Closing Recap 

Global markets started the final trading week of the year on a quiet and mixed note, with U.S. stock futures muted as many traders remain on holiday. The most dramatic action was in the silver market, which surged to a new all-time high above $83 an ounce before experiencing a violent reversal, triggered by a CME margin hike. The volatility drew comments from Elon Musk, who warned about the industrial impact of rising silver prices. Elsewhere, Asian markets were mixed, with the Japanese yen strengthening after the Bank of Japan’s December meeting summary reinforced expectations for further rate hikes. Geopolitical tensions remained elevated, with China conducting military drills around Taiwan and Ukraine peace talks showing only incremental progress. 

Key Takeaways 

• Silver Sees Wild Swings After Hitting New Record: Silver was the main event, surging to a new record high above $83.75/oz before crashing over 10% in 70 minutes after the CME announced a margin requirement hike, a classic move to curb speculative excess. 
• Stocks Start Final Week on a Cautious Note: U.S. stock futures are muted as markets enter the final, holiday-shortened trading week of the year, with thin liquidity expected to prevail.
• Bullion Bank Collapse Rumors:The volatility is being amplified by unconfirmed reports of a major bullion bank collapsing under a massive short position, potentially requiring a Fed bailout.
• China’s Economic Woes Persist: China’s industrial profits slumped 13.1% y/y in November, highlighting persistent deflationary pressures, though Beijing has signaled a more proactive fiscal stance for 2026. 
• “Santa Claus Rally” in Focus: The market remains in the historically strong “Santa Claus Rally” period, a seasonal tailwind that bulls are hoping will cap a remarkable year for stocks.
• Yen Gains on Hawkish BoJ, Intervention Warnings: The Japanese yen is strengthening as the BoJ’s meeting summary pointed to more rate hikes, and officials continue their verbal warnings against excessive currency moves. 
• Dollar Subdued as Fed Easing Hopes Hold: The U.S. Dollar is on the back foot as the market holds onto expectations of Fed rate cuts in 2026.
• Geopolitical Risks Simmer: Geopolitical tensions are bubbling under the surface, with renewed PLA military drills around Taiwan and ongoing discussions around a Russia-Ukraine peace deal.
• Ukraine Peace Hopes Rise on Trump Comments: A major new catalyst has emerged, with President Trump stating he is in the “final stages” of talking about a Russia-Ukraine peace deal, a potentially significant “peace dividend” moment for European assets and a headwind for oil.
• 2025: The Year of Metals: As the year closes, precious metals have been the standout performers. Silver is on track for a stunning 185% gain, while gold is up nearly 72%, both dramatically outpacing stocks and crypto. 
• Bitcoin Rebounds, but Remains Fragile: The crypto market saw a modest recovery, with Bitcoin reclaiming the $90,000 level, but the market remains on edge after last week’s sharp declines. However, the technical picture remains weak after a brutal Q4 sell-off.
• Key Events This Week: The market is looking ahead to a light but potentially impactful week, with FOMC minutes on Tuesday and the start of China’s silver export restrictions on Thursday. 

Market Overview

The final trading week of 2025 has kicked off with a bang, but not from the usual suspects but with a stunning display of volatility in the silver market. While equity markets were predictably quiet, the action was fast and furious in the silver market. A parabolic surge to new all-time highs was met with a classic response from the exchange: a margin hike. The precious metal surged to a new all-time high above $83 before being slammed down in a massive 10% reversal. The catalyst for the wild swing was a 23% margin hike from the CME Group, a move designed to curb the rampant speculation that has defined the historic rally. This “paper hands flush” is a classic feature of parabolic moves and highlights the extreme risks in the current environment. The episode, which even drew a concerned tweet from Elon Musk about industrial supply chains, is a stark reminder of the froth that has built up in the precious metals market this year. 

Index	Up/Down	%	Last
DJ Industrials	40	0.0008	48751
S&P 500	2.95	-0.0004	6926.99
Nasdaq	45	-0.0017	25600
Russell 2000	(N/A)	–	2558

Beyond the drama in silver, the broader market is in a state of quiet consolidation. The underlying narrative remains supportive for risk assets, with the market still firmly convinced that a cycle of Federal Reserve rate cuts is on the horizon. With thin liquidity and a light data calendar this week, the market is likely to drift, though the underlying bullish sentiment from the “Santa Claus Rally” period remains intact. However, significant cross-currents are developing. In China, the economy continues to struggle with deflation and a deep property crisis, a major headwind for global growth. In Japan, the Bank of Japan is on a clear path to further policy tightening, a move that could have significant ripple effects on global liquidity. With geopolitical risks still simmering and the market heading into the thinnest trading days of the year, the potential for unexpected volatility remains high.

