For the Week:
The S&P500 gained 1.4% (up 17.8% y-t-d), and the Dow rose 1.2% (up 14.5%). The Utilities advanced 1.2% (up 13.8%). The Banks rose 1.8% (up 32.1%), and the Broker/Dealers added 1.3% (up 31.0%). The Transports increased 0.5% (up 11.0%). The S&P 400 Midcaps gained 0.7% (up 8.1%), and the small cap Russell 2000 added 0.2% (up 13.6%). The Nasdaq100 gained 1.2% (up 22.0%). The Semiconductors jumped 2.0% (up 44.7%). The Biotechs increased 0.7% (up 29.6%). With bullion jumping $194, the HUI gold index surged 4.3% (up 171.3%).
Three-month Treasury bill rates ended the week at 3.5425%. Two-year government yields were unchanged at 3.48% (down 76bps y-t-d). Five-year T-note yields were about unchanged at 3.70% (down 69bps). Ten-year Treasury yields slipped two bps to 4.13% (down 44bps). Long bond yields declined three bps to 4.80% (up 1bp). Benchmark Fannie Mae MBS yields fell four bps to 5.04% (down 81bps).
Italian 10-year yields declined three bps to 3.55% (up 3bps y-t-d). Greek 10-year yields dipped two bps to 3.44% (up 23bps). Spain's 10-year yields fell four bps to 3.29% (up 23bps). German bund yields slipped three bps to 2.86% (up 50bps). French yields fell five bps to 3.56% (up 37bps). The French to German 10-year bond spread narrowed about two to 70 bps. U.K. 10-year gilt yields dipped two bps to 4.51% (down 6bps). U.K.’s FTSE equities index slipped 0.3% (up 20.8% y-t-d).
Japan’s Nikkei 225 Equities Index jumped 2.5% (up 27.2% y-t-d). Japan’s 10-year “JGB” yields added two bps to 2.04% (up 94bps y-t-d). France’s CAC40 declined 0.6% (up 9.8%). The German DAX equities index added 0.2% (up 22.3%). Spain’s IBEX 35 equities index was unchanged (up 48.1%). Italy’s FTSE MIB index slipped 0.3% (up 30.5%). EM equities were mostly higher. Brazil’s Bovespa index rallied 1.5% (up 33.8%), and Mexico’s Bolsa index jumped 2.6% (up 32.6%). South Korea’s Kospi rose 2.7% (up 72.1%). India’s Sensex equities index was little changed (up 8.3%). China’s Shanghai Exchange Index advanced 1.9% (up 18.3%). Turkey’s Borsa Istanbul National 100 index declined 0.4% (up 14.9%).
Total money market fund assets (MMFA) added $7.5 billion to a record $7.673 TN - with a 21-week surge of $597 billion, or 20.7% annualized. MMFA were up $868 billion, or 12.7%, y-o-y - and ballooned a historic $3.042 TN, or 66%, since October 26, 2022.
Freddie Mac 30-year fixed mortgage rates declined three bps to 6.18% (down 67bps y-o-y). Fifteen-year rates rose three bps to 5.50% (down 50bps). Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates down five bps to 6.50% (down 83bps).
Currency Watch:
December 22 – Bloomberg (Erica Yokoyama and Takashi Umekawa): “Japan has a ‘free hand’ to take bold action against currency moves that are not in line with fundamentals, Finance Minister Satsuki Katayama said, in her strongest warning yet to speculators following the yen’s weakening even after a rise in interest rates. ‘The moves were clearly not in line with fundamentals but rather speculative,’ Katayama said… ‘Against such movements, we have made clear that we will take bold action, as stated in the Japan–US finance ministers’ joint statement,’ she said.”
For the week, the U.S. Dollar Index declined 0.7% to 98.022 (down 9.6% y-t-d). On the upside, the South Korean won increased 2.5%, the Australian dollar 1.6%, the New Zealand dollar 1.4%, the Norwegian krone 1.3%, the Swedish krona 1.2%, the Canadian dollar 1.0%, the British pound 0.9%, the Swiss franc 0.8%, the Japanese yen 0.8%, the Mexican peso 0.7%, the South African rand 0.7%, the Singapore dollar 0.7%, the euro 0.5%, and the Brazilian real 0.3%. China's (onshore) renminbi gained 0.51% versus the dollar (up 4.2% y-t-d).
Commodities Watch:
December 26 – Bloomberg (Robin Paxton, Preeti Soni and Yvonne Yue Li): “Gold, silver and platinum jumped to all-time highs to extend a historic end-of-year rally for precious metals, with support from escalating geopolitical tensions, US dollar weakness and thin market liquidity. Spot gold rose as much as 1.6% to a peak above $4,540 an ounce on Friday. Spot silver for immediate delivery advanced for a fifth session, climbing as much as 7.6% to cross $77 an ounce. Frictions in Venezuela, where the US has blockaded oil tankers and ramped up pressure on the government of Nicolás Maduro, have added to the precious metal’s haven appeal. Washington also launched a military strike against Islamic State in Nigeria in collaboration with the African nation’s government.”
December 23 – Bloomberg (Mark Burton and James Attwood): “Copper prices topped $12,000 a ton for the first time, extending the metal’s recent bull run as mine outages add to concerns about supply of the vital industrial metal. Benchmark prices climbed as much as 2% on the London Metal Exchange on Tuesday to $12,159.50. The metal has gained more than 35% this year and is on track for its biggest annual jump since 2009.”
The Bloomberg Commodities Index jumped 3.4% (up 13.9% y-t-d). Spot Gold rose 4.5% to a record $4,533 (up 72.7%). Silver surged 18.0% to $79.2708 (up 174.3%). WTI crude inched eight cents higher, or 0.1%, to $56.74 (down 21%). Gasoline dipped 0.6% (down 16%), while Natural Gas rallied 9.6% to $4.366 (up 21%). Copper jumped 6.0% (up 45%). Wheat gained 1.8% (down 6%), and Corn rose 1.4% (down 2%). Bitcoin declined $750, or 0.8%, to $87,320 (down 6.8%).
Market Instability Watch:
December 24 – Bloomberg (Mia Glass): “Japan’s two-year government bond yield rose after an auction of the tenor drew weak demand amid speculation that the Bank of Japan may need to raise interest rates more aggressively to rein in inflation and support the yen. The bid-to-cover ratio… was at 3.26, compared with 3.53 at the previous sale and a 12-month average of 3.65. The two-year yield jumped 2.5 bps to 1.125%, its highest level since 1996.”
December 22 – Bloomberg (Edward Bolingbroke): “Traders are loading up on Treasury options targeting a bond rally that would send US 10-year yields back to 4% in coming weeks, a level not seen since the end of November. CME… data… confirmed heavy buying in one March 10-year options contract over the past week. The total premium paid on the position so far is unusually large at approximately $80 million, and open interest, or new positioning held by traders, has soared to 171,153 options — a 300% rise in a week.”
