Analysis Report: iCapital's Sonali Basak Discusses December Fed Rate Cut Expectations

On November 25, 2025, Sonali Basak (Chief Investment Strategist at iCapital) appeared on CNBC’s Squawk on the Street to argue that rising unemployment rates increase the likelihood of a Federal Reserve interest rate cut in December. The interview was published at 11:40 UTC (06:40 EST) [1].

Supporting data from Comerica’s November 24 Economic Weekly noted the U.S. unemployment rate edged up to

—its highest level in nearly four years—putting pressure on the Fed to act. Additionally, private sector job losses accelerated to an average of (four weeks ending November 8, 2025), up from 2,500 weekly losses earlier [2].

The market reacted positively to rate cut expectations on November 25, 2025:

• U.S. Indices
  : Broad gains across all major indices, with small-caps leading (Russell 2000 +1.62%). Key moves: S&P 500 (+0.71% to 6,744.54), Dow Jones (+1.02% to 46,956.78), Nasdaq (+0.41% to 22,896.30) [0].
• Sector Rotation
  : Cyclical sectors (benefiting from lower rates) outperformed defensives:
  • Top: Consumer Cyclical (+1.21%), Industrials (+1.16%), Financial Services (+1.11%).
  • Bottom: Utilities (-0.81%), Real Estate (-0.79%), Basic Materials (-0.61%) [0].

1. Labor Market Stress
   : The 4.4% unemployment rate and accelerating job losses signal a cooling labor market—an important input for Fed policy decisions [2].
2. Equity Market Optimism
   : Small-cap outperformance (Russell 2000) reflects their higher sensitivity to interest rate changes (due to greater reliance on borrowing) [0].
3. Sector Trends
   : Cyclical gains align with expectations of lower rates boosting consumer spending (Consumer Cyclical) and capital investments (Industrials). Defensive underperformance indicates reduced demand for safe-haven assets [0].
4. Consumer Sentiment
   : U.S. consumer confidence fell 6.8 points to
   88.7
   (largest drop since April), suggesting weakening consumer sentiment could offset rate cut benefits [3].

• Recency of Unemployment Data
  : The Comerica report does not specify if the 4.4% rate refers to October or early November data—clarity is needed to assess trend momentum [2].
• Fed Policy Pricing
  : Missing Fed fund futures data to quantify the degree of December rate cut expectations already reflected in asset prices.
• Bond Market Reaction
  : Treasury yield movements (e.g.,10-year yield) are not included—key indicators of interest rate expectations.
• Full Interview Details
  : The YouTube link was not crawled, so additional insights from Basak (e.g., inflation outlook) are unavailable [1].

1. Fed Policy Uncertainty
   : Comerica notes a split vote on a December rate cut is likely. If the Fed does not cut rates as expected, market volatility could rise [2].
2. Labor Market Weakness
   : Accelerating private sector job losses may impact consumer spending and corporate earnings even if rates are cut—users should monitor weekly jobless claims for further signs of stress [2].
3. Consumer Confidence
   : The sharp drop in sentiment suggests consumers may remain cautious, limiting the effectiveness of monetary policy [3].

: This analysis is for informational purposes only and does not constitute investment advice. All data is sourced from publicly available tools and reports as of November 25,2025.