November was another positive month for SPX while NDX fell.

SPX finished November in positive territory for a seventh straight month despite some significant intramonth volatility.  Some of the key drivers for the volatility were fluctuations in expectations of a December rate cut, lack of economic data releases due to the Government shutdown, and significant selling in the crypto space.  Tech lagged in November, as the AI-theme was under pressure.  Following a return of 2.34% in October (total return), SPX (the S&P 500) returned 0.25% (total return) in November.  After returning 4.81% (total return) in October, NDX (the Nasdaq-100) returned -1.57% (total return) in November.  The Russell 2000 returned 0.96% in November after a gain of 1.81% in October.  By the end of the month, SPX & NDX held their key moving averages in November, which we will illustrate later in this note. 

High Yield, International, Real Estate and Bitcoin were mixed in October.  Following a return of 0.16% in October (total return), High Yield (Bloomberg US Corporate High Yield Total Return Index) returned 0.58% (total return) in November.  Following a return of 1.19% in October (total return), the MSCI EAFE Index returned 0.65% in November.  Following a return of -2.44% in October (total return), Real Estate (Dow Jones US Real Estate Capped Index) returned 2.33% (total return) in November.  Bitcoin returned -17.01% in November (Bloomberg Bitcoin Index) after returning -3.94% in October.  Through November, Bitcoin has returned roughly -2.5% YTD.

Treasuries were little changed in November after in October, the FOMC lowered its policy rate to a range of 3.75% – 4.00%.  In addition to the recent rate cut, fixed income markets were mostly driven by the lack of data due to the Government shutdown, weaker labor market conditions and expectations, moderating recent inflation reports, and expectations of future rate cuts.  The short-end of the curve slightly outperformed once again during November.  The 10-yr closed near 4.01% to end November, slightly lower than at the end of October, and under the lower end of its important 4.20% – 4.50% technical range.  The 30-year Treasury yield ended November at roughly 4.66%, nearly unchanged from 4.65% at the end of October.  Over the past several months and years, the correlation between equities and fixed income has been notably high – and likely will remain so.  Additionally, the 2/10 Treasury yield spread widened in November after narrowing in October.  The 2/10’s record-long inversion came to an end in the second half of 2024.

Due to the Government shutdown, there was limited data that was released: PPI printed 0.3% M/M, matching the consensus.

The next Fed meeting will take place on 12/9-12/10, and there is a 25bps cut expected.  Looking ahead, and as of the end of November, the market is pricing in 75bps for 2026 (three cuts).  The Fed continues to target 2% inflation as its goal, and incoming inflation reports will likely continue to drive the dot plot.  However, the Fed has signaled that it is ready to start cutting rates despite inflation remaining stuck above the 2% target.  Furthermore, the weaking employment picture will play a major role in future cuts.

According to FactSet, the trailing 12-month P/E ratio for SPX is 28.3 which is above the 5-year average (25.0), and above the 10-year average (22.8).  The forward 12-month P/E ratio for SPX is 22.4, which is above the 5-year average (20.0), and above the 10-year average (18.7).  Additionally, per FactSet, SPX is expected to report Y/Y revenue growth 7.5% for Q4 2025, which is above the estimate of 6.4% on 9/30.  Finally, per FactSet, SPX is expected to report Y/Y earnings growth of 7.7% for Q4 2025, which is above the estimate of 7.1% on 9/30.

Within commodities and currencies: WTI Crude Oil fell in November by roughly 3.5% to close near $59/bl.  Gold rose by 5.9% in November to close near $4,250/oz as its historic run in 2025 continued.  Finally, the USD/DXY rose M/M and closed out November near 99.40.  2025 has been one the weakest years for the USD in several decades.

VOLATILITY UPDATE

After closing out October near 17.50, the VIX Index finished November near 16.30 as volatility fell M/M after spiking intramonth to 29 before falling back under 20.  This was the second month in a row where the VIX printed near 30, but it has mostly remained sub-20 since Q2.  The 12-month high of the VIX Index was registered on 4/7/25 at 60.13.  In 2022, the VIX averaged over 25.  In 2023, the VIX averaged near 17.  And in 2024, the VIX averaged near 15.50.

The MOVE Index calculates the future volatility of US Treasury yields implied by current prices of options on Treasuries of various maturities.  It is thought of as “The VIX Index of the Bond Market.“   After closing out October near 66, the MOVE Index closed out November near 69.  The MOVE continues to print very low numbers.  The 12-month high of the MOVE Index was registered on 4/8/25 at 139.88.  Traders will continue to monitor this index to gauge potential future bond and equity volatility.  Equities tend to favor a subdued MOVE Index – and a low MOVE Index has been the case over the past 5 months.

LOOKING AHEAD

Among other factors, the market will be adjusting to and watching employment data, US trade policy headlines, inflation, earnings, yields, and fiscal policy.  On the inflation front, November’s CPI will be released on 12/18, and PPI will be delayed until 1/14.  Finally, the next FOMC meeting will take place on 12/9-12/10, and the market is expecting a 25bps cut.