December 23 – Bloomberg (Maria Elena Vizcaino): “DoubleLine is warning of a ‘brewing collision’ in some developed economies as governments from France to the UK and Japan struggle to balance social demands against ballooning fiscal deficits. Political jolts and runaway budgets, which have long plagued emerging markets, are now factoring into investment decisions in the developed world, according to Bill Campbell… at Jeffrey Gundlach’s firm… Campbell warned of a ‘vicious loop’ that has played out time and again in developing economies. Embedded benefits and rising fiscal costs hurt the outlook for growth and public spending, leading to currency depreciation and rising rates, which in turn fuel social tensions and political instability. ‘Until recently, the developed markets had been largely immune to such doom loops,” he wrote. ‘But the tide has changed’.”
U.S. Credit Trouble Watch:
December 21 – Wall Street Journal (Matt Wirz and Heather Gillers): “Wall Street fund managers want 401(k) plans to include private credit, but similar products they have already sold to individual investors are in sharp decline this year. Some of the same money managers leading the charge to ‘democratize’ private markets—like KKR and BlackRock—are among the worst performers in the publicly traded private-credit funds called business development companies. Business development companies, or BDCs, typically make high-interest loans to midsize corporations with junk credit ratings, using income from the loans to pay big dividends to their investors. They have become a popular way for fund managers to draw mom-and-pop investors into the booming private-credit industry. Demand for BDCs surged and the cash they manage has more than tripled since 2020 to about $450 billion… Now, a number of BDCs have stumbled.”
December 19 – Bloomberg (Rene Ismail): “The default rate across 1,200 US private debt borrowers tracked by Fitch Ratings increased to 5.7% in November from 5.2% in October on a trailing 12-month basis… The default rate rose to 9.3% in November from 7.7% in October for a subset of 300 privately issued loans rated by Fitch… About 59% of the 91 defaults from November 2024 through last month stemmed from payment-in-kind or interest deferrals, while bankruptcies made up just 7%.”
December 22 – Financial Times (Sujeet Indap and Akila Quinio): “Private credit firms snapped up nearly 14 times as much consumer debt this year as in 2024, piling into riskier areas such as credit cards and buy now, pay later debt. In 2025, private credit groups, including the likes of KKR, Blue Owl and Sixth Street, either purchased or struck so-called forward flow agreements to purchase $136bn of consumer loans, according to… KBW analysts. That number compared with just $10bn in the previous year. The rush of deals… raises concerns about underwriting standards and risk management by Wall Street firms that are quickly expanding their empires. ‘These deals underscore an emerging trend where private capital is fuelling rapid growth in unsecured consumer lending, while regulated incumbents continue to move with caution,’ the KBW analysts said.”
December 25 – Wall Street Journal (AnnaMaria Andriotis): “Goldman Sachs has been trying to clean up a mess inside its publicly traded private-lending company for more than three years. Investors are still unimpressed. The bank’s business-development company, Goldman Sachs, is primarily a lender to middle-market corporations. Like all BDCs, it raises funds by selling shares, or taking on its own debt, and lends it out in bespoke private-credit deals, with the income paid out in dividends. Those dividends have made BDCs a popular investment for individuals. Thanks to souring loans, the per share value of Goldman BDC’s holdings has slid for seven straight quarters and its stock price has fallen even further.”
December 24 – Bloomberg (Scott Carpenter): “Tricolor Holdings founder Daniel Chu collected nearly $30 million in compensation in the year leading up to the subprime auto lender’s collapse amid alleged fraud, according to a lawsuit… Chu ‘defrauded Tricolor by using corporate funds to pay for lavish personal expenses and by forcing the company into paying him tens of millions of dollars in bonuses (on top of his executive salary),’ trustee Anne Burns said… That compensation was ‘premised on his ability to deliver exceptional financial results — results that were the product of the fraud’.”
December 22 – Financial Times (Sujeet Indap): “JPMorgan… was aware for more than a year of ‘serious material weaknesses in accounting practices’ at Tricolor Holdings, the… subprime auto lender and retailer that collapsed in September, according to a civil lawsuit from its bankruptcy trustee. According to the complaint filed by Anne Elizabeth Burns, the court-appointed trustee managing the Tricolor estate, a JPMorgan audit in February 2024 ‘revealed approximately $13 million in double pledged loans on collateral pledged to JPMorgan’.”
December 23 – Bloomberg (Reshmi Basu and Eliza Ronalds-Hannon): “Saks Global Enterprises, facing limited options ahead of a more than $100 million debt payment due at the end of this month, is considering Chapter 11 bankruptcy as a last resort… Saks raised billions of dollars from bond investors late last year to finance a bold turnaround plan centered on the acquisition of Neiman Marcus, betting that scale would revive the struggling luxury retailer. Instead, the deal deepened the company’s debt burden…”
Global Credit and Financial Bubble Watch:
December 23 – Bloomberg (Gerson Freitas Jr, Abraham Gonzalez Dominguez, and Rainier Harris): “Companies across the US and Europe are preparing to sell a record amount of high-grade bonds in 2026, testing investors’ appetite as yields drift lower. Morgan Stanley strategists predict more than $2 trillion in US investment-grade debt sales to hit the market next year, which would be the most ever. That’s expected to be driven by AI expansion projects, refinancing of looming maturities and acquisition financing. The upbeat sales forecast comes despite questions on how much longer the current credit boom can run.”
December 22 – Financial Times (Kate Duguid): “US companies have sold $1.7tn of investment-grade bonds in 2025, a near-record sum stoked by a rush of borrowing to fund artificial intelligence infrastructure that has spurred concerns over a debt glut. This year’s issuance — closing in on the $1.8tn issued in 2020 as businesses rushed to shore up their finances during the Covid pandemic — has come as companies took advantage of relatively low borrowing costs to refinance their debt. But the debt sales… also reflect an AI borrowing boom, as Big Tech groups including Meta, Alphabet, Amazon and Oracle tapped bond markets to fund data centres and the energy systems needed to power them. AI-related borrowing now accounts for about 30% of net investment-grade issuance, according to Goldman Sachs, and is expected to grow in 2026…”
December 20 – Bloomberg (Josh Saul and Gerson Freitas Jr.): “The great artificial intelligence boom that’s fueling US economic growth now depends heavily on credit markets to finance the investments, and utilities are among the key borrowers… Bond sales by US utilities grew 19% this year to a record $158 billion, funding rampant growth in power demand driven by the artificial-intelligence boom. A lot more is coming: electric companies are expected to spend more than $1.1 trillion on power plants, substations, and other grid infrastructure over the next five years, according to… Edison Electric Institute, up about 44% from the previous period.”
