Data Deluge

For the week ending 19 December 2025

As of midday Friday, global equites had declined for the week, with shares linked to AI facing sell-offs due to high valuations. The yield on the US 10-year Treasury note edged down to 4.15% from 4.18% a week ago, while the price of a barrel of West Texas Intermediate crude oil consolidated around $56.50. Volatility, as measured by futures contracts on the Cboe Volatility Index (VIX), rose to 18 from 16.

MACRO NEWS

Key US data released; inflation fall discounted

US data agencies continue to play catch up after weeks of disruption due to the government shutdown. This week, employment data for October (partial) and November were released, along with October retail sales and November CPI. Payrolls fell 105,000 in October but rebounded 64,000 in November. The October downdraft was the result of 162,000 federal workers accepting buyouts to leave their positions. In November, the unemployment rate ticked up to 4.6%, a four-year high as the labor force participation rate grew. Stripping out the federal workers, however, the data were solid, suggesting the labor market remains broadly stable. Retail sales were unchanged at the headline level in October, but the control group measure, which is included in GDP accounting, rose a robust 0.8%. The quality of the CPI data seems to have suffered the most as a result of the shutdown.  Data collection for October was skipped entirely while November’s figures were likely heavily distorted to the downside. Headline CPI fell to2.7% in November from 3% in September and the core rate fell to 2.6% from 3%. Methodological workarounds used to compile the figures in the absence of October data appear to have skewed the data.

European leaders agree on loan to Ukraine

European Union leaders have agreed to lend Ukraine €90 billion after failing to approve a plan that would have instead mobilized frozen Russian assets for use by Ukraine. Kyiv will only need to pay back the loan only after Russia has paid reparations. After talks in Berlin early this week, progress was made toward a peace agreement with Russia, though substantial areas of disagreement remain. Ukraine dropped its NATO membership demands after receiving assurances of strong security guarantees from the EU and the US. Talks will continue in Miami this weekend.

QUICK HITS

Flash purchasing managers indices were mostly weaker in December compared with final November data, according to data from S&P Global. 

As widely anticipated, the Bank of Japan raised interest rates 0.25% on Friday to 0.75%, the highest level in 30 years. The bank made clear that its hiking cycle will continue provided that its economic outlook is realized. Markets anticipate another hike in the middle of 2026. Despite the hike, the yen weakened after the decision. The yield on the 10-year Japanese government bond closed above 2% on Friday for the first time since 1999.

Retail sales, industrial production, fixed-asset investment and property investment in China all came in lower than expected in November. Despite the sluggish growth backdrop, policymakers have not yet hit the panic button by unleashing sizeable stimulus.

According to Politico, half of US imports are avoiding tariffs primarily thanks to carveouts, free trade agreements, or existing tariff regimes.

Fed Governor Stephen Miran says he will likely to remain on the Board of Governors until someone else is confirmed to fill his seat when his term ends on January 31. Such a move is permitted under the law that governs the Fed.

The jockeying to succeed Jerome Powell as Fed chair continued this week as President Trump interviewed Fed Governor Christopher Waller for the position. Betting odds continue to favor National Economic Council Director Kevin Hassett over former Fed Governor Kevin Warsh, with Waller a distant third. Trump said in a speech Wednesday evening that the next Fed chair will be someone who believes in lowering rates “by a lot.”

Oil prices fell to their lowest levels in nearly five years on Tuesday, with WTI falling briefly below $55 before rebounding after President Trump ordered a blockade of sanctioned oil tankers going into and leaving Venezuela.

Japanese Prime Minister Sanae Takaichi’s ruling coalition is discussing raising income taxes by 1% across all income brackets in January 2027 to help pay for higher defense spending.

US Trade Representative Jamieson Greer threatened to retaliate against large EU-based tech companies over the bloc’s digital services tax (DST). The US said it will use every tool to counter the DST, including fees and service restrictions. According to the USTR, the EU has engaged in a “persistent course of discriminatory and harassing lawsuits, taxes, fines and directives” against American companies.

In a year-end address on Tuesday, Bank of Canada Governor Tiff Macklem said bitcoin is “very volatile” and “a lousy store of value.”

The EU proposed watering down rules that would have effectively banned the sale of new combustion-engine cars in the bloc starting in 2035.

The German parliament this week approved €50 billion in defense procurement. Europe’s largest economy plans to spend a total of €650 billion on defense between 2025 and 2030 — double the budget of the preceding five years.

The Bank of England cut its base rate 0.25% to 3.75% on Thursday, days after the UK inflation rate slowed to 3.2% from 3.6%. The European Central Bank held rates steady Thursday at 2% while raising its 2026 GDP forecast to 1.4% from 1.2%.

Nasdaq announced this week that it is seeking approval from the US Securities and Exchange Commission to offer 23-hour stock trading five days a week.

In order to boost defense ties with the US, the Turkish government has asked Russia to take back its S400 air defense system. If successful, Turkey could then be allowed to acquire US F-35 stealth fighters.

On Wednesday, the US State Department approved an $11.1 billion arms sale to Taiwan, the largest such package of its kind.

President Trump signed an executive order on Thursday that reclassifies marijuana as a Schedule III substance. Those are defined as drugs with a moderate to low potential for physical and psychological dependence. The order allows for increased research on medical marijuana and CBD.

Canadian retail sales fell 0.2% month-over-month in October.

THE WEEK AHEAD

Monday: UK GDP

Tuesday: US GDP, durable goods, industrial production < consumer confidence; Canada GDP

Wednesday: US initial jobless claims

Thursday: Japan unemployment; Christmas Day

Friday: Boxing Day

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Sources: MFS research, Wall Street Journal, Financial Times, Reuters, Bloomberg News, FactSet Research.