Fixed Income Update 11 Dec 2025
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 11 December 2025
Fed Cuts, BI Follows?
A Global Signal Flashes the Green Light for Domestic Easing
The Federal Reserve voted to cut its policy rate by 25 bps to a range of 3.50%–3.75%, though the decision came with an unusually divided 9–3 vote as policymakers differed sharply on the urgency of supporting the labor market versus containing persistent inflation. Despite the immediate relief from the rate reduction, the updated economic projections point to a slower pace of easing ahead. The median forecast indicates only limited further cuts in 2026, as officials expect inflation—particularly PCE inflation bwtween 2.3% and 2.5% range, still above the Fed’s target.
On the domestic front, the Retail Sales Index rose from 218.3 in Sep ‘25 to 219.7 in Oct ‘25 and is estimated to reach 222.1 in Nov ‘25, signaling continued recovery in consumer spending. October’s gains were supported by stronger demand for Cultural & Recreation Goods (6.7% yoy) and Food, Beverages & Tobacco (6.4% yoy), aided by smooth distribution channels and rising consumption ahead of the Christmas–New Year (Nataru) period. The Consumer Confidence Index also strengthened, increasing from 115.0 in Sep ‘25 to 121.2 in Oct and 124.0 in Nov. The improvement was driven primarily by rising incomes and better labor market conditions, reflecting a continued pickup in consumer sentiment.
Regards,
KBVS Research Team