Trump Administration Watch:
December 22 – Bloomberg (Katanga Johnson, Patrick Clark, Olga Kharif, Ari Natter and Allison McNeely): “President Donald Trump moves fast. He signed 26 executive orders within hours of being sworn in for the second time — more than any modern president and roughly triple the number signed by his predecessor on his first day. The more-than 140 orders in his first 100 days touched everything from a wind farm project in Idaho to a cryptocurrency issuer in New York. Agencies were told to clear backlogs, unwind rules and speed up approvals. Investors got the message. Pipeline projects were revived and renewable-energy projects canceled. The US dollar wheezed under the prospect of tariffs… Trump’s first year in office has touched nearly every corner of American life in some way, and he’s moved with uncommon speed to change the flow of money in the US. Some strike directly at the financial plumbing of the nation. Others nudge savers toward new investments that will take decades to judge. The effect is a rapid reweighting of incentives that is already changing the way capital moves.”
December 23 – New York Times (Tony Romm and Colby Smith): “It was early November, and the stock market had grown jittery as investors recoiled anew over the enormous bets the nation’s largest technology companies had placed on artificial intelligence. But the skittishness playing out on Wall Street that day barely registered at the White House. Asked whether he harbored any fears about an emerging bubble, one that could damage the economy if it were to pop, President Trump brushed aside all doubts. ‘No,’ he quickly replied, ‘I love A.I.’ For Mr. Trump, there is no risk, only reward, posed by the dawning and disruptive new age of computing. Over the past year, the president and his top aides have fully embraced A.I., and showered its leading corporate backers with money and regulatory support, as the administration looks to supercharge one of the primary areas of growth in an otherwise precarious U.S. economy.”
December 23 – Financial Times (Richard Milne): “US President Donald Trump has insisted ‘we have to have Greenland’, a day after appointing a special envoy to the vast Arctic island — a move that sparked outrage among his European allies. Trump said his interest in the geopolitically crucial island of just 57,000 inhabitants, which is an autonomous part of the Kingdom of Denmark and located in North America, was not down to its rare minerals and mining opportunities. ‘If you take a look at Greenland, up and down the coast, you have Russian and Chinese ships all over the place. We need it for national security. We have to have it,’ he told a press conference…”
December 24 – Reuters (Steve Holland): “The White House has ordered U.S. military forces to focus almost exclusively on enforcing a ‘quarantine’ of Venezuelan oil for at least the next two months, a U.S. official told Reuters, indicating Washington is currently more interested in using economic rather than military means to pressure Caracas. ‘While military options still exist, the focus is to first use economic pressure by enforcing sanctions to reach the outcome the White House is looking (for),’ the official said…”
December 24 – Reuters (Suzanne McGee): “U.S. investors may soon have access to a greater array of products tied to asset classes like private credit and crypto as the Trump administration and SEC push to open markets, a change that some investment advisors say puts too much onus on individuals to protect themselves. Both the White House and the Securities and Exchange Commission, under Chair Paul Atkins, have embraced offering investors more choice in order to tap into some asset classes that can offer high returns. Still, some financial advisors caution their clients, who typically invest in stocks and bonds, may not be able to fully comprehend the influx of new offerings already underway that market analysts expect to increase in 2026.”
December 22 – Axios (Ben Geman): “The Trump administration said… it’s immediately pausing all leases for offshore wind projects under construction due to ‘national security risks.’ It’s among the most sweeping broadsides yet against the renewable energy source that's most directly in President Trump's crosshairs. It follows billions of dollars in investments into the large-scale projects. The Interior Department announcement alleges there are national security risks ‘identified by the Department of War in recently completed classified reports’.”
December 22 – Bloomberg (Jen Judson and Courtney Subramanian): “President Donald Trump announced the Navy will build a new ‘Trump-class’ battleship as part of the White House push to modernize a fleet that’s been hobbled by years of cost overruns and delays. A poster displayed at the event at Trump’s gilded Mar-a-Lago estate featured an artist’s rendering of a sleek-looking warship dubbed the USS Defiant, cutting through choppy waters with a laser beam shooting from its deck and smoke billowing from a target in the background.”
December 23 – New York Times (Emmett Lindner): “The Trump administration will begin to garnish the pay of student loan borrowers in January, the Department of Education said…, stepping up a repayment enforcement effort that began this year. Beginning the week of Jan. 7, roughly 1,000 borrowers who are in default will receive notices informing them of their status… The number of notices will increase on a monthly basis.”
December 23 – Bloomberg (Hadriana Lowenkron): “President Donald Trump announced he’ll meet next week with executives from major US defense contractors in a bid to force them to spend more money on weapons development, not stock buybacks, executive pay and dividends. ‘We make the best equipment in the world but they don’t make them fast enough,’ Trump said. ‘We don’t want to have executives making $50 million a year issuing big dividends to everybody and also doing buybacks and also saying we don’t have the money to build a plant’.”
China Trade War Watch:
December 24 – Bloomberg (Jordan Fabian): “The US accused China of engaging in unfair trade practices in the semiconductor sector, but is declining to impose additional tariffs on chip imports until at least mid-2027. The Office of the US Trade Representative… released the findings of a nearly yearlong inquiry into China’s chip sector that was launched in the final weeks of the former President Joe Biden’s administration, with the expectation the matter would be resolved under President Donald Trump. In the intervening months, Trump struck a truce with Chinese President Xi Jinping to end a trade war that rattled global markets.”
December 24 – Bloomberg (Joe Deaux): “China is still restricting the rare earth elements that the US needs to produce its own permanent magnets and other products even after President Donald Trump reached a deal with his Chinese counterpart in October to lift restrictions on the supplies, according to market participants. More than a dozen consumers, producers, government officials and trade experts said that while China has boosted deliveries of finished products — primarily permanent magnets — the US industry remains unable to acquire the inputs needed to make those items on its own, a key priority for the administration.”
Constitution Watch:
December 23 – Bloomberg (Greg Stohr): “The US Supreme Court refused to let President Donald Trump start deploying National Guard troops in Chicago, dealing a setback to his drive to use the military in liberal cities across the country. Rejecting a Trump request in a 6-3 decision, the court on Tuesday left in force a judge’s ruling that has blocked the deployment since Oct. 9. The president wanted to use hundreds of troops to aid immigration enforcement in the third-largest US city.”
