Macro Brief - Nov 26th, 2025

What I’m telling clients this week: the market is catching its breath, not breaking. The tape still rhymes with a late‑cycle slowdown, not a crash. U.S. GDP is running about 1½–2%, Europe is hugging zero, Japan just above 1%.

Unemployment has drifted only a few tenths off the lows, wage growth has cooled toward ~4%, and core inflation is gliding into the high‑2% zone in the U.S. and the low‑3% range in Europe. That’s disinflation without choking growth, which gives the Fed and ECB room to ease gradually instead of reactively. Disinflation + positive growth + policy flexibility = soft‑landing setup, not a recession signal.

The pullback is valuation repair on top of a higher cost of capital. SPX near ~5,650 still sits in the high‑teens to ~21x forward earnings while the 10Y holds around ~4% and revisions have cooled. Credit is the stress check: IG around ~120 bps and HY ~360–380 bps are nowhere near the 600+ panic zone; defaults are muted; private credit still holds roughly $1½T of dry powder; banks lend to quality. If allocators were genuinely worried, spreads would be flashing red—they aren’t.

The curve and liquidity say the same thing. The 2s/10s inversion has eased; it’s still modestly negative but bending toward flat, which historically aligns with falling recession odds. U.S. M2 contraction has ended; euro‑area broad money has ticked positive. Vol remains contained. That’s what a healthy reset looks like: real yields positive, long rates stabilizing, plumbing intact.

Opportunities in the washout: secular growers—semis, enterprise software, industrial automation, specialty healthcare—still carry double‑digit earnings trajectories, but multiples have rolled back to pre‑hype levels. Next‑year semi revenue forecasts sit in the low‑teens; software FCF multiples have come off from 30–40× to low‑20s with solid cash conversion. High‑quality cyclicals—industrial distributors, branded consumer, logistics—sold off in sympathy despite fortress balance sheets. This is when patient capital accumulates the next cycle’s leaders at reasonable prices. Income is the best it’s been in a decade: 2–5y Treasuries above 4%; IG around 5%; tax‑equivalent munis 6–7%; preferreds mid‑6s; senior private credit 9–11% with covenants. That carry cushions portfolios and buys optionality to deploy into equity dislocations.

Commodities/FX signal moderation, not stress. WTI around ~$58 says demand is cooling, not collapsing. Gold near ~$4,190 is supported by central‑bank buying and policy‑hedge demand. The dollar has eased off its 2023 peak as rate differentials narrow, opening space for non‑U.S. assets and select EM debt where real yields and policy credibility are strong.

News: Shop small, ship smart: The Small Business Holiday Catalog presented by UPS & American Express | How to celebrate Small Business Saturday in Indianapolis | When is Small Business Saturday in Oregon? What to know. Retail/SME headlines reinforce “cooling, not cratering” demand—a late‑cycle, not‑breaking signal.

Positioning stays a disciplined barbell: core in secular growers with fortress balance sheets; high‑quality income across intermediate Treasuries, IG, munis, preferreds, and selective senior private credit; resilient cash‑flow assets (regulated utilities, energy infra, toll roads) for inflation‑linked income. Internationally, add European and Japanese mid‑caps at 11–14× with governance tailwinds; selectively buy EM debt yielding 7–9% where inflation is falling and policy is credible.

Alternatives such as senior private credit and core real assets remain staples for double‑digit cash yields backed by real collateral.

Bottom line: hard‑landing ingredients still aren’t here. Disinflation is progressing. Growth is slower but solid. Liquidity is functioning. Credit stress is contained. The curve is de‑risking. Volatility is giving better entry points than three months ago. Stay invested with intention, lean into quality, harvest real yield, and keep optionality to buy when others are forced to sell. The cycle is late, not breaking—and that’s how I’m positioned until the data prove otherwise.