Positioning for Fed Rate Cuts: A Sector Roadmap

Fed cut bets lift stocks and bonds as jobs data weakens

More evidence of a cooling US jobs market has traders almost fully pricing in a 25 bp Fed rate cut at the final meeting of 2025. ADP data showed private payrolls dropping by 32,000 in November, the biggest fall since early 2023, while two-year Treasury yields slipped to around 3.48% and the dollar had its worst day since September. The S&P 500 edged higher, with roughly 350 names up even as some mega-cap tech stocks lagged.

Winners

Housing and homebuilders

Reason: Mortgage rates tend to track longer-term Treasury yields. When the market prices in rate cuts and the 10-year yield drifts lower, the cost of financing homes usually eases. That can stabilise demand for new builds and support order books, even if the macro narrative is “slower jobs growth”. Lowe ...