December 24 – Wall Street Journal (Lindsay Wise): “When the news broke that the Kennedy Center would be renamed to include President Trump, it came as a surprise to the Senate’s Republican leader, John Thune…—even though Thune is an ex officio member of the Kennedy Center board. ‘Ah, I just heard about it,’ Thune said… An act of Congress in 1964 had named the performing arts center to memorialize the slain John F. Kennedy. Thune concluded that Congress would ‘take a look at it for sure and… see where that goes.’ But by the next day, the Kennedy Center had already added Trump’s name to the building’s facade. It was just the latest example of how the 119th Congress has mostly been relegated to a sidekick role, deferring to Trump’s muscular executive branch as it moves at a breakneck pace to execute the president’s agenda…”
December 25 – Financial Times (Eva Xiao): “The US Congress is at one of its most polarised levels in decades as Democrats stand firmly opposed to Donald Trump and Republican lawmakers close ranks behind the president. Preliminary data suggests that Republican legislators have backed Trump this year more than any other president since the 1950s, according to Congressional Quarterly… Partisan gridlock over the extension of health insurance subsidies culminated in a record 43-day federal government shutdown this year. Public approval of the legislative body fell to just 15% in October, according to Gallup. On average, House Republicans’ votes aligned with Trump’s public guidance 95% of the time, breaking their record last set in 2017 during his first term…”
U.S./Russia/China/Europe/Iran Watch:
December 23 – Wall Street Journal (Sune Engel Rasmussen): “President Trump’s appointment of a special envoy for Greenland drew an angry response from Denmark and reignited its concerns about U.S. efforts to control the strategic Arctic territory. Trump… appointed Louisiana Gov. Jeff Landry as envoy for Greenland, an autonomous island that is part of the Kingdom of Denmark, saying on social media that Landry ‘understands how essential Greenland is to our National Security.’ Landry on X called it an honor to take up the voluntary position ‘to make Greenland a part of the U.S’… Trump said Greenland was vital for the U.S.’s national security. ‘We need Greenland for national protection. They have a very small population. They say Denmark, but Denmark has spent no money. They have no military protection. They say Denmark was there 300 years ago or something with a boat,’ he said.”
December 22 – Bloomberg (Sune Engel Rasmussen): “President Trump’s appointment of a special envoy for Greenland drew an angry response from Denmark and reignited its concerns about U.S. efforts to control the strategic Arctic territory. Trump on Sunday appointed Louisiana Gov. Jeff Landry as envoy for Greenland…, saying on social media that Landry ‘understands how essential Greenland is to our National Security.’ Landry on X called it an honor to take up the voluntary position ‘to make Greenland a part of the U.S’… Trump said Greenland was vital for the U.S.’s national security. ‘We need Greenland for national protection. They have a very small population. They say Denmark, but Denmark has spent no money. They have no military protection. They say Denmark was there 300 years ago or something with a boat,’ he said.”
December 24 – Associated Press (Lorne Cook): “The European Union’s executive… warned that it would take action against any ‘unjustified measures’ after the U.S. State Department barred five Europeans it accuses of pressuring U.S. technology firms to censor or suppress American viewpoints. The Europeans were characterized by U.S. Secretary of State Marco Rubio as ‘radical’ activists and ‘weaponized’ nongovernmental organizations… The European Commission, the EU’s powerful executive branch and which supervises tech regulation in Europe, said that it ‘strongly condemns the U.S. decision to impose travel restrictions’ and that it has requested clarification about the move. French President Emmanuel Macron also condemned it.”
December 22 – Bloomberg: “China criticized the US for seizing oil tankers off the coast of Venezuela, signaling it stands with Caracas as its confrontation with Washington intensifies. ‘The US practice of arbitrarily seizing other countries’ vessels grossly violates international law,’ Chinese Foreign Ministry spokesman Lin Jian said… China opposed anything that ‘infringes upon other countries’ sovereignty and security, and all acts of unilateralism or bullying,’ he added.”
December 26 – Reuters: “China’s foreign ministry announced sanctions on Friday targeting 10 individuals and 20 U.S. defence firms, including Boeing’s St. Louis branch, over arms sales to Taiwan. The measures freeze any assets the companies and individuals hold in China and bar domestic organisations and individuals from doing business with them… Individuals on the list, including the founder of defence firm Anduril Industries and nine senior executives from the sanctioned firms, are also banned from entering China, it added.”
December 23 – Bloomberg (Courtney McBride and Nectar Gan): “China is in the midst of a ‘historic military buildup’ that has made the US homeland ‘increasingly vulnerable,’ according to the latest edition of a Pentagon report on the capabilities of the Asian nation’s military…The congressionally mandated report… is the first version issued during the second Trump administration. It describes a Chinese military that is increasingly sophisticated and resilient, wary of large-scale agreements with the US and learning lessons from Russia’s setbacks in Ukraine as it increases pressure on Taiwan.”
December 23 – Financial Times (Arjun Neil Alim, Ryan McMorrow and Ivan Levingston): “A BlackRock-backed $23bn acquisition of dozens of global ports, including key assets in the Panama Canal, is at risk of collapsing after China’s state-owned shipping giant Cosco demanded a majority stake in the deal. Three people familiar with the talks said BlackRock and Mediterranean Shipping Company were considering walking away from a deal to buy the ports from CK Hutchison if Cosco were to insist on getting a majority stake.”
New World Order Watch:
December 23 – Bloomberg (Sara Sjolin): “Danish Foreign Minister Lars Lokke Rasmussen said his country won’t bow to Donald Trump’s demand to hand over Greenland and summoned the US ambassador to explain his president’s comments… The meeting served ‘to say ‘no’ and draw a clear red line, but of course also simply to ask for an explanation,’ Lokke said… ‘An attack on one part of the kingdom is an attack on the entire kingdom’.”
December 24 – Bloomberg (Brendan Murray): “The global trading system, which is finishing up one of its most transformational years of the past century, heads into another facing more challenges to stability and growth. Merchandise trade across the world held up relatively well through 2025… Data cited this week by shipping industry veteran John McCown show global container volumes grew 2.1% in October from a year earlier. Yet beneath the overall resilience are shifting undercurrents: The US saw a 8% contraction in inbound volumes, while imports into Africa, the Middle East, Latin America and India all showed robust growth. ‘World container supply chains have already begun to adapt and reconfigure trading patterns,’ McCown wrote… After the US in 2024 saw a 15.2% gain in container imports for the full year, ‘to say that the annual total for 2025 will be in diametric contrast is an understatement’.”
Ukraine War Watch:
December 26 – Axios (Barak Ravid): “President Trump is expected to host Ukrainian President Volodymyr Zelensky in Mar-a-Lago on Sunday to try and reach agreement on the U.S. peace plan, Ukrainian officials say. The meeting is a sign of significant progress in the talks. Trump said previously that he'd only meet Zelensky if he felt a deal was close.”