Economic Calendar 

With U.S. markets heading into a holiday-shortened week, today’s session is light on U.S. data. The focus is on international developments and positioning ahead of the year’s end. Data Released Earlier / Overnight: 

• China Industrial Profits (Nov): Plunged -13.1% y/y, the sharpest decline in over a year, highlighting persistent deflationary pressures. 
• BoJ December Summary of Opinions: Showed policymakers remain confident in the case for further steady rate hikes. 

Today’s Economic Calendar: 

• U.S. Session: The only major release is the November Pending Home Sales report. 

Key Events This Week: 

• FOMC December Meeting Minutes (Tuesday) 
• China’s Silver Export Restrictions Begin (Thursday) 
• December S&P Global Manufacturing PMI (Friday) 
• U.S. Markets Close Early on Wednesday and are Closed on Thursday for New Year’s Day.

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

Silver was the main event, with prices first surging to a new all-time high above $83 before a CME margin hike triggered a violent 10% reversal. The move highlights the extreme volatility and speculative fervor that has gripped the precious metals market. After the 10% plunge, the price of silver has since stabilized near $76.00/oz. But the drama has been supercharged by unconfirmed reports swirling over the weekend of a systemically important bullion bank collapsing after being liquidated on a massive silver short position, potentially requiring an emergency $34 billion repo operation from the Fed. Gold also saw some profit-taking, pulling back from its recent record highs. Crude oil prices are slightly higher as progress on Ukraine peace talks appears to have stalled. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.65	0.0115	57.39
Gold	-53	-0.0116	4499.7
Silver	-1.091	-0.0141	76.105
EUR/USD	0.0007	0.0006	1.1779
USD/JPY	-0.46	-0.003	156.11
Bitcoin	2043	0.0234	89506
10-Year Note Yield	0.021	0.0051	0.04116

The U.S. dollar is starting the week on a flat note, while the yen is outperforming on hawkish BoJ signals. 

• USD/JPY: The pair is dipping below 156.20 as the yen gains ground. The BoJ’s December meeting summary reinforced expectations of continued tightening in 2026, providing strong support for the Japanese currency. 
• EUR/USD: The pair is trading in a narrow channel above 1.1750. The euro is consolidating its recent gains as traders take profits, but the broader dovish Fed narrative is likely to limit the downside. A large $1.2B options expiry at the 1.1745 level could act as a magnet today.
• GBP/USD: The pound is trading on a softer note near 1.3485. While the market is pricing in a dovish Fed, the Bank of England is also on a clear easing path, which is likely to cap the cable’s gains. 

Cryptocurrencies: After a period of extreme volatility, the crypto market is showing signs of stabilizing. Bitcoin has reclaimed the $90,000 level, participating in a modest recovery in risk sentiment. However, with the market having lost over $1 trillion in value since the October peak, the recovery remains extremely fragile. U.S. Treasury yields are slightly higher as investors adopt a cautious stance. The benchmark 10-year yield is trading around 4.13%, reflecting ongoing uncertainty about the Fed’s future policy path. 

Looking Ahead 

This week’s trading is likely to be subdued as markets wind down for the New Year holiday. With no major U.S. data on the calendar until the FOMC minutes on Tuesday, sentiment will be driven by any fresh headlines on the geopolitical front or central bank commentary. The thin liquidity of the holiday period can often lead to exaggerated price swings, and traders should remain vigilant for any unexpected news that could disrupt the quiet holiday mood, as was seen in the silver market overnight.

What to Watch Today

• The Silver Squeeze and its Aftermath: The massive volatility in silver is a major event. The CME margin hike was a classic “bubble pricking” move. Traders will be watching to see if dip-buyers emerge to defend key levels or if the unwinding of leveraged positions leads to a deeper correction. 
• The “Santa Claus Rally” in Play: The market has now officially entered the historically strong “Santa Claus Rally” period. With powerful seasonal tailwinds now in play, the path of least resistance is higher for stocks, but the thin holiday liquidity can lead to exaggerated moves. 
• China’s Deflationary Drag: The weak industrial profit data is a stark reminder of the deflationary pressures in China. This is a major headwind for global growth and commodity prices. 
• The BoJ’s Hawkish Stance: The BoJ’s commitment to policy normalization is a significant new theme for 2026. This is a major tailwind for the Yen and a potential headwind for the popular Yen-funded carry trades.
• The “Peace Dividend” Narrative: President Trump’s comments on a potential Ukraine deal are a significant new catalyst. If the market begins to price in a genuine resolution, it would be a major positive for European assets and a headwind for oil and defense stocks.