Global Markets React to UK Inflation Data Whilst Awaiting US Jobs Report

Global financial markets displayed a cautious tone on 19 November 2025 as investors digested fresh UK inflation data, monitored surging Japanese bond yields, and awaited critical US labour-market indicators. Technology stocks faced pressure due to concerns over artificial intelligence valuation, while homebuilder sentiment showed a marginal improvement despite persistent affordability challenges.

TL;DR

• US Homebuilder Sentiment: NAHB index edged up to 38 in November from 37 in October, remaining in negative territory

• Labour Market Focus: Delayed JOLTS data and upcoming employment figures guide Federal Reserve policy expectations

• UK Inflation Eases: Consumer price index fell to 3.6% in October from 3.8% in September, boosting rate-cut expectations

• Japan Bond Yields Surge: 10-year JGB yield climbed to 1.77%, the highest since June 2008, on fiscal stimulus speculation

• Tech Stocks Decline: NASDAQ fell 1.2% on 18 November; chip stocks including AMD, Marvell, and Micron under pressure

US Housing Market Shows Persistent Weakness

The National Association of Home Builders/Wells Fargo Housing Market Index edged up one point to 38 in November 2025, marking the highest reading in seven months but remaining firmly in negative territory for the 19th consecutive month. Any reading below 50 indicates that more builders view conditions as poor rather than good.

The marginal improvement came despite continued affordability challenges stemming from elevated mortgage rates. Trading Economics noted that economic uncertainty and labour-market concerns kept builder sentiment subdued.

Key findings from the November survey include:

• Current Sales Conditions: The Index component measuring present single-family sales rose to 42 from 41

• Future Sales Expectations: Six-month outlook index increased to 51 from 49

• Buyer Traffic: Component measuring prospective buyer visits remained at 28, indicating weak demand

• Price Cuts: Record proportion of builders reduced prices to attract buyers

Realtor.com analysis highlighted that builders continue to implement aggressive price cuts and offer incentives, including mortgage rate buydowns, to stimulate demand. However, these efforts have failed to materially boost buyer activity in a market constrained by affordability pressures.

Meanwhile, the NAHB forecasts a slight increase in single-family housing starts in 2026, following a decline in 2025, contingent upon interest-rate movements and broader economic conditions. (Source: Nasdaq)

US Labour Market Indicators Under Scrutiny

The upcoming JOLTS report tomorrow, 20 November, will offer insights into the US labour slack. Recent data, including initial jobless claims of 232,000 (week ending October 18) and ADP showing 2,500 jobs shed weekly (four weeks ending November 1), suggest that employment is cooling. This softening might lead the Fed to consider early 2026 interest-rate cuts, though the 2% inflation target remains paramount. The data-dependent Fed balances maximum employment with price stability, heavily weighing both employment and inflation trends. (Source: NAHB)

Investor Sentiment Reaches Elevated Levels

Bank of America's November global fund manager survey revealed that equity allocations are at their highest levels since early 2023, with cash positions declining to 3.7%. The survey results indicate widespread optimism about equity markets despite economic uncertainties.

However, the report cautioned that historically elevated bullish sentiment can precede market corrections, particularly if economic conditions deteriorate or central bank policies remain restrictive for longer than anticipated. Contrarian indicators suggest that extreme positioning may leave markets vulnerable to reversals.

Investment strategists note several factors supporting current equity valuations:

• Corporate Earnings Resilience: Companies have generally maintained profit margins despite cost pressures

• Economic Growth: GDP expansion continues at modest but positive rates across major economies

• Policy Expectations: Anticipation of eventual monetary easing supports risk assets

• Sector Rotation: Flows into international and value-oriented sectors provide market breadth

Nevertheless, risks remain, including geopolitical tensions, inflation persistence, fiscal sustainability concerns, and the potential for policy missteps by central banks navigating complex economic conditions.

UK Inflation Declines, Raising Rate-Cut Prospects

The UK Office for National Statistics reported that consumer price inflation eased to 3.6% in the year to October 2025, down from 3.8% in September, marking the first decline in five months. On a monthly basis, CPI rose 0.4% in October 2025, compared with a 0.6% increase in October 2024.