December 24 – Wall Street Journal (Anastasiia Malenko): “Ukrainian President Volodymyr Zelensky said he would be willing to pull troops out of the eastern region of Donetsk and create a demilitarized free economic zone as part of a potential peace deal, provided Russia took similar steps to withdraw from areas it controls. Zelensky said the proposal and other aspects of a 20-point plan would be put to a referendum.”
December 22 – Reuters (Jonathan Landay, Erin Banco and John Irish): “U.S. intelligence reports continue to warn that Russian President Vladimir Putin has not abandoned his aims of capturing all of Ukraine and reclaiming parts of Europe that belonged to the former Soviet empire, six sources familiar with U.S. intelligence said… The reports present a starkly different picture from that painted by U.S. President Donald Trump and his Ukraine peace negotiators, who have said Putin wants to end the conflict. The most recent of the reports dates from late September, according to one of the sources.”
December 23 – Politico (Veronika Melkozerova): “Russia attacked Ukraine with dozens of cruise missiles and kamikaze drones in the early hours of Tuesday morning, with strikes reported in Kyiv and in 13 other regions… Moscow launched more than 650 drones and more than 30 missiles at Ukraine, President Volodymyr Zelenskyy said in a morning statement. ‘This Russian strike sends a clear signal about Russian priorities. A strike before Christmas, when people want to be with their families, at home, safe. A strike in the midst of negotiations to end this war. Putin can’t accept that the killing has to stop. And that means the world isn’t putting enough pressure on Russia,’ Zelenskyy added.”
Taiwan Watch:
December 24 – Wall Street Journal (Marcus Weisgerber): “China is making steady progress on developing more sophisticated weapons and expanding its armed force’s ability to operate away from the mainland, including against Taiwan, according to the Pentagon’s latest assessment… Beijing was still uncertain as of last year that it could invade and take over Taiwan, despite the Chinese military’s determination to have the capabilities to seize the island forcibly by 2027… The ‘PLA continues to refine multiple military options to force Taiwan unification by brute force,’ the report said… But China’s leaders ‘remain unsure of the PLA’s readiness to successfully seize Taiwan,’ it said. Last week, the Trump administration approved an $11 billion arms-sales package to Taiwan that includes truck-based missile launchers, antitank missiles, artillery and drones.”
AI Bubble/Arms Race Watch:
December 24 – Financial Times (Richard Waters): “That 2025 would be another banner year for artificial intelligence was not in doubt. But few realised just how much it would belong to the builders of AI rather than the users — or how that imbalance would start to perturb Wall Street. Investors were transfixed all year by the steady escalation in the amount of capital being thrown at AI data centres. Morgan Stanley had predicted spending would grow 20-25%. By last month, that forecast had ratcheted up to 68%, with the total projected to hit $470bn before jumping again to $620bn in 2026. Even that pales compared with the giant deals that were being signed in the second half of this year, led by the $1.4tn of new data centres that OpenAI has lined up.”
December 26 – CNBC (Jordan Novet): “Three months ago Oracle named Clay Magouyrk and Mike Sicilia as its new CEOs. They’re off to a rough start. Oracle shares have plummeted 30% so far this quarter. With four trading days remaining in the period, the stock is on pace for its sharpest decline since 2001 and the dot-com bust. Investors have grown skeptical about the database software vendor’s ability to open more server farms for ChatGPT operator OpenAI, which agreed in September to spend more than $300 billion with Oracle… On the earnings call, newly appointed finance leader Doug Kehring called for $50 billion in fiscal 2026 capital expenditures, 43% higher than the plan in September and double the total from a year earlier. Additionally, Oracle is plotting $248 billion in leases to boost cloud capacity, on top of building data centers. Such growth will require boatloads of debt.”
December 23 – Wall Street Journal (Mark Maurer): “The massive AI build-out comes with a transparency problem. Tech companies often provide the cost of AI data centers and chips associated with a long-term construction project. The catch: They generally don’t break out the costs for each, nor are they required to do so, despite the vastly different time periods in which facilities and chips depreciate. That means the cost of chips that may have to be replaced in a few years or less can be lumped together with buildings that can stand for decades. This has some investors seeking more details about tech giants’ surging capital spending on AI infrastructure. ‘The construction-in-progress account is this big hole where hyperscalers can bury a lot of their costs,’ said Gaurav Kumar, an accounting professor at the University of Arkansas…”
December 21 – Bloomberg (Neil Callanan): “OpenAI, the world’s most valuable startup, has soared more than 350% on secondary exchanges since the start of last year, vastly outperforming the likes of stock market darling Nvidia Corp. and helping to make private companies the hottest thing in finance. All of which inspires FOMO among retail investors. With trillions of dollars expected to flow into private markets from mom-and-pop investors desperate to get a piece of the action, concern is rising that amateurs may be jumping in at exactly the wrong moment.”
December 25 – Financial Times (Rafe Rosner-Uddin): “America’s wealthiest tech billionaires added more than $550bn to their combined net worth this year… The top 10 US tech founders and chief executives possessed nearly $2.5tn in cash, equity and other investments at the close of trading… on Christmas Eve… The figure is up from $1.9tn at the beginning of this year and comes as the S&P 500 climbed more than 18%. Silicon Valley’s leaders have profited from the hundreds of billions of dollars spent globally on AI chips, data centres and products, even if some of their gains were trimmed in recent months over concerns about an AI-fuelled investment bubble.”
December 22 – Wall Street Journal (Will Parker): “Commercial real-estate investors are becoming increasingly aligned with the AI boom—enabling them to rake in profits on the upside, but also making their funds more vulnerable to a correction in AI that disrupts demand for data centers. Spending on data-center construction looks poised to surpass office-building construction as soon as next year… Data centers earn more than nearly any other real estate. These properties returned 11.2% last year… That was higher than every other sector, other than manufactured housing.”
December 26 – New York Times (Alex Travelli and Pragati K.B.): “Satya Nadella, Microsoft’s chief executive, was striding across a stage in New Delhi, extolling his company’s $17.5 billion investment in artificial intelligence and the benefits it would bring to his native country’s 1.4 billion people. While he was speaking, Amazon made a rival announcement, promising to throw $35 billion into A.I.-driven projects across India. A flood of money for data centers, cloud computing and other hardware has come to India. Two months before the near-simultaneous Microsoft-Amazon announcements, Google committed $15 billion to data centers…”
Bubble and Mania Watch:
December 26 – Financial Times (Ivan Levingston and Oliver Barnes): “Global dealmaking topped $4tn this year for the first time since the boom of 2021, as a record number of megadeals lifted investment banking fees to their second-highest level ever. A total of 68 deals worth at least $10bn each reshaped sectors from the media to industrials, as companies took advantage of buoyant markets, readily available financing and less stringent US regulation to attempt strategic transactions that would not have been possible in other conditions. Worldwide mergers and acquisitions increased by almost 50% from 2024 to $4.5tn, according to… the London Stock Exchange Group. It is the second-highest total in more than 40 years of records, topped only by the 2021 pandemic frenzy of dealmaking. ‘I haven’t seen large-scale M&A like this in a decade… These are deals which are really transforming industries,’ said Tony Kim, co-president of investment bank Centerview Partners. ‘Scaled M&A requires a lot of important ingredients in the mix to succeed, and we seem to have all of those elements today’.”
