Global Stocks Rally as Fed Rate Cut Bets Surge for December

Global stock markets kicked off a volatile week on an optimistic note Monday, as traders ramped up bets for an interest rate cut by the Federal Reserve in December — even as policy makers continued to publicly disagree about the move.

The broadest MSCI Asia-Pacific ex-Japan Index advanced 0.4%, South Korea’s KOSPI jumped 1.2%, and Hong Kong’s Hang Seng gained between 1.06% and 1.97% according to various reports. U.S. equity futures were also in the green, with S&P 500 futures rising 0.5% and Nasdaq futures up 0.64%.

The rally followed comments from influential Fed official John Williams on Friday, who said interest rates could fall “in the near term,” greatly boosting expectations for further monetary easing at the Fed’s final 2025 policy meeting on December 9–10. The CME Group ’s FedWatch tool now prices a 67.3% chance of a 25 basis-point cut next month—up from about 40% just a week earlier.

Rebound After a Tumultuous Week
Monday's positive action offered relief after a turbulent period marked by tech stock selloffs and concern over elevated AI valuations. Last week, Hong Kong’s Hang Seng dropped 5.1% (steepest weekly loss since April), and the tech-rich Hang Seng Tech Index plunged 7.2%. The Nasdaq fell 2.2% on November 20 before recovering.

Goldman Sachs Chief Economist Jan Hatzius expressed confidence in another rate cut, telling clients, “We expect another Fed cut in December, followed by two more moves in March and June 2026, taking the federal funds rate to 3-3.25%.” He added that risks for next year “skew toward further cuts,” citing favorable inflation data and a deteriorating labor market, especially for college-educated workers.

Trading volumes were light Monday, with Japanese markets closed for a holiday. The Fed has already reduced rates by 25 basis points in both September and October, setting the current target range at 3.75%-4%. However, expectations have swung wildly in recent weeks — the odds of a December cut went from 97% in mid-October down to just 22% as of November 20, before Williams’ remarks restored market optimism.

Sources:
Investing.com, CNBC, New York Times, Reuters