Closing the Year Strong: Market Insights for the Final Week

Weekend Wind‑Down: The Market Got a Little Wet… and Still Pretty Quiet

Friday’s trading look was all over the place – and I mean that in the best way. We had a knock‑whip yet no headline, so the charts just did their ordinary wobbles and we left the day looking half‑happy, half‑suspicious.

Where We Stand

Right now, currencies, bonds and equities all went on a mild “no‑speakers” run. The only real headline was that the GBP slung itself back toward the $1.26 mark after October’s GDP telling the tale of a little‑bit of economic shrinkage. That, along with the dark clouds of pre‑Budget uncertainty, gave the pound a less-than‑glad look.

Things look set to go a bit worse: the Budget’s full effect hasn’t hit yet, especially with the National Insurance tweaks that should make the economy feel like a runaway train. The Chancellor’s plan to boost growth while the Treasury kept throwing the whole economy a “wait‑a‑minute” comment turned out to be a mixed bag. And the Bank of England?

Quote: “We’ll keep the bank rate steady at 4.75%,” the Bank said on Thursday.
In other words, we might all forget that the UK economy has a “big week” ahead with PMIs, jobs, inflation and retail sales all rolling up. But those numbers are likely to keep the gloom alive.

Currency Corner

The yen made quite the splash too – after the Bank of Japan (BoJ) hinted that another 25bp hike would wait until 2025, the JPY slid and USD/JPY danced toward the 154 range. The BoJ’s “tightening window” seems to be closing fast, so I’d stay away from carry trades for now – especially with the political circus (Trump’s return) shaking up volatility.

Other G10 FX movements stayed calm. The dollar hovered around 107, the euro stuck near $1.05, and no big ECB chatter rattled the market. The Euro Overnight Index Swap (OIS) priced a 50/50 chance of a 50bp January cut, which feels like an appropriate bet right now.

Wall Street’s “Two Halves” Day

The S&P 500 opened up on strong Broadcom numbers, only to falter by the end of the day and finish flat. It’s the first weekly loss in three, a gloomy but not catastrophic wipe‑out. I stay an equity bull though – seasonality’s hand is still in play and the index is already 30% higher YTD. Panic? Maybe brush it off.

Bond buyers saw a brief sell‑off, especially on the long end. After a 30bp yank above 4.60% last week, we’re still wondering why the 30‑year notes are doing this. Perhaps the “Bessent Bid” is unwinding, or the auctions are just a bit too soft.

Irony for Gold

Shake that gold, folks! The yellow metal stumbled, slipping more than 1% on Friday, unable to break past the November highs near $2,720/oz. Play the range: look for support below the 100‑day and 50‑day moving averages. The bears are clearly trying to take the upper hand.

Looking Ahead

We’ve got a whirlwind week before us – five central banks are planning to speak, and the data front is packed for the UK and the US. Here’s the rundown:

FOMC (US): likely a 25bp cut for 2025 flexibility.
Riksbank (Sweden): a 25bp cut, staying in lockstep with the ECB.
Norges Bank (Norway), BoE (UK), BoJ (Japan): hold rates steady.

UK data will keep the “stagflation-esque” vibe going: retail sales, PMIs, CPI and industry surveys will stack up. The latest US retail sales report may lean toward the upside thanks to a robust Thanksgiving spend.

Once that data storm passes, we can finally stretch our legs. Until then – keep your coffee hot, your spreadsheets ready, and your sense of humor intact.

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