December 22 – Bloomberg (Megawati Wijaya and Kat Hidalgo): “Netflix Inc. refinanced part of a $59 billion bridge loan with cheaper and longer-term debt, bolstering the financial package underpinning its bid for Warner Bros. Discovery Inc. The streaming giant got a $5 billion revolving credit facility and two $10 billion delayed-draw term loans to refinance part of the bridge facility it took out for its Warner Bros. bid… That leaves $34 billion for syndication.”
December 23 – New York Times (Maureen Farrell): “Heading into 2025, private equity executives were predicting a new heyday. After several years of high interest rates and a tough regulatory environment that had chilled deal making, the private equity industry was ready to start selling companies again and booking profits. ‘This is one of the best business environments we’ve seen in a long time,’ Harvey Schwartz, chief executive of Carlyle… said… on Dec. 10, 2024. He predicted that 2025 would be a great year for deals. While deal making did pick up toward the end of 2025, it was far from enough to solve private equity’s biggest problems: Many firms have been producing lackluster returns that lag the stock market; firms are struggling to raise money from investors; and they are saddled with a record number of companies they bought years ago, but have been reluctant to sell, fearing they won’t get the returns they promised investors.”
December 23 – New York Times (Keith Bradsher): “Early this year, Chinese automakers enthusiastically announced that they would soon be mass-producing and selling self-driving vehicles. Most of those plans have now been delayed after a deadly crash that drew broad public attention. China’s regulators finally gave the go-ahead last week to only two of the nine automakers that had submitted plans to sell self-driving cars. And the approvals by the Ministry of Industry and Information Technology were narrowly tailored to allow little more than further testing, not mass production.”
December 19 – Financial Times (Mary McDougall): “Australia’s largest pension fund is planning to reduce its allocation to global equities next year, amid signs that the artificial intelligence boom in the US stock market could be running out of steam. John Normand, head of investment strategy at the A$400bn (US$264bn) AustralianSuper, told the Financial Times that not only did valuations of big US tech companies look high relative to history, but the leverage being used to fund AI investment was increasing ‘very rapidly’, as was the pace of fundraising through mergers, venture capital and public listings.”
Deflating Crypto Bubble Watch:
December 23 – Bloomberg (Judy Lagrou): “Michael Saylor’s Strategy Inc. bolstered its cash reserve to $2.19 billion and paused purchases of Bitcoin over the past week as the largest digital asset treasury company appears to be settling in for a long crypto winter. The… firm raised $748 million through the sale of common shares in the seven days ended Dec. 21… It had purchased about $2 billion in Bitcoin over the previous two weeks, bringing its total holdings to around $60 billion.”
Inflation Watch:
December 23 – Wall Street Journal (Ryan Felton): “The price of new cars and trucks in the U.S. has increased 33% since 2020, and consumers are piling on interest as they stretch out loan terms to eight, nine and nearly 10 years. David Kelleher, who runs a… dealership in Glen Mills, Pa…, said many American families can’t comfortably take on a new-car payment these days. ‘We don’t have $300 monthly payments any longer in new vehicles,’ he said. ‘It’s a thing of the past.’ The average price of a new car broke the $50,000 barrier this fall… That is up from less than $38,000 in early 2020 before the pandemic hit.”
Federal Reserve Watch:
December 23 – Wall Street Journal (Greg Ip): “President Trump is down to four finalists for Federal Reserve chair, and the consensus on Wall Street is that White House adviser Kevin Hassett will get the job. As for who should get the job, many on Wall Street say: not Hassett. Why the dissonance? The same thing that makes Hassett the favorite is what worries his critics—that someone so close to Trump can’t be an independent central banker. And yet this Fed transition is unique in that the president wants a Fed chair who doesn’t fit traditional notions of ‘independent.’ He wants someone to support his overall economic agenda, which means lowering interest rates, a lot.”
December 20 – Wall Street Journal (Brian Schwartz and Nick Timiraos): “President Trump told aides and allies in early December that he wasn’t sold on picking former Federal Reserve governor Kevin Warsh to lead the central bank… Trump said at a cabinet meeting he had narrowed his list to one. Interviews with other contenders were suddenly canceled. Everything pointed to Kevin Hassett… Then came the reality-TV show plot twist. Warsh was suddenly back in contention with what Trump viewed as a strong interview last week… Fed governor Christopher Waller is also in the running, interviewing with Trump this week and picking up backing from corporate chiefs. Rick Rieder, a senior executive at BlackRock, is scheduled to be interviewed by Trump at the president’s private Florida club Mar-a-Lago during the last week of the year…”
December 23 – Bloomberg (Christopher Anstey and Daniel Flatley): “Treasury Secretary Scott Bessent backed the idea of reconsidering the Federal Reserve’s 2% inflation target once the US has sustainably brought price increases back down to that pace. ‘Once we are back to 2 — which I think will be in sight — then we can have a discussion: Is it much smarter to have a range?’ Bessent said… ‘Once we re-anchor to the target, then we can talk about a Range’.”
December 21 – Wall Street Journal (Nick Timiraos): “Cleveland Fed President Beth Hammack said she doesn’t see any need to change interest rates for several months after the central bank cut rates at its last three meetings. Hammack has opposed recent rate cuts because she is more worried about elevated inflation than the potential labor-market fragility that prompted officials to lower rates by a cumulative 0.75-point over the past several months… ‘My base case is that we can stay here for some period of time, until we get clearer evidence that either inflation is coming back down to target or the employment side is weakening more materially,’ she said… Hammack said a favorable inflation reading for November released last week likely understated 12-month price growth due to data-collection distortions…”
U.S. Economic Bubble Watch:
December 23 – CNBC (Jeff Cox): “The U.S. economy grew at a much greater-than-expected pace in the third quarter, boosted by strong consumer spending… U.S. gross domestic product, a sum of all goods and services produced in the sprawling U.S. economy, expanded by 4.3% in the July-September period, the Commerce Department said in its initial reading of third-quarter growth. Economists… expected a gain of 3.2%. Consumer spending expanded by 3.5% in the third quarter after rising 2.5% in the second quarter. Increases in exports and government spending also boosted growth, while a smaller dip in private fixed investment helped as well.”
