๐ ๐ข๐ฅ๐ก๐๐ก๐ ๐จ๐ฃ๐๐๐ง๐
Markets remain uneasy as last weekโs โbubble warningsโ dominated headlines, but optimism hasnโt disappeared. U.S. equities staged an impressive late-Friday rebound on hopes that Congress is finally moving back into constructive budget talks. Major indices still closed the week lower: S&P 500 -1.6% and Nasdaq -3.0%, the weakest performance since the tariff-driven volatility in April.
The debate around AI valuations continues. The Fedโs latest Stability Report unsurprisingly acknowledges bubble concerns, while NY Fedโs Williams indirectly offered some support for the broader AI theme in a recent interview. The reality is that the rapid global transformationโsecurity, technology, and energyโwill involve some degree of capital misallocation along the way.
Bulls are focusing on faster U.S. corporate profit growth, now running at +11% y/y, the strongest pace in four years. Meanwhile, the government shutdown has created a lack of economic data, pushing markets to seek alternative indicators. Thursdayโs Challenger report was a stark reminder of labour-market weakness, showing the highest level of layoffs in more than 20 years, citing AI and rising costs. Markets now assign a 63% probability to a Fed rate cut on December 10.
Asian markets and U.S./European equity futures are trading higher this morning on the latest budget developments. FX markets remain broadly stable.
๐จ.๐ฆ. ๐ด๐ผ๐๐ฒ๐ฟ๐ป๐บ๐ฒ๐ป๐ ๐ฟ๐ฒ๐ผ๐ฝ๐ฒ๐ป๐ถ๐ป๐ด
The Senate has taken the first concrete step toward ending the record-long shutdown. The agreement is described as temporary and would fund operations through January 2026, though a full reopening still requires several days of votes and procedures.
Consumer sentiment has fallen to its lowest level in three yearsโnear record lowsโdriven largely by frustration over the shutdown. This metric is crucial for political Washington, and voter dissatisfaction is likely to influence the 2026 midterms. Yesterday, Trump promised nearly all Americans a USD 2,000 payout financed by tariff revenuesโa clear response to the political setbacks Republicans have faced over the past week.
๐จ.๐ฆ. ๐ฝ๐๐๐ต ๐ณ๐ผ๐ฟ ๐ถ๐ป๐๐ฒ๐ป๐๐ถ๐ณ๐ถ๐ฒ๐ฑ โ๐ฑ๐ผ๐น๐น๐ฎ๐ฟ๐ถ๐๐ฎ๐๐ถ๐ผ๐ปโ
The dollar already dominates global finance, but the U.S. appears poised to expand its reach. On Friday, Fed official Stephen Miran discussed stablecoins and their role in reinforcing global demand for dollars. FT also reported that the Treasury is exploring ways to encourage other countries to adopt the USD as their primary payment currency.
Motivations include:
1. Lower borrowing costs for the U.S. government
2. Reduced risk of geofinancial fragmentation
3. Greater geo-economic leverage in the monetary race with China
4. Broader U.S. influence abroad
Importantly, increased dollarisation does not automatically imply a stronger USD. Trump has been explicit: he wants a โjust rightโ dollarโsupportive of exports while keeping U.S. rates attractive for global investors.
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Thu Dec 11 2025 18:03:41 GMT+0000 (Coordinated Universal Time)
