Markets are suffering sharp losses following an eventful three-day weekend that featured heightening geopolitical tensions amidst a violent selloff in Japanese debt that sent yields on the longest tenors to all-time highs.
Outlook
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It seems as though the Treasury may be preparing the market for a potential change in issuance sizes or duration at some point in the not-too-distant future, though that is admittedly speculative.
Stocks posted solid gains in an action-packed week of market-moving economic data, geopolitical news, and bullish new year sentiment. By Monday’s close, the Dow Industrials had gained enough to make the “Santa Claus Rally” a reality.
While the near-term market effect of the US capture of Venezuelan President Nicolas Maduro is minimal—beyond select US oil refiners, Venezuelan sovereign bonds, etc.—Maduro’s capture is a major geopolitical event with profound implications for the future.
An eventful weekend featuring the ousting and arrest of communist Venezuelan dictator Nicolas Maduro is generating outperformance in the energy sector as the US oil majors are poised to benefit from Washington’s control of the crude rich nation.
As 2025 ends, investors increasingly allocated capital to geographies where economic conditions were moving more favorably.
While only two official dissenters opposed the December rate cut, dot-plot projections reveal that six Fed members, including four “silent dissenters,” were against easing, signaling deeper division within the Fed than headlines suggest.
The tactical USD view moved from neutral to negative as a dovish Fed pivot pressured the currency. Softer labor data and rising expectations of a December rate cut halted the earlier USD recovery and kept it rangebound.
A widely anticipated Federal Reserve decision on interest rates and a rotation into non-tech areas helped push the Dow Industrials higher, while the broader market and technology stocks lagged behind.
As the year comes to a close, with just about two weeks left, there is going to be plenty of news flow with consequences for global markets.
Worries are mounting that the significant investments committed to the modern technology’s infrastructure and the associated profitability may pale in comparison to the remarkable valuation expansion that has occurred among AI related companies.
The US utilities sector is entering a transformative phase, fueled by structural demand shifts from electrification and the rapid adoption of AI.