December 23 – Wall Street Journal (Jeanne Whalen and Rachel Wolfe): “The U.S. economy continues to power through the trade and immigration shocks of 2025, defying widespread expectations of a slowdown or even a recession and blowing past other developed countries. One big reason: Americans continue to spend, despite their pessimistic outlook on the economy, their lingering anger about high prices and even a slowdown in the job market. Enormous business investment in the data centers and other scaffolding needed for the artificial intelligence race also helps explain the economy’s growth. AI investment and household consumption, particularly by higher-income Americans, accounted for nearly 70% of growth in the third quarter, economists from RSM noted…”
December 25 – Wall Street Journal (Harriet Torry and Justin Lahart): “It has been a good year for most of America’s biggest companies, with surging profits and enthusiasm for artificial intelligence propelling stocks to record highs. But for many small businesses, it has been just the opposite. At small businesses… years of high inflation, increasingly cautious consumers and tariffs are weighing on earnings and prompting cutbacks. Over the past six months, private firms with fewer than 50 workers have steadily shed jobs, according to… ADP, cutting 120,000 in November alone. Midsize and, especially, large firms have continued to add jobs… The growing divide between the fortunes of small and large businesses mirrors the divide that has emerged over the past year between low-income Americans and their high-income counterparts.”
December 24 – Associated Press (Matt Ott): “The number of Americans applying for unemployment benefits fell last week and remain at historically healthy levels despite some signs that the labor market is weakening. U.S. applications for jobless claims for the week ending Dec. 20 fell by 10,000 to 214,000 from the previous week’s 224,000… That’s below the 232,000 new applications forecast…”
December 22 – Bloomberg (Amanda Mull): “Every holiday season brings with it close scrutiny of Americans’ spending, but this year, the gaze cast at shoppers is even more intense than usual… Most measures of consumer confidence suggest the mood has worsened significantly since the 2024 election, with people across the political spectrum concerned about higher prices and a stagnant job market… So far, the topline numbers suggest spending is up significantly from 2024 and the volume of people out there shopping is also at an all-time high.”
December 23 – Associated Press (Anne D’Innocenzio): “Consumers stepped up gift giving during the first seven weeks of the holiday shopping season… But uncertainty about the economy is making shoppers more targeted in their buying. From Nov. 1 through Sunday, cash and credit card sales rose 4.2%, which is less than the 4.8% increase during the same period a year ago, according to Visa…”
December 23 – Bloomberg (Siddharth Philip and Aashna Shah): “US airlines expect to ferry a record number of passengers over the holidays after a year in which economic uncertainty and a government shutdown have whipsawed travel demand. A daily average of 2.9 million passengers will travel between Dec. 19 and Jan. 5, 1.5% more than a year ago, the Airlines for America lobby group said... Domestic airfares over the period will average $900 for a round trip, or 7% more than in 2024, the American Automobile Association said…”
December 23 – Bloomberg (Sakura Murakami): “Japan and the United States are set to speed up an initiative for Japan to invest $550 billion into the US, agreed as part of a broader trade deal to lower tariffs imposed by US President Donald Trump. ‘Ministers are aligned on expediting preparations so that the first project under the Strategic Investment Initiative could be announced as early as possible,’ according to a statement…”
December 20 – Financial Times (Nicole Friedman): “Mortgage rates have fallen to their lowest level in a year, but millions of homeowners are still locked into ultralow mortgage rates they don’t want to give up. Nearly 30 million households, or 54% of primary mortgage-holders, have mortgage rates at or below 4%... They were able to buy homes or refinance their mortgages when rates fell to 3% or lower in 2020 and 2021. Now, many of those who want to move don’t feel it is worth it to buy a home and take on mortgage rates that have doubled. This ‘lock-in effect’ has helped freeze the housing market for three straight years, suppressing the number of U.S. homes for sale and keeping inventory well below historic levels for most of that period.”
December 25 – Wall Street Journal (Benoît Morenne and Andrew Mollica): “Shale drillers have turned the biggest oil field in the U.S. into a pressure cooker that is literally bursting at the seams. Producers in the Permian Basin of West Texas and New Mexico extract roughly half of the U.S.’s crude. They also produce copious amounts of toxic, salty water, which they pump back into the ground. Now, some of the reservoirs that collect the fluids are overflowing—and the producers keep injecting more. It is creating a huge mess. A buildup in pressure across the region is propelling wastewater up ancient wellbores, birthing geysers that can cost millions of dollars to clean up. Companies are wrestling with drilling hazards that make it more costly to operate and complaining that the marinade is creeping into their oil-and-gas reservoirs. Communities friendly to oil and gas are growing worried about injection.”
China Watch:
December 22 – Wall Street Journal (Brian Spegele): “In cities and small towns across China, two seemingly contradictory facts are simultaneously true: China is closing the gap with the U.S. for global technological dominance, and yet big parts of its economy are a mess. Locally pioneered electric cars zip past deserted apartment blocks. Factory robots run by artificial intelligence churn out products that jobless college graduates cannot afford. State technology funds throw billions of dollars at money-losing startups even as the national debt surges to unprecedented levels. The emergence of AI startup DeepSeek earlier this year showed China can challenge the U.S. in some of the world’s most competitive technologies. But Beijing’s gains are coming at a steep cost, with the state’s heavy-handedness in directing investments wasting colossal amounts of money.”
December 22 – Bloomberg: “China Vanke Co., once the country’s biggest developer before it succumbed to an unprecedented property crisis, won last-minute support from creditors to extend a bond grace period in a reprieve that helps it avoid default, at least for now.”
December 23 – Bloomberg (Alan Wong): “S&P Global Ratings downgraded China Vanke Co. to selective default…, labeling the developer’s recent onshore bond extension as a distressed debt restructuring tantamount to a default.”
December 22 – Wall Street Journal: “China Vanke, once the country’s largest home developer, is no longer too big to fail. As the state-backed property giant buckles under the weight of its debt, the government has so far refrained from stepping in. Analysts say that sends a clear message: Beijing isn’t coming to the sector’s rescue. Vanke, which has about $170.43 billion in assets, is set to become the latest domino to fall after the Shenzhen government abruptly reversed its position on a partial bailout of the developer. Many of China’s other large developers have already defaulted, and a Vanke collapse would raise questions about how policymakers plan to address the real-estate slump as it drags on into a sixth year in 2026.”
December 21 – Reuters (Jiaxing Li): “Investors are snapping up yuan credits and surging yuan lending is poised to overtake overseas dollar loans at Chinese banks as attractive pricing helps drive a sustained push by Beijing to put the yuan on the global stage. China’s overseas bank lending has tripled in four years to 2.52 trillion yuan and sales of onshore and offshore yuan debt are at or near records for the second year running.”
