Donald Trump won the 2024 presidential election and will return to the White House with a Republican majority in both the Senate and the House of Representatives. The equity markets are applying pending policy changes against the list of corporations likely to be impacted by President-elect Trump’s legislative agenda. With the Republicans’ pro-growth agenda, bond yields have pushed higher to reflect both more economic growth and the likelihood of higher inflation.

With inflation seemingly under control, the Federal Reserve recently lowered the Fed Funds target range by 25bps. This was a follow-up to the 50bps cut in September and likely set the new pace of interest rate cuts moving forward. Solid third quarter GDP growth, recent strength in the employment picture and fiscal stimulus forthcoming have some market participants forecasting an early stoppage of this rate cutting cycle. Chairman Powell, in his post meeting press conference, has expressed the Fed’s desire to keep optionality in the rate setting process by indicating that the pace and degree of future rate cuts will depend on the economic data. But recent employment data has been volatile, with September payroll additions coming in at 223,000 while in October the economy only added 12,000 new jobs. A combination of factors led to the disappointing October numbers, including the recent devastating hurricanes and the strike at Boeing contributing to negatively impacting the number. These factors highlight the difficulty in setting monetary policy when the data has been volatile.

The November jobs report will be critical to the decisions made by the Federal Reserve at their next meeting in December. The Federal Reserve has several weeks to digest the fiscal policies that are likely to be proposed by the next administration and how those policies may impact the Fed’s economic projections and interest rate forecasts which will be released for 2025 and beyond.