General Market Analysis – 17/12/25

US Stocks Mixed After Employment Update – Dow off 0.6%
US equity markets were mixed overnight as investors worked through delayed employment data released following the government shutdown, which delivered conflicting signals on labour market momentum. The Dow Jones fell 0.62% to close at 48,114, while the S&P 500 eased 0.24% to 6,800. In contrast, the Nasdaq edged 0.23% higher to finish at 23,111. Non-Farm Payrolls data had slumped sharply in October during the height of the shutdown before rebounding strongly in November to exceed most expectations. The DXY slipped 0.10% on the day to 98.21, having initially dropped harder on the initial data. In rates markets, the 2-year Treasury yield fell 1.4 basis points to 3.487%, while the 10-year lost 2.7 basis points to move back down to 4.145%. Oil prices took another step lower to hit levels not seen for nearly five years. Brent dropped 2.82% to $58.85 a barrel, while WTI slid 2.90% to $55.19. Markets continue to price in persistent oversupply into next year, while growing optimism around a potential peace agreement in Ukraine added further downside pressure. Gold was little changed on the session, easing 0.06% to $4,302.32 an ounce, though the metal continues to find solid support on dips amid the current macro environment.

Market Remains More Dovish than the Fed
Global markets remain much more dovish than the Fed in current conditions, with the overall market pricing in 58 basis points of rate cuts from the world’s biggest central bank in 2026, while the clear message from Jerome Powell was that the FOMC has just one 25 basis point cut on the calendar in the coming 12 months. Last night’s data had the market pricing in a chance of a hold in January more strongly, up to 75% from 70% before the numbers, but it is the divergence further out that could see moves in the market. Of course, a lot of the longer-dated market pricing has a new Chairman factored in who is likely to be more dovish, in line with the President’s wishes, so that situation is likely to add volatility in the coming months. We have key CPI data out tomorrow, and that could be telling for the shorter term, as we have clear indications from FOMC members that they consider inflation to be too sticky at the moment. If CPI remains at elevated levels, it could push those rate cut expectations further down the curve.

Quieter Calendar Day Ahead for Traders
Looking ahead, it is a relatively quiet day on the macroeconomic calendar today, though traders will be monitoring price action following the US overnight session and key data updates from there. There is little on the calendar in the Asian session today; however, UK markets will be back in focus early in the European session with key CPI data due out. Expectations are for a 3.5% year-on-year print, which is still high, just a day ahead of the crucial Bank of England rate call tomorrow. Germany’s IFO Business Climate survey is due out later in the session (exp. 88.2), but expect that UK data to dominate. In the US session, we have the usual weekly crude oil inventory data (exp. -2.4 mio) scheduled, but expect comments from Fed members Waller, Williams, and Bostic to move markets as we progress through the session.

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