Weekly Market Report: November 21st, 2025
Equity markets tried to take an overdue breather last week with earnings season largely behind us and inflation/FOMC dynamics taking on renewed focus. Despite some mid-week jitters, equity markets closed the week relatively flat with value outperforming growth domestically and international developed (+1%) and emerging (+0.75%) both posted stronger gains thanks to a weak USD (-0.31%). Interest rates inched higher across the curve, taking the 10yr back up to 4.14% to close the week.
Financial Market Highlights
- U.S. equity market saw more consolidation last week with monetary policy and a slow reboot of economic data acting as the primary drivers.
- The past week of Bitcoin and Ethereum wiping out all of 2025 gains reminds investors of the massive swings crypto can bring which includes 10+ declines of 25%, 6 of 50%, and 3 of 75%.
- Large UST auctions, including a $48.5b 10yr issue, over the past two weeks have reinforced competing narratives of market complacency and long-term fiscal profligacy.
Economic Highlights
- The K-shaped recovery has several plausible explanations including a robust stock market, low household debt, anemic job prospects, and challenging affordability.
Bullish Asset Allocation Narratives
- Growth conducive policies including an incrementally less restrictive Fed, OBBB fiscal stimulus, and business friendly deregulation.
- A healthy consumer with room to re-lever thanks to lower debt levels and higher net worth.
- Exceptional U.S. corporate earnings growth, profit margins, and forward guidance.
- Fading tariff levies and trade policy uncertainty.
- The AI boom including substantial capex, expected productivity gains, and earnings potential.
Bearish Asset Allocation Narratives
- Risks to consumption due to elevated interest rates, sluggish labor markets, tariff-related demand destruction, and cumulative inflation.
- Monetary policy mistake from the Fed overstaying restrictive policy despite labor market stress.
- Fading (TCJA, pandemic stimulus, OBBB) U.S. fiscal thrust beyond Q2’26 with clear market and political constraints on continuing elevated deficit spending.
- Narrow market reliance on AI stock momentum and aggressive capital spending amidst eyebrow raising circular investment and high valuations/earnings expectations.
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