Fed End QT: Federal Reserve Ends Tightening Program

Central Bank

Summary:

In a major shift in U.S monetary policy, the federal reserve has officially ended its three year quantitative tightening (QT) program, marking one of the most significant pivots since the post pandemic economic recovery. The move signals a transition from balance sheet reduction to liquidity stabilization as the central bank seeks to maintain healthy banking system and guide inflation back towards target levels.

Source: X

Fed halts balance sheet reduction after shrinking $2.2 Trillion

The federal reserve has stopped cutting its balance sheet, ending a QT cycle that ran from 2022 to 2024. During this period, the fed allowed assets to roll off without reinvestment reducing:

$1.6 trillion in U.S treasuries
$600 billion in mortgage backed securities (MBS)

This marks one of the largest balance sheet contractions in its history and reflects the central banks attempt to reverse the excessive liquidity created during covid era stimulus.

Bank Reserves return to safe and stable levels

With QT ending, the Fed signaled the bank reserves have reached a comfortable and safe level reducing the risk of stress in short term funding assets. This is critical because excessively low reserves can trigger tightening in the repo market– a flashpoint to avoid after the volatile 2019 trading volume squeeze.

Market Expect a December rate cut as odds hit 88%

Following the policy shift, traders now see an 88% probability of a 25 bps rate cut in December. The market confidence has strengthened due to:

Easing inflation pressures
Steady labor market cooling
The Fed pivoting away from aggressive tightening

A rate cut would mark the first step towards a more accommodative environment that could support risk assets, lending activity and broader market funding conditions.

The Federal Reserve's decision to end its three-year QT cycle and shift toward liquidity support is being viewed as a bullish catalyst across the crypto assets. Traders expect improved dollar funding, higher risk appetite, and a potential December rate cut—all factors that typically boost digital assets.

With bank reserves stabilizing and preparing to add liquidity through T-bill purchases, Bitcoin and altcoins often benefit from easier financial conditions, stronger capital flows, and renewed market momentum.

If its pivot develops into a broader easing cycle, analysts anticipate increased inflows into crypto, stronger demand for risk assets, and a more favorable macro backdrop heading into the next phase.

Fed to boost liquidity through T-Bill purchases

Instead of shrinking its balance sheet further, the Federal Reserve will shift to purchasing treasury bills (T-bills) to keep reserves from failing. This approach allows the Fed to:

Stabilize the level of reserves in the banking system
Maintain flexibility in its balance sheet composition
Prevent tightening from resurging unintentionally

This move is widely seen as a strategic transition to a steady state balance sheet policy

The Fed's decision to end its three year Quantitative tightening program is a major turning point in U.S monetary strategy. With bank reserves now stable,

Expectations for a December rate cut elevated, and the central bank shifting to T-bill purchases to maintain liquidity, markets are preparing for a more supportive policy environment.

The upcoming Decision will reveal whether this pivot evolves into a full easing cycle, shaping the economic landscape in the months ahead.

Source: CryptoSlate

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Adam

Stocks

Boeing is continuing to express optimism about its business as the company wraps up the year and looks at 2026.

Chief Financial Officer Jay Malave said Tuesday at a UBS conference that the company expects deliveries of both its 737 and 787 jets to be up next year.

“When you now fast forward to 2026, we’re going to be increasing our deliveries,” Malave said.

Boeing’s stock rose more than 8% in midday trading Tuesday after Malave’s comments.

He added that he expects the certification for the 737-10 aircraft, which is years behind schedule, to come later in 2026.

The bolstered deliveries will be “a big driver” of cash flow as well, Malave said, with positive free cash flow expected to be in the billions in the “low single digits.” Boeing hasn’t turned an annual profit since 2018.

Malave also said the company expects that cash margins will get a “pretty significant boost” through 2030 due to the higher productivity.

Boeing has been experiencing an upward trend after a period of increased scrutiny following the blowout of a door plug on a flight in January 2024. In July, CEO Kelly Ortberg said the company was beginning to see changes in its business, including slashing its quarterly losses.

Boeing saw a strong delivery pace in October, putting it on track for its highest annual delivery total since 2018. The company said its jetliner deliveries drove it back into cash-positive territory for the first time in nearly two years in October.

Those deliveries follow a lifting of restrictions by the Federal Aviation Administration, allowing the company to sign off on some of its 737 Max and 787 Dreamliner planes before they reach customers.

