December 8–14, 2025: Weekly economic update

Last week saw the final FOMC meeting of the year, at which the policy rate was, as expected, cut by a quarter of a percentage point, alongside the resumption of quantitative easing (just 12 days after quantitative tightening had been concluded). This marked one of the most dovish meetings of the year.

Over the course of the month, the Fed plans to purchase up to $40 billion in 1–3-month Treasury bills. The regulator appears to be acting preemptively: there are currently no signs of liquidity disruptions in the money markets, but volumes in the reverse repo market remain very limited, and there is a risk of a government shutdown after January 31. Overall, when the central bank becomes a buyer of government debt, equity markets tend to view this as a positive signal.

As for interest rates, Powell noted that the cut was driven by cooling conditions in the labor market. The current policy rate sits at the upper end of the neutral range, which signals that the pace of further rate cuts is likely to slow significantly. This is also reflected in the Fed’s rate projections for 2026, which imply only one additional cut, bringing the rate into the 3.25–3.50% range. However, the swaps market (FedWatch), as has traditionally been the case, continues to run ahead of the regulator and is pricing in two rate cuts in 2026, with the first expected only at the April meeting.

Based on the revised macroeconomic forecasts, the Fed is presenting an almost ideal scenario for 2026–27. Specifically, it projects stronger economic growth (GDP growth rising to 2.3%), a steady decline in inflation to 2.1%, and a stable labor market (with unemployment falling to a historical low of 4.2%). Trade disputes also carry a notable upside for the United States: many countries have committed, in the context of negotiations, to invest hundreds of billions of dollars into the U.S. economy.

Macroeconomic Statistics

INFLATION (September)

• Core Consumer Price Index (CPI) (m/m): 0,2% (previous: 0.3%)
• Consumer Price Index (CPI) (m/m): 0.3% (previous: 0.4%)
• Core Consumer Price Index (CPI) (y/y): 3.0% (previous: 3.1%)
• Consumer Price Index (CPI) (y/y): 3.0% (previous: 2.9%)

Producer Price Index (September):

• PPI (m/m): 0.3% (prev: -0.1%)
• Core PPI (m/m): 0.1% (prev: -0.1%)

INFLATION EXPECTATIONS (MICHIGAN)

• 12-month expected inflation (November): 4.1% (prev: 4.5%)
• 5-year expected inflation (November): 3.2% (prev: 3.4%)

Core Personal Consumption Expenditures Price Index (September) — the Federal Reserve’s preferred measure of underlying inflation:

• m/m: 0.2% (prev: 0.2%)
• y/y: 2.8% (prev: 2.9%)

GDP (U.S. Bureau of Economic Analysis, BEA) — 2Q25 annualized, third estimate: +3.8% (second estimate: +3.30%; 1Q2024: – 0.5%). Atlanta Fed GDPNow estimate (4Q): 3.9% (vs. 3.9%). (The GDPNow forecasting model provides a “real-time” proxy for the official GDP estimate ahead of its release, using a methodology broadly aligned with that of the U.S. Bureau of Economic Analysis.)

Business Activity Index (PMI) (October):

(Above 50 indicates expansion; below 50 indicates contraction)

• Services sector: 54.1 (previous: 54.8)
• Manufacturing sector: 52.2 (previous: 52.5)
• S&P Global Composite: 54.2 (previous: 54.6)

LABOR MARKET (Data for September, BLS; October figures will be released later together with the November report)

The labor-market data exceeded expectations across several indicators:

• Unemployment rate: 4.4% (prev: 4.3%)
• Total number of individuals receiving unemployment benefits in the United States: 1,838K (vs. 1,937K)
• Initial jobless claims: 236K (vs. revised 192K)
• ADP non-farm employment change (November): –32K (prev: +47K)
• Change in Private Nonfarm Employment (ADP), December: 4.75K (prev. −13.5K)
• Average hourly earnings (y/y): 3.8% (prev: 3.8%)
• JOLTS job openings: — (vs. 7.227M)

MONETARY POLICY

• Effective Federal Funds Rate (EFFR): 3.50%–3.75%
• Federal Reserve balance sheet increased: $6,539T (vs. previous week: $6,535T). The Fed: asset purchases over the coming months will be substantial.

FOMC Macroeconomic Projections: upward revisions across all metrics for 2026–27, with the EFFR (policy rate) forecast left unchanged.

MARKET FORECAST FOR RATE (FEDWATCH)

• Next meeting (January 28): the implied probability of a 0.25% rate cut stands at 24.4%, while the probability of no change is 75.6%.
• Over the next 12 months: two 0.25% rate cuts are expected, bringing the target range to 3.00–3.25%.

Today:

А week earlier:

Market

SP500

The S&P 500 approached its all-time high at 3,900 points; for the week, it declined by 0.63% (weekly close: 6,827.42). For the full year 2025, the index is up 15.66%.

Despite the fact that the meeting was broadly positive for the technology sector, volatility remains elevated due to high valuations and management guidance pointing to margin compression.

NASDAQ100

Weekly performance: −1.93% (weekly close: 25,196.73). Year-to-date return: +19.30%.

Goldman Sachs forecasts that the S&P 500 will reach 7,600 points by the end of 2026, implying a 10% upside from current levels.

The consensus forecast for U.S. real GDP growth calls for an expansion of 2.0% in both 2025 and 2026. This aligns with the Fed’s projection for 2027 but is 0.3 percentage points lower than the Fed’s forecast for 2026.

