US Stock Futures Mixed as Treasury Yields Rise, Fed Rate Cut Expected

The financial landscape on Monday, December 1, 2025, presents a puzzle for investors. The yield on the benchmark 10-year US Treasury note, a critical gauge for global borrowing costs, climbed to 4.04%. This increase typically signals expectations of stronger economic growth, persistent inflation, or both, which would normally pressure the Federal Reserve to maintain or even raise interest rates. However, the market narrative is simultaneously dominated by a powerful counter-signal: futures markets are now betting there is an 87% probability the Federal Reserve will lower interest rates as soon as next week.

This divergence creates a fundamental tension. Rising yields, like the 4.04% seen on the 10-year bond, translate directly into higher financing costs for corporations and consumers, potentially dampening economic activity. They can also make bonds more attractive relative to stocks, pulling capital away from equity markets. Yet, the overwhelming expectation for a Fed rate cut suggests investors are interpreting other data—likely the ‘wave of new global economic data’ referenced—as pointing toward a need for monetary stimulus, not restraint. This clash between bond market action and interest rate expectations is the core driver behind the morning’s mixed US stock futures.

The 87% implied probability of a Federal Reserve rate cut is a staggering figure that dominates short-term market sentiment. A rate reduction by the Fed is a classic tool to stimulate the economy by making borrowing cheaper, which can boost corporate investment and consumer spending on big-ticket items. This anticipated pivot is a powerful bullish force for equities, as lower rates tend to increase the present value of future corporate earnings and make stocks comparatively more attractive.

However, the simultaneous rise in Treasury yields complicates this simple narrative. It suggests that bond traders may be skeptical about the longevity or depth of the Fed’s easing cycle, or that they are pricing in other risks, such as fiscal concerns or long-term inflation expectations, that equity investors are currently overlooking. The market is essentially placing two conflicting bets: one on immediate Fed accommodation and another on longer-term economic pressures that keep yields elevated. This uncertainty is why US stock futures are mixed rather than uniformly higher; investors are struggling to reconcile the short-term promise of cheaper money with the long-term reality of higher capital costs signaled by the 10-year yield.

The immediate result of these crosscurrents is a cautious and fragmented market open. Sectors sensitive to interest rates, such as technology and growth stocks, may find support from the rate cut narrative but face headwinds from the higher discount rates applied to their future earnings, a direct consequence of the 4.04% 10-year yield. Conversely, financial institutions might see pressure from a flattening yield curve, where short-term rates fall (due to the Fed) but longer-term rates remain stubbornly high.

For market participants, the coming days will be crucial in resolving this tension. Investors will be scrutinizing every piece of incoming global economic data and parsing statements from Federal Reserve officials for clues. The key question is whether the bond market will capitulate to the overwhelming rate cut expectations, pulling the 10-year yield down, or if the equity market will be forced to adjust to a world where the Fed’s easing power is constrained by persistently high long-term rates. The mixed performance of US stock futures this morning is not an endpoint but a reflection of this high-stakes balancing act, where the traditional relationship between bonds, central bank policy, and equities is being actively tested.