Source: cnbc

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Gerik

Economic

Commodity

Silver Retreats After Overextended Rally

Silver prices dropped 1.8% to $56.97 an ounce in London on Tuesday, slipping from their recent record after a powerful six-day surge. At one point during the session, silver was down as much as 2.4%, trading roughly $1.70 below its all-time high. The pullback appears to be a technical correction, rather than a shift in fundamentals, as indicators signaled that the rally had become overheated.

The 14-day Relative Strength Index (RSI) briefly crossed above 70 an important threshold suggesting overbought conditions. This reading typically signals the potential for a short-term reversal as traders reassess stretched momentum trades.

Overbought Signal Prompts a 'Natural Pullback'

Ole Hansen, Head of Commodity Strategy at Saxo Bank, described the dip as a “natural pullback” following sharp gains. He noted that the structural bull case remains intact, particularly if prices remain above the support range of $54.5–$55 per ounce. This suggests that the correction may reflect healthy consolidation within an ongoing uptrend, rather than a deeper reversal.

Silver had climbed more than 8% across just two sessions before the decline, primarily driven by expectations of tight global supply and increased speculative demand. These expectations were compounded by inventory stress in major trading hubs. While London received record inflows of silver in October to ease pressure, the Shanghai Futures Exchange now reports stockpiles at decade-low levels signaling a shift in supply tightness to Asia.

Investor Demand Driving Gains Despite Weak Physical Markets

TD Securities strategist Daniel Ghali noted that while industrial and jewelry demand expectations have declined, investment demand has taken over as the primary price driver. He added that silver's recent rally has now “moved beyond rational momentum,” citing especially weak physical trading in London’s over-the-counter market as evidence of a divergence between price action and physical fundamentals.

This shift from physical to financial demand introduces a risk of volatility, as speculative positioning can reverse quickly in response to macroeconomic news or technical triggers.

Gold-Silver Ratio Signals Possible Turning Point

The gold-silver ratio a measure of how many ounces of silver are needed to purchase one ounce of gold has dropped to its lowest point in over a year. This shift indicates silver's recent outperformance and may suggest a potential inflection point, especially for traders who watch inter-metal spreads for trend reversals.

Gold also fell on Tuesday, declining 1% to $4,191.25 per ounce, as some traders locked in gains ahead of next week's anticipated U.S. Federal Reserve policy meeting. Platinum and palladium similarly lost ground, though the Bloomberg Dollar Spot Index remained flat, implying that currency dynamics were not the primary driver of precious metal movements on the day.

Rate Cut Expectations Remain a Supportive Backdrop

Despite the correction, the macro backdrop remains supportive for precious metals. Markets are pricing in a near-certain 25-basis-point interest rate cut from the Federal Reserve at its December meeting. Since precious metals yield no income, they tend to benefit in low-rate environments where opportunity costs diminish and monetary easing boosts their appeal as alternative stores of value.

Silver's retreat from record highs reflects a temporary cooling of momentum rather than a fundamental shift in the metal’s outlook. Technical overbought signals and reduced physical demand are prompting short-term traders to take profits, but the structural narrative anchored in supply tightness and dovish central bank expectations remains supportive. As long as silver prices hold above key support levels, the broader bullish trend is likely to resume once speculative froth clears.

Source: Bloomberg

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Gerik

Economic

Marginal Rise in Inflation Supports Cautious ECB Stance

Data released by Eurostat shows that eurozone consumer prices increased by 2.2% in November compared to the same period last year, slightly above October’s 2.1% and the 2.1% forecast by economists surveyed by Bloomberg. The slight uptick remains within close range of the ECB’s 2% target, providing validation for its current monetary policy trajectory.

Core inflation, which excludes food and energy, held steady at 2.4%, signaling persistent underlying price pressures. The most notable component, services inflation, also edged higher and remains a primary source of concern, as it reflects domestic cost drivers such as wage growth.

National Variations Highlight Asymmetric Recovery

The inflation picture across the euro area remains uneven. Germany saw a pickup in inflation, while France’s rate was flat and Spain and Italy posted declines. These national disparities are partly driven by base effects and local economic dynamics, complicating the ECB’s job of maintaining price stability across the entire bloc.

This divergence does not appear to shift the broader trend, which has shown stabilization of inflation near target since early 2025. Still, individual member states’ inflation trajectories introduce a layer of complexity to policymaking and may delay any unified signal toward easing.

ECB Reiterates Confidence in Current Rate Path

ECB President Christine Lagarde reinforced the central bank’s satisfaction with its policy position, stating that the inflation cycle appears well-managed and that current rates are “set correctly.” The deposit facility rate stands at 2%, following eight consecutive quarter-point cuts from a peak of 4%.

