I trust that everyone had a joyful and relaxing Thanksgiving break with family and friends. Having awoken from their tryptophan comas and recovered from a four-day football binge, investors turn their sights to the final weeks of what has been a tumultuous yet fruitful year for financial markets. November proved a bit choppy, as bond and stock indices slumped initially, but both rebounded in the final week before the holiday as rate cut hopes revived.
The longest (43 days) US government shutdown in history -an exercise in futility benefitting no one but hurting many- ended with a Continuing Resolution to fund the government through January 31st. Without a final budget agreement, another shutdown is possible next year. Collection and processing of economic data by the BLS, BEA, etc. during the shutdown was spotty. What little “hard” economic data was reported after the government reopened amounted to stale August and September figures. Privately produced surveys (“soft” data) such as the ISM and S&P Global indices and the ADP Employment Report painted a mixed, but stable, picture. Manufacturing activity remained soft, with typical regional variation, and goods prices behaved[1]. Services indexes were a bit firmer, including prices[1]. On the labor front, Initial Unemployment Claims have been stable, and payrolls continued to rise sluggishly[1] . In sum, November’s economic reports validated the “no-hire-no-fire” backdrop.
Government agencies announced the schedule for reports to be released throughout December but indicated some October reports will be skipped due to insufficient data. Lagging data sets such as the December JOLTS report, scheduled for December 9th covering October, thus take on greater significance and for many data series the January 2026 report will be the first true month-over-month comparison since September. As I write, the probability of a rate cut by the Federal Reserve on December 10th is nearly 90%. While the decision will be made with fewer data points and less confidence in them than usual, there is nothing in recently released private survey data or official economic reports to suggest the Fed will not cut. Notably, November employment and inflation data are scheduled for release after the Fed meeting.
Bonds started November a bit shaky as October ADP employment came in a touch stronger than expectations and the ISM Services Prices Paid Index surprised on the high side, ticking up from September versus an expected decline[1]. After rising initially, the 10-year treasury yield reversed course as softer data was digested, ending the month at 4.01%[1]. The 10-year note yield begins the final month of 2026 down -7 basis points from the end of October and down more than -50 basis points from 4.57% at the start of the year[1]. Credit spreads ticked up slightly to 30 basis points but remained near historic lows[1]. The Bloomberg Catholic US Aggregate Bond Index returned 0.62% for the month, right in line with the US Treasury Index, while the Short-Term (1-3 year) index returned 0.47%[1]. The two indexes are up 7.42% and 4.98%, respectively, year-to-date[1]. Yields climbed in the abbreviated November 28th session with the release of the Monthly Treasury Statement for October and jumped a further eight basis points on December 1st[2]. Despite a record $31.4 billion haul from customs duties (tariffs), up $24 billion from last year, the $284 billion October deficit was $27 billion higher than a year ago, the vast majority of which was due to higher interest cost2.
Equities hit a speed bump in November, as doubts about the AI-driven data center buildout crept into investor psychology causing expensive momentum stocks to retreat. Nvidia, the poster child for AI-driven equity rally, declined by -12.59% in November and was the worst performer among the Magnificent Seven[3]. Google parent Alphabet was the best performing Mag-7 name, returning 13.87%[3]. An interesting development with implications going forward was news that Google might begin selling its internally developed AI semiconductor, known as a Tensor Processing Unit (TPU), into the marketplace potentially competing with Nvidia GPUs. The key takeaway is that TPU’s are faster and significantly more cost-effective than GPUs in terms of power consumption when used for specific, narrowly defined AI processing tasks. Not that Nvidia’s crown is in imminent danger, but it will be interesting to see how this progresses.
The B1000 Catholic Index fell -5.18% on a price basis before bouncing in the final five days of trading[1]. For the month, the B1000 Catholic Index posted a total return of -0.37% while the B1000 Catholic Growth Index returned -1.31%. Small Caps fared better, as the B2000 Catholic Index returned 2.00%[1]. The B1000 Catholic Value Index was the top domestic performer with a total return of 2.76%[1]. The World Ex-US Catholic Index fell -0.34%[1]. With one month to go in 2025, the World Ex-US Catholic Index leads the pack with a total return of 28.54% year-to-date, a full ten percentage points better than the B1000 Catholic Index at 18.30%[1].
We think the combination of favorable seasonality, ample liquidity, a dovish trending Federal Reserve, and expectations for further earnings growth next year are supportive of stocks through year end despite a challenging valuation backdrop. Potential negative catalysts include (1) the Fed surprising with no cut on December 10th and/or a notably hawkish tone in either the minutes or press conference and (2) a Supreme Court ruling against the President in the tariff case argued in November that substantially upsets the current status quo, with which we think markets have become comfortable.
One final thought. Consider Alphabet (Google), Nvidia, Silver, and Gold. If I asked you which of those was the best performing investment so far this year, what would your answer be? Spoiler alert: Silver! And it is not even close. Up 96% and hitting all-time highs as I write, “poor man’s gold” has run circles around its elite cousin’s mere 62% gain[1]. Speaking of silver and gold, which always makes me think of Burl Ives, I wish you all a merry and blessed Christmas season. Until next year.
[1] Source: Bloomberg
[2] Source: Monthly Treasury Statement October 2025
https://fiscaldata.treasury.gov/datasets/monthly-treasury-statement/summary-of-receipts-outlays-and-the-deficit-surplus-of-the-u-s-government
[3] Source: https://www.zerohedge.com/markets/jensen-japan-jobs-jawboning-china-lift-big-tech-bitcoin-ahead-fed