The moderation in inflation stemmed primarily from slower energy price growth following earlier tariff increases. Core inflation, which excludes volatile food and energy components, also showed signs of cooling, according to analysis from Reuters.

Market participants increased expectations for a Bank of England interest-rate cut in December, with money markets pricing in a higher probability of monetary easing. The Guardian reported that falling inflation provides relief to households whilst supporting the case for looser monetary policy ahead of the UK budget.

Sterling initially weakened against the dollar following the data release before stabilising, whilst UK government bond yields declined as investors anticipated potential policy shifts. (Source: ONS)

Japanese Government Bond Yields Reach Multi-Year Peaks

Japan's 10-year government bond yield rose to 1.77% on 19 November, marking the highest level since June 2008, as investors expressed concern about a substantial fiscal stimulus package under consideration. The five-year JGB yield touched 1.275%, its highest since July 2008.

The Wall Street Journal noted that speculation surrounding a potential ¥20 trillion economic stimulus package has intensified concerns about fiscal sustainability, driving yields higher across the curve. The 20-year bond auction on 19 November showed a bid-to-cover ratio of 3.28, down from 3.56 at the previous month's sale, reflecting tepid demand.

Rising Japanese yields have broader implications for global markets, potentially pressuring other sovereign bond markets and influencing currency movements. The yen weakened against the dollar as yield differentials shifted, whilst market participants monitored Bank of Japan commentary for signals about potential policy adjustments.

Economists suggest that higher borrowing costs could constrain Japan's heavily indebted government, which carries debt exceeding 260% of GDP, amongst the highest in developed economies. (Source: Bloomberg)

Technology Stocks Face Valuation Pressure

US technology shares declined on 18 November, with the NASDAQ Composite falling 1.2% to close at 22,708.08 points, as investors reassessed artificial intelligence valuations and growth prospects. The S&P 500 dropped 0.8%, marking its fourth consecutive daily decline.

Semiconductor stocks experienced particularly sharp losses, with Advanced Micro Devices, Marvell Technology, and Micron Technology amongst the weakest performers. The Wall Street Journal reported that growing scepticism about AI investment returns and concerns about stretched valuations drove the technology sector sell-off.

Market participants cited several factors contributing to the cautious tone:

• Valuation Concerns: Technology stocks trade at elevated price-to-earnings multiples, raising questions about sustainability

• Interest-Rate Uncertainty: Higher-for-longer rate expectations pressure growth-oriented sectors

• Earnings Expectations: Investors await evidence that AI investments will translate to revenue growth

• Regulatory Scrutiny: Increased attention to competition policy in the technology sector

Some analysts suggest that technology stocks may continue to face volatility as the market grapples with high expectations against the backdrop of economic uncertainty and evolving monetary policy. (Source: Investopedia)

Global Economic Context and Market Outlook

The International Monetary Fund projects global GDP growth of 3.2% in 2025, reflecting modest expansion amid elevated interest rates and geopolitical uncertainties. Advanced economies face particular headwinds from restrictive monetary policy aimed at containing inflation.

Labour-market resilience, especially in the United States, has been a key pillar supporting economic growth and consumer spending. However, recent indicators suggest that higher-for-longer interest rates are weighing on employment growth, housing activity, and business investment.

Central banks face difficult trade-offs between supporting economic growth and ensuring inflation returns sustainably to target levels. The European Central Bank, Bank of England, and Federal Reserve have all signalled data-dependent approaches, with policy decisions contingent on evolving economic conditions.

Conclusion

Global financial markets on 19 November 2025 reflected a delicate balance between encouraging inflation trends and persistent economic uncertainties. The UK's inflation declined to 3.6%, which may have provided relief and raised prospects for monetary easing, whilst Japanese bond yields surged on fiscal concerns. Technology stocks faced valuation pressures, and US homebuilder sentiment remained subdued despite a marginal improvement.

*Past performance does not reflect future results. The above are only projections and should not be taken as investment advice.