This position has broad support from market participants, who expect no further rate cuts through 2026. The upcoming ECB meeting in December will include fresh economic projections extending to 2028, but officials caution that one-time factors such as a postponed EU carbon pricing initiative may temporarily suppress inflation data, without altering the underlying trajectory.

Wage Pressures Pose a Sticky Threat to Services Inflation

One driver behind the persistently elevated services inflation is wage catch-up, where salary increases lagging behind past inflation continue to filter through the system. However, the ECB’s collective bargaining tracker indicates a moderation in wage growth going forward, suggesting inflationary momentum in services may ease over time.

Bloomberg Economics analyst David Powell noted that service inflation’s resistance to decline has been a critical concern, as it reflects domestic pressures rather than global shocks. Still, he emphasized that broader disinflationary trends are likely to remain intact as wage growth reverts to equilibrium levels.

Stable but Conditional Policy

Despite the mild inflation uptick, the ECB appears firmly positioned to hold rates steady unless there is a marked change in economic or geopolitical conditions. Vice President Luis de Guindos acknowledged that while no rate adjustments are currently priced in, flexibility remains in case external shocks disrupt the benign inflation backdrop.

This conditional stance underscores the ECB’s commitment to a data-dependent approach. The causal relationship between wage normalization and stable inflation supports the current rate pause, but policymakers remain alert to the risks posed by global conflicts, supply disruptions, or shifts in consumer sentiment.

The November inflation print provides the ECB with further justification to maintain its current policy. While core and services inflation continue to hover slightly above target, wage trends and national divergences suggest that overall price pressures are manageable. As the eurozone economy shows tentative signs of momentum, the ECB is likely to remain in a holding pattern, balancing vigilance with confidence that its monetary toolkit has already steered inflation toward a sustainable path.

Source: Bloomberg

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Gerik

Economic

Stocks

Big Tech’s Capital-Light Playbook Faces a Structural Shift

For over two decades, dominant players like Alphabet, Amazon, Meta, and Microsoft thrived on a lean model: generate massive profits while spending relatively little. That model is now under pressure. The push to lead in artificial intelligence has drastically increased capital intensity, threatening the cost-efficiency that made these firms investor favorites.

According to Bloomberg data, the four companies are expected to spend more than $380 billion in the current fiscal year an increase of over 1,300% from a decade ago with much of that directed toward chips, servers, and data center infrastructure. Microsoft’s capex alone is now 25% of revenue, more than triple its level from 10 years ago and higher than most energy or telecom companies.

This sharp increase marks a causal transformation in the business model. AI’s promise of long-term productivity and revenue growth comes at the cost of massive near-term investment, challenging the previous low-risk, high-return tech narrative.

Investor Optimism Persists But Cracks Are Emerging

So far, the market has largely embraced the spending spree. Microsoft is up 15% year-to-date, and trades at more than 28 times forward earnings above both its 10-year average and the S&P 500’s multiple of 22. However, the tolerance for speculative AI investment is not unlimited.

Meta’s recent experience offers a cautionary tale. After CEO Mark Zuckerberg failed to provide a clear monetization path for the company’s AI investments during Q3 earnings, Meta shares plunged 11% its worst day in three years and have since fallen further. This shows how investor confidence is closely tied to perceived payoff timelines.

Depreciation, Cash Flow Pressures, and Rising Debt Weigh on Outlook

One underappreciated risk of the AI race is rising depreciation tied to specialized infrastructure. Hedge fund manager Michael Burry has suggested these AI assets may depreciate faster than assumed, which would hurt reported profits and create earnings shocks in the future. Such an accounting shift would reduce the long-term earnings multiple justification currently underpinning tech valuations.

Moreover, AI spending is beginning to erode free cash flow. Alphabet’s free cash flow is projected to decline to $63 billion this year, down from $73 billion in 2024. Meta and Microsoft are expected to show negative free cash flow after accounting for dividends and buybacks, limiting their ability to return capital to shareholders.

To finance these expenditures, companies are increasingly tapping debt markets and private financing. Meta, for instance, issued $30 billion in bonds and raised another $30 billion in private funds moves that expose it to refinancing risk and raise concerns over long-term leverage ratios.

AI Investment Brings Strategic Convergence and Competitive Collision

Historically, the major tech companies operated in relatively distinct segments. But AI’s centrality has collapsed these boundaries, forcing Microsoft, Meta, Google, and Amazon into direct competition. As Callodine Capital CEO Jim Morrow observes, these firms are now in “a high capital intensity AI business model” with uncertain payoffs.

This convergence creates not only pricing pressure and race-to-scale dynamics but also the risk of overspending in unproven areas. If AI productivity gains fail to materialize at the pace or scale assumed, tech stocks priced for precision could see valuations compress dramatically.

