Risk Assets Slide as Expectations for a December Fed Cut Unravel

Global equity markets sold off sharply on Thursday as investors dialed back hopes for a Federal Reserve rate cut in December. The shift in expectations pushed stock indices lower across the U.S., Europe, and Asia, while government bond prices also slipped, sending yields higher.

The reversal came after a series of Fed speakers signaled caution about easing policy too quickly, stressing that the central bank still lacks key economic data due to the ongoing government shutdown. Without official readings on jobs and inflation, policymakers appear less confident in committing to near-term cuts — a message that markets quickly absorbed.

U.S. tech and growth stocks led the equity decline, with high-valuation names reacting most strongly to rising yields. Defensive sectors held up better but still ended the session in the red. In fixed income, Treasury yields rose across the curve as traders unwound aggressive bets on an imminent policy pivot.

Asian markets added to the pressure, posting steep losses after weaker-than-expected economic signals from China heightened concerns about regional demand. European indices also retreated, weighed down by declining risk appetite and a broad reassessment of monetary-policy timelines.

For traders, the key question now is whether the Fed’s tone represents a temporary pause due to missing data — or a more structural reluctance to cut in the near term. Either way, volatility is likely to remain elevated as markets reposition for a slower easing cycle and continue to monitor political developments in Washington.