The number of ongoing jobless claims in the United States was 1.939 million as of November 21, marking a slight decrease from the previous figure of 1.96 million. This data indicates a small shift in the unemployment benefits situation in the country. Ongoing claims give us a glimpse into how many people are still unemployed and receiving benefits for a longer time. The drop in continuing jobless claims to 1.939 million shows that the labor market is still strong. This resilience challenges the idea that the economy will weaken enough for the Federal Reserve to cut interest rates early in 2026. Therefore, it’s wise to rethink strategies that heavily rely on a friendly Fed approach in the first quarter. The ongoing strength in the labor market, along with the recent November 2025 CPI report revealing core inflation still at 2.8%, indicates that the Fed may keep interest rates higher for an extended period. This situation makes strategies that benefit from stable or slightly rising rates more appealing. Recently, we have noticed a flattening of the yield curve, with the difference between the 2-year and 10-year Treasury notes narrowing to just 30 basis points this past week. Volatility has been low, with the VIX staying around 15 for most of the fourth quarter of 2025. This low volatility adds some uncertainty, making short-term call options on the VIX a cheap way to guard against possible overreactions in the market to the Fed’s next announcement. We could see a rise in volatility as we approach the December FOMC meeting in two weeks. Given the positive outlook for consumers, we should think about using bullish options strategies on consumer discretionary ETFs. On the other hand, sectors sensitive to interest rates, like technology and real estate, may struggle if the market changes its expectations for rate cuts. This calls for a cautious approach, perhaps by using put spreads on the Nasdaq 100 index as a hedge. This situation feels reminiscent of what we saw in 2023, when the market frequently anticipated rate cuts that a strong economy and persistent inflation postponed. That time taught us to appreciate the labor market’s strength and its impact on Fed policy. We should expect skepticism towards any signs of economic weakness until a clearer trend becomes evident.

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