Market Risks Rise as Big Tech Bets Big on AI

The pivot to AI marks a foundational shift for Big Tech from capital-efficient platforms to infrastructure-heavy operators. While investors have so far accepted higher spending in exchange for future innovation, emerging cracks in earnings, free cash flow, and confidence especially as seen with Meta suggest this tolerance is conditional.

The causal link between AI capital intensity and deteriorating financial metrics will be closely watched in the coming quarters. Should companies fail to demonstrate tangible returns, the market may reassess the premiums currently awarded to tech leaders. In a sector that now comprises a third of the S&P 500’s weight, the consequences of a miscalculation would ripple far beyond Silicon Valley.

Source: Bloomberg

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Olivia Brooks

Cryptocurrency

●Bitcoin surges to $91,000 due to institutional interest.

●Driven by Fed rate cut expectations.

●Investor confidence grows despite previous decline.

Bitcoin's price has surged back to $91,000 as of late November 2025, buoyed by institutional investor activity and favorable macroeconomic signals, notably due to potential Federal Reserve rate cuts.

This resurgence highlights market sensitivity to economic policy shifts, influencing both Bitcoin's valuation and wider cryptocurrency sentiment, with Ethereum also seeing gains above $3,000.

Bitcoin's price reached $91,000 in late November 2025, marking a strong recovery from previous lows near $80,000.

This rebound matters as it signals renewed institutional interest and aligns with expectations for a potential Federal Reserve rate cut.

Institutional Demand Boosts Bitcoin to $91,000

Bitcoin has experienced a notable recovery attributed to macroeconomic optimism and institutional investor movements. Wall Street's growing interest in digital assets has driven increased trading volumes. Experts highlight support levels as crucial for ongoing price rallies.

The rebound follows an approximately 20% decline over the past month, impacted by market fluctuations and selling pressure from US-based investors. Analysts like Daan Crypto Trades emphasize the importance of the $89,000-$91,000 range.

Market Sees Surge as Fed Rate Cut Anticipated

The immediate effect on the cryptocurrency market has been significant, with a surge in trading volumes and increased buying pressure. Institutional trading volumes hitting $78 billion indicate significant inflows pushing the price above $91,000. Institutional investors leading the charge reflect heightened confidence.

Economically, expectations of a Federal Reserve rate cut have bolstered risk asset sentiment, further influencing Bitcoin's price trajectory. Ethereum similarly reacted, surpassing the $3,000 mark.

History of Bitcoin Rallies Following Monetary Easing

Similar rebounds have been observed during periods of anticipated monetary easing. Historical trends show support levels around $89,000-$91,000 often foreshadowing further rallies.

Experts speculate on potential outcomes, citing past rallies where sustained price levels led to significant gains. Michael Feroli, Economist at J.P. Morgan, noted,

"While the next FOMC meeting remains a close call, we now believe the latest round of Fedspeak tilts the odds toward the Committee deciding to cut rates in two weeks from today,"

linking to increased BTC bullish sentiment.

Continued institutional interest and macroeconomic factors remain pivotal for future price stability.

Source: CryptoSlate

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Gerik

Economic

Stocks

AI Optimism and Economic Resilience Undermine Short Positions

As 2025 draws to a close, 22V Research warns that betting against U.S. equities could prove costly. According to strategists led by Dennis Debusschere, robust consumer spending and continued capital expenditure on artificial intelligence projects are reinforcing market fundamentals. This combination could sustain corporate earnings and propel stocks higher, despite intermittent volatility and fears of overvaluation in the AI sector.

Shorting equities, they argue, requires a high conviction that the economic backdrop will materially weaken or that AI investment will sharply reverse—two scenarios that currently lack strong evidence.

Short Sellers Whipsawed by Market Reversals

Recent market action illustrates how treacherous it has become for short sellers. U.S. equity short positions incurred $80 billion in mark-to-market losses in the final week of November alone, according to S3 Partners. These losses effectively erased the nearly $95 billion in gains accumulated earlier that month. The rapid reversal reflects a causal relationship between market momentum shifts and the forced unwinding of bearish bets.

Hedge funds responded by covering index and ETF shorts at the fastest pace in five months, Goldman Sachs data shows. This reaction further contributed to market rallies, fueling a feedback loop where every market dip draws in buyers and punishes bearish positioning.

