Closing Recap

U.S. stocks finished the week on a high note, shaking off a rocky start to stage a strong Friday rally. The “Santa Claus Rally” narrative took center stage as the S&P 500 (+0.88%) and Nasdaq (+1.31%) recovered from mid-week volatility triggered by rumors of Oracle/OpenAI delays. Despite a 10% drop in Nike (NKE) following earnings, broader market breadth was robust (9:5 favoring advancers), fueled by cooler CPI data and “window dressing” from fund managers closing out 2025. The Fear & Greed Index shifted from “Fear” back to “Neutral” (46/100), suggesting sentiment is stabilizing just in time for the holiday window. 

Key Takeaways 

• Stocks Recover to Finish Strong: After a rocky start driven by earnings jitters (Nike, FedEx), U.S. stocks staged a late-week recovery. The S&P 500 (+0.88%) and Nasdaq (+1.31%) both posted gains, with the S&P closing within 25 points of its all-time high.
• Santa Rally Signal: History favors the bulls; the S&P 500 has never posted three consecutive negative “Santa Rally” periods in 56 years. The window officially opens next week. 
• The Oracle Scare: Tech wobbled mid-week on a Bloomberg report (later denied) of OpenAI data center delays, but buyers stepped in Friday. 
• BOJ Hikes, Yen Dives: The Bank of Japan raised rates to 0.75% (highest in 30 years), yet the Yen weakened sharply (USD/JPY +1.21% to 157.72) on a “dovish hike” signal, as markets digest the narrowing rate gap between the US and Japan. 
• Silver Super-Spike: Silver is ending 2025 in a frenzy, pushing into the $67/oz range (+1.97 Friday) amid a tight physical market and rate cut bets. The metal is being driven by Fed cut bets, tight physical supply, and massive ETF inflows, continuing its historic outperformance of gold.
• Trump on Rates: President-elect Trump stated interest rates should be “1% or lower,” floating Kevin Warsh or Kevin Hassett as potential Fed Chair picks. 
• Bitcoin Repair Mode: After volatility around the CPI release, Bitcoin stabilized near $88,000, with analysts at Citi projecting a potential rise to $143,000 over the next 12 months despite the recent bear market trend.
• Oil Geopolitics: WTI Crude climbed to $56.52 as the US imposed a blockade on Venezuelan tankers, adding a geopolitical risk premium. 
• UK Weakness: GBP/USD slipped below 1.3400 after UK Retail Sales missed estimates, signaling the BoE rate cut was justified.
• Week Ahead Focus – The Holiday Lull: A shortened holiday week features the US Q3 GDP 2nd Estimate (Tue) and Tokyo CPI (Fri), but liquidity will dry up significantly as traders break for Christmas.

Looking Ahead 

The “vibe” for next week is defined by the “Santa Claus Rally” phenomenon. We are entering the statistically strongest window of the year (last 5 trading days of Dec + first 2 of Jan). With the S&P 500 up +15% YTD, institutional “window dressing” is in full effect—fund managers need to show they own the winners. However, liquidity will be critically thin due to the holiday shortened week (Markets closed Dec 25). This creates a “Flash Crash” risk environment where headlines regarding the US/Venezuela naval blockade or AI valuation jitters could cause outsized moves.

Weekly Market Overview Narrative: The Bulls Are In Control Heading Into Christmas 

The bulls successfully defended the trend this week, shaking off early wobbles from disappointing guidance by Nike and FedEx. By Friday, the “Santa Rally” narrative took hold, driven by institutional window dressing and a “Fear of Missing Out” (FOMO) as the S&P 500 approaches its record highs. The index has now risen for 9 of the last 10 days, fueled by growing confidence that the Federal Reserve will continue cutting rates in 2026 to support a softening labor market.

Index	Last Price	Daily Change	Daily Change %
DJ Industrials	48135	182.73	0.0038
S&P 500	6835	59.95	0.0088
Nasdaq	23308	301.26	0.0131
Russell 2000	2529	21.58	0.0086

Sentiment has shifted remarkably from “Extreme Fear” just last month to “Neutral/Greed” today. With retail asset allocation in stocks at 20-year highs (approx. 70%), the market is positioned aggressively. While 2026 is historically a weaker year in the Presidential cycle (“Year 2”), Goldman Sachs remains constructive, forecasting a 13-15% return driven by earnings growth. For now, the path of least resistance appears higher, provided liquidity conditions don’t trigger a flash crash during the holiday lull.

Economic Data Calendar (Week