Europe Watch:
December 23 – Associated Press: “France’s fractured parliament approved an emergency bill… designed to prevent a U.S.-style government shutdown next week, after negotiations on a 2026 budget collapsed. With just days left before the new year, President Emmanuel Macron and his Cabinet met Monday night to present the brief draft law. It aims ‘to ensure the continuity of national life and the functioning of public services,’ including collecting taxes and disbursing them to local authorities based on tax and spending levels in the 2025 budget…”
December 23 – Bloomberg (Giovanna Coi): “Home prices in Portugal posted another record jump in the third quarter, with the deepening housing squeeze fast becoming one of the country’s biggest political flashpoints. The average price for a dwelling rose 17.7% from a year earlier... It’s the biggest increase since the agency began tracking the data in 2009, and the third record in a row. Existing homes drove much of the surge in the third quarter, with prices climbing 19.1% year on year — outpacing the broader market.”
Japan Watch:
December 25 – Bloomberg (Erica Yokoyama and Akemi Terukina): “Japanese Prime Minister Sanae Takaichi’s government plans to unveil a record initial budget for the fiscal year starting in April, increasing outlays at a faster pace than inflation. The budget for the year beginning April 2026 will total about ¥122.3 trillion ($786bn)… That represents an increase of roughly 6.3% from the ¥115.2 trillion allocated for the current fiscal year, marking the largest initial budget on record.”
December 25 – Wall Street Journal (Megumi Fujikawa): “The Japanese cabinet… approved a record-high initial budget totaling approximately $785 billion for the coming fiscal year, signaling Prime Minister Sanae Takaichi’s latest effort to support growth through aggressive spending… It includes an 8.8 trillion yen defense allocation and increased interest payments. The prime minister’s slogan of ‘responsible and proactive fiscal policy’ has sparked concerns over public finances, driving bond yields higher. Coupled with expectations for further interest-rate hikes by the Bank of Japan, the benchmark 10-year Japanese government bond yield rose to a nearly 27-year high of 2.1% this week.”
December 25 – Bloomberg (Komaki Ito and Yoshiaki Nohara): “Japan’s industry ministry is set to nearly quadruple its budgeted support for cutting-edge semiconductors and artificial intelligence development to about ¥1.23 trillion ($7.9bn) for the fiscal year starting in April. Overall the Ministry of Economy, Trade and Industry’s budget rose by about 50% from the previous year to ¥3.07 trillion, largely due to the jump in chips and AI spending. After Prime Minister Sanae Takaichi’s cabinet signed off on…”
December 25 – Wall Street Journal: “Bank of Japan Gov. Kazuo Ueda said… the central bank is getting closer to achieving its 2% inflation target, reaffirming his stance of seeking further interest-rate increases. ‘Amid tightening labor market conditions, firms’ wage- and price-setting behavior has changed significantly in recent years, and the achievement of the 2% price stability target, accompanied by wage increases, is steadily approaching,’ Ueda said… The BOJ governor expressed confidence in the country’s wage-price dynamics, noting that ‘the likelihood of Japan’s economy returning to a so-called zero-norm state, in which wages and prices hardly change, seems to have decreased considerably’.”
December 24 – Bloomberg (Toru Fujioka): “Bank of Japan Governor Kazuo Ueda signaled further interest hikes are likely coming next year, by projecting rising confidence that the central bank is closer to attaining its sustainable price target. ‘The achievement of the 2% price stability target, accompanied by wage increases, is steadily approaching,’ Ueda said… ‘Amid tightening labor market conditions, business behavior has shifted significantly on setting wages and prices in recent years’.”
December 25 – Bloomberg (Hidenori Yamanaka): “Japan plans to reduce sales of government bonds during the fiscal year starting in April, focusing on cuts to super-long debt. Total issuance of government bonds to institutional investors through auctions will be ¥168.5 trillion ($1.1 trillion), a reduction of ¥3.8 trillion compared with the initial plan for the previous fiscal year… Combined sales of 20-year, 30-year, and 40-year bonds will drop ¥7.2 trillion to ¥17.4 trillion, with the issuance of super-long-term debt falling to its lowest level since 2009…”
December 23 – Bloomberg (Takashi Umekawa): “Japan’s Finance Ministry will set a key rate used to calculate the country’s likely interest payments on bonds next fiscal year at 3.0%, the highest in nearly three decades… The interest rate underpinning debt servicing costs in the year beginning April 2026 will rise from an initial 2.6% set during August’s budget request stage… The level marks a sharp stepping up from 2% used in the current fiscal year and would be the highest since fiscal 1997, likely pushing up Japan’s debt servicing to a new record.”
Leveraged Speculation Watch:
December 25 – Wall Street Journal (Gunjan Banerji): “Family offices are the new power players on Wall Street. A growing number of wealthy Americans are launching family offices, firms that do everything from investing money for the superrich to managing their personal affairs. They are huge and secretive, and their influence on Wall Street and Main Street is only growing. Families with these offices recently oversaw about $5.5 trillion in wealth, a 67% jump from five years ago, according to Deloitte. The firm expects that figure to rise to $6.9 trillion this year and top $9 trillion by 2030. It estimates that in coming years, these offices will manage more money than hedge-fund firms. Banks and other firms are hungry to cater to family offices’ every need… ‘It’s not just growing, it’s exploding,’ said Hendrik Jordaan, a partner at Nelson Mullins who works exclusively with family offices. ‘I really think about the family office world being the next private equity’.”
December 21 – Financial Times (Costas Mourselas and Amelia Pollard): “Macro hedge funds are enjoying their best year since at least 2008, as huge swings in the price of currencies, commodities and bonds have provided fertile conditions for traders. An index from data provider HFR tracking the returns of such funds — which aim to profit from economic trends by trading equities, bonds and commodities — was up 16% at the end of November, putting the sector on course for its most profitable year in data stretching back to 2008. Hedge funds such as Andrew Law’s Caxton and Chris Rokos’s RCM have enjoyed returns which were well into the double digits this year…”
Social, Political, Environmental, Cybersecurity Instability Watch:
December 21 – Washington Post (Naftali Bendavid): “The covid.gov website says covid-19 most likely originated in a Chinese lab, although scientists are in fact deeply divided over its origin. A widely read report posted on energy.gov/topics/climate concludes that humans’ impact on climate is relatively small, a finding sharply at odds with the scientific consensus. On DHS.gov, the government informs Americans that nearly 2 million undocumented migrants have ‘self-deported’ this year, an assertion that mystifies researchers. And cdc.gov/vaccine-safety dismisses the conclusion that vaccines do not cause autism as not ‘evidence-based.’ Researchers and activists increasingly fear that under the Trump administration, the U.S. government is abdicating its historic role as a clearinghouse for reliable information — a momentous shift for what has been the world's foremost producer of widely accepted data for everyone including academic researchers, local governments and ordinary citizens.”
