Despite the strong dollar, commodities generally rose last week, led by a 5+% gain in oil. Gold also posted another solid weekly increase, seemingly due to renewed inflation concerns. Industrial Metals, however, lagged as weak global manufacturing data dampened growth expectations for raw materials in 2025.

The Federal Reserve’s decision on Wednesday will be this week’s central focus and a 25-basis-point rate cut is almost universally expected. Any deviation from that would be a major surprise. Investors will be more focused on how many future rate cuts the Fed signals through its updated dot plot projections.

Last week’s economic data reinforced the soft-landing narrative (where the Fed brings rates down without destroying economic growth). The highlight of the week was the Goldilocks jobs report, showing a solid 227k job increase for November (above estimates) and an upward revision for October, pointing to a steady, but not overheated, labor market growth.

Expectations for another rate cut in December grew significantly last week, while solid economic data and the anticipated pro-growth political agenda continue to drive investor optimism. Market valuations remain “frothy”, but well supported by the data.

Treasury yields were largely unchanged last week with the 10-year yield hovering around the 4.40% mark, despite the solid economic growth data in the US while the dollar spiked to new highs for the year amid weaker European data. Commodities rallied across the board led by advances in Oil and Gold thanks to intensified geopolitical unrest as Ukraine sent US-made missiles into Russian territory — a move Russia warned would have consequences.