Weekly Market Update (Dec 07, 2025)

Market Hedwig
13 minutes ago
2 min read

HIGHLIGHTS

Markets expect a hawkish Fed cut next week. Bank of Japan is expected to hike the week after and Bank of England is likely to cut.

China: Manufacturing PMI missed expectation, indicating weaker domestic demand. The drop in services PMI is a concern. Meanwhile, exports remain strong, supported by the strong new export orders and shipping figures.

Liquidity: The bad market performance in the previous month is driven by the liquidity squeeze rather than by a bad economic and earnings outlook.

BoJ: Bank of Japan is likely to hike in the next meeting, driving the yield higher. Markets are pricing 89% likelihood of a hike, indicating firmer inflation and more certainty in policy. The increase in rate is going to trigger more JPY-funded carry trade unwind.

MARKETS

Nasdaq	23,578.13	+0.91%
S&P 500	6,870.40	+0.31%
Dow	47,954.99	+0.50%
10-Year	4.14%	+12bps
Brent	63.39	+1.62%
DXY	98.99	-0.47%

*Data as of market close. 5-day change ending on Friday.

VIEW FROM THE STREET

Equity

UBS: We expect US equity to rally in 2026. Healthcare sector has emerged and is expected to have more clarity on pricing of drugs and pharma tariffs. Utilities are also expected to rise supported by the infrastructure investments.

Bank of America: 2025 is a good example to show that diversification pays. Almost everything, including US stocks, global stocks, bonds and commodities, rallies. Balanced exposure will still be critical in the coming year.

Fixed Income

Standard Chartered: Although markets are expecting a 25bps Fed cut, we believe the interest rate volatility to persist. The ongoing concerns about fiscal balance would drive yields higher. We prefer medium-duration USD bonds over longer-term duration.

Blackrock: Fed is putting the weakening larbour market at the center of its decisions. Job growth has slowed down, labour demand and supply have contracted, especially the supply is affected by the slow increase in migration.

Economy

J.P. Morgan: Both domestic retailers and foreign producers are going to benefit from the US holiday season. There are more opportunities across global markets trading at great discounts relative to the US peers.

Citibank: Although Fed is expected to cut 25bps next week, we believe sticky inflation should remain a focus in Fed’s consideration. However, CPI print is going to come out after the FOMC meeting.

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DISCLOSURE

This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.