Corporate Earnings and Consumer Spending Show Resilience

Despite lingering concerns over inflation and a softening labor market, corporate fundamentals remain supportive of equity valuations. Strategas Asset Management forecasts 12.5% profit growth over the next year for U.S. companies. Meanwhile, consumer demand has held firm. Mastercard SpendingPulse data showed Black Friday sales rose 4.1% year-over-year, reflecting resilient consumption that continues to support earnings growth.

These data points challenge the bearish narrative that elevated rates and slowing employment will drag on the economy. Instead, they reinforce the view that economic conditions remain broadly favorable, making bearish strategies riskier.

Federal Reserve Rate Cut Expectations Add to Bullish Momentum

Another critical factor supporting the market is the anticipated policy shift from the Federal Reserve. A rate cut is now expected at the upcoming December 9–10 meeting, a development that could stimulate further economic activity and ease financial conditions. This expectation has helped flip 22V’s proprietary quantitative model into what they call an “everything rally,” signaling broad-based bullish momentum across asset classes.

December is historically one of the most favorable months for equities. The S&P 500 has posted an average gain of 1.4% during the month and finished higher 73% of the time, according to LPL Financial. The rally typically intensifies in the second half of the month, building around the 11th trading day. This seasonal pattern compounds the risk for short sellers who may be forced to cover in anticipation of or in response to accelerating gains.

The experience of Beyond Meat, which soared 37% in a single day despite no fundamental news, exemplifies the risk of sharp short squeezes. From a low of $0.52 in mid-October, the stock surged nearly sevenfold before collapsing again. As Roundhill Investments CEO Dave Mazza notes, the cost of holding bearish positions is rising fast in an environment where sentiment can pivot overnight.

Shorting in a Bullish Macro Environment Is Increasingly Hazardous

While volatility and policy uncertainty remain, the underlying strength of the U.S. economy and ongoing enthusiasm for AI-driven innovation have made it difficult for bearish investors to maintain positions. Strong corporate earnings, healthy consumer spending, and favorable seasonal trends all contribute to an environment where dips are being consistently bought, forcing short sellers to unwind and driving markets higher.

Unless clear signs of macroeconomic deterioration or a collapse in AI capital expenditure emerge, the structural forces currently favor bulls. For now, shorting U.S. equities remains a high-risk endeavor in a market environment driven by both fundamentals and momentum.

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

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Fed End QT: Federal Reserve Ends Tightening Program

Source: X

Fed halts balance sheet reduction after shrinking $2.2 Trillion

Bank Reserves return to safe and stable levels

Market Expect a December rate cut as odds hit 88%

Fed to boost liquidity through T-Bill purchases

This move is widely seen as a strategic transition to a steady state balance sheet policy

Source: CryptoSlate

Boeing stock jumps 8% as CFO says company expects higher 737, 787 deliveries next year

Source: cnbc

Silver Pulls Back After Hitting Record as Rally Momentum Shows Signs of Exhaustion

Silver Retreats After Overextended Rally

Overbought Signal Prompts a 'Natural Pullback'

Investor Demand Driving Gains Despite Weak Physical Markets

Gold-Silver Ratio Signals Possible Turning Point

Rate Cut Expectations Remain a Supportive Backdrop

Source: Bloomberg

Eurozone Inflation Inches Up, Reinforcing Case for ECB to Keep Rates Steady

Marginal Rise in Inflation Supports Cautious ECB Stance

National Variations Highlight Asymmetric Recovery

ECB Reiterates Confidence in Current Rate Path

Wage Pressures Pose a Sticky Threat to Services Inflation

Stable but Conditional Policy

Source: Bloomberg

Big Tech’s High-Spending AI Pivot Challenges Its Low-Cost Growth Legacy

Big Tech’s Capital-Light Playbook Faces a Structural Shift

Investor Optimism Persists But Cracks Are Emerging

Depreciation, Cash Flow Pressures, and Rising Debt Weigh on Outlook

AI Investment Brings Strategic Convergence and Competitive Collision

Market Risks Rise as Big Tech Bets Big on AI

Source: Bloomberg

Bitcoin Price Rebounds To $91,000 Amid Institutional Buying

Institutional Demand Boosts Bitcoin to $91,000

Market Sees Surge as Fed Rate Cut Anticipated

History of Bitcoin Rallies Following Monetary Easing

Source: CryptoSlate

Shorting US Stocks Is Risky as Economic Strength and AI Momentum Fuel Bullish Pressure

AI Optimism and Economic Resilience Undermine Short Positions

Short Sellers Whipsawed by Market Reversals

Corporate Earnings and Consumer Spending Show Resilience

Federal Reserve Rate Cut Expectations Add to Bullish Momentum

Shorting in a Bullish Macro Environment Is Increasingly Hazardous

Source: Bloomberg

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