4% respectively (in dollars). On a regional basis, there was little between the largest developed markets, but in emerging markets there was a big gap between Asia, weighed down by technology stocks in South Korea and Taiwan, and Latin America, which reported another very strong month.

Figure 3: The OpenAI effect on Oracle and AMD

Source: Bloomberg. Based on price returns in US dollars