Weekly Market Insights
December 19, 2025 Volume 12 Issue 51
Global equities were mixed this week, with the S&P and NASDAQ rising slightly, while the Dow declined. Small caps underperformed. International markets didn’t fare much better, as MSCI EAFE was essentially flat and MSCI Emerging Markets declined. Sector performance varied: Consumer Discretionary led, while Energy dropped sharply. Commodities experienced volatility, with silver jumping around 8% and gold increasing about 1%; meanwhile, oil and natural gas fell.
Economic data releases dominated headlines. The Bureau of Labor Statistics resumed regular reporting after the shutdown, releasing payroll data for October and November. Private payrolls grew modestly, while government employment continued to decline, pushing the unemployment rate to 4.6%. CPI data showed headline inflation at 3.1% year-over-year, but analysts noted distortions from imputed shelter costs, suggesting the report may have underestimated price pressures. Despite these quirks, markets largely ignored the release, focusing instead on labor market trends. Liquidity concerns remain, leading the Fed to rename its Standing Repo Facility as “standing repo operations” and to start Reserve Management Purchases of T-bills, which some see as a form of quantitative easing. These actions aim to stabilize funding markets before year-end and tax season, reinforcing perceptions of an ongoing Fed backstop.
Fiscal dynamics and valuation risks are increasingly coming into focus. The U.S. deficit narrowed to 5.8% of GDP, its lowest level since 2019, but total debt remains close to 123% of GDP. Tariffs have increased revenue, yet legal challenges could lead to refunds, creating uncertainty. Meanwhile, equity valuations are stretched: the Shiller CAPE ratio rose above 40, its second-highest level ever, suggesting muted long-term returns.
Have a great weekend!
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*All economic release data referenced from public sources believed to be accurate. *The source of data for all charts/graphs included in this presentation is Bloomberg LP. *Figures quoted represent monthly changes (m/m) and are seasonally adjusted.