Russel 2000 (RUT)

Weekly performance: +1,19% (weekly close: 2551,45). Year-to-date performance: +13,84%.

VIX

Weekly close at 15.73

Eurozone

Interest Rates:

• Deposit facility rate: 2.0% (prev. 2.0%);
• Marginal lending facility rate: 2.4% (prev. 2.4%) — the rate at which banks can borrow overnight from the central bank;
• Short-term (policy) rate: 2.15% (prev. 2.15%).

Inflation: Consumer Price Index (CPI), November:

• Core CPI (y/y): 2.4% (prev. 2.4%);
• CPI (m/m): −0.3% (prev. 0.2%);
• CPI (y/y): 2.2% (prev. 2.1%).

GDP, Q3 (final):

• q/q: 0.3% (prev. 0.1%);
• y/y: 1.4% (prev. 1.5%).

Unemployment rate (October): 6.4% (prev. 6.3%).

Purchasing Managers’ Index (PMI), October:

• Services: 53.6 (prev. 53.0);
• Manufacturing: 49.6 (prev. 50.0);
• S&P Global Composite: 52.8 (prev. 52.5).

Euro Stoxx 600

Weekly performance: +0,35% (week closed at 580,7). Year-to-date: +14,85%.

China:

• 1Y Loan Prime Rate (medium-term lending): 3.50%;
• 5Y Loan Prime Rate (five-year rate, influencing mortgages): 3.50%.

Inflation Indicators (October):

• Consumer Price Index (CPI, m/m): −0.1% (prev. 0.2%);
• CPI (y/y): 0.7% (prev. 0.2%).

• Unemployment rate (October): 5.1% (prev. 5.2%);
• Industrial production (October, y/y): 4.9% (vs. 6.5%);
• Fixed asset investment (October, y/y): −1.7% (vs. −0.5%);
• Imports (December, y/y): 1.9% (vs. 1.0%);
• Exports (December, y/y): 5.9% (vs. −1.1%);
• Trade balance (December): $111.68 bn (vs. $90.7 bn).

Trade balance surplus for January–November (highlighted in yellow) and December (in black).

China’s exports in November rose by 5.9% year-on-year, pushing cumulative exports for the year above the $1 trillion mark. Shipments to the United States fell by 29% due to tariffs; however, stronger exports to the EU, Latin America, and Africa more than offset this decline. Exports to the EU increased by nearly 15%, while shipments to Africa surged by almost 28%.

Purchasing Managers’ Indices (PMI), November:

• Manufacturing: 49.2 (prev. 49.0);
• Non-manufacturing: 49.0 (prev. 49.0);
• Composite PMI: 49.5 (prev. 50.1).

CSI 300 Index

Weekly performance: −0.08% (weekly close: 4,580.95); year-to-date performance: +16.53%.

Hang Seng TECH Index (HSTECH.HK)

Weekly performance: −0.43% (weekly close: 5,638.05); year-to-date performance: +27.08%.

BOND MARKET – yields on long-dated Treasuries moved higher

20+ Year U.S. Treasury Bonds (ETF TLT): for the week: −0.94% (weekly close: 87.34). For 2025: −0.52%.

Yields and Spreads

• Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity: 4.18% (vs. 4.14%);
• 2-year Treasury yield: 3.51% (vs. 3.56%);
• ICE BofA BBB U.S. Corporate Index Effective Yield: 5.02% (vs. 5.02%).
• Yield spread between 10-year and 2-year U.S. Treasuries: 67 bps (vs. 58 bps);
• Yield spread between 10-year and 3-month U.S. Treasuries: 54 bps (vs. 43 bps).

The cost of the 5-year U.S. credit default swap (CDS), a measure of default insurance, stands at 27.88 bps (vs. 28.78 bps last week).

GOLD FUTURES (GC)

Weekly performance: +2.42% (weekly close: $4,329.8 per troy ounce). Year-to-date gain: +63.95%.

DOLLAR INDEX FUTURES (DX)

Weekly performance: −0.99%; weekly close: 98.015; for 2025: −9.52%.

OIL FUTURES

Weekly performance: - 4.34% (weekly close: $57.53 per barrel). Year-to-date performance: −19.93%.

IEA Report:

• Global oil demand is expected to increase by 830 kb/d (vs. 790 kb/d) in 2025, supported by improving macroeconomic and trade prospects;
• In 2026, demand growth is projected at 860 kb/d (vs. 770 kb/d previously).

Cryptocurrencies

The People’s Bank of China has imposed a ban on digital assets, declaring virtual currencies — including stablecoins — illegal and prohibiting their use as a means of payment.

BTC FUTURES

Weekly performance: −2.53% (weekly close: $88,181). Year-to-date performance: −5.95%.

ETH FUTURES

Weekly performance: +0.01% (weekly close: $3,062.3). Year-to-date performance: −8.43%.

Total cryptocurrency market capitalization stands at $3.06 trillion (vs. $3.11 trillion a week earlier), according to CoinMarketCap.

Crypto market shares:

• Bitcoin: 58.6% (58.7%);
• Ethereum: 12.4% (12.1%);
• Others: 29.0% (29.7%).

Public Companies with Bitcoin Treasury Strategies: the share of Bitcoin held on corporate balance sheets now accounts for 5.30% of the total Bitcoin supply, up from 5.02% last week.

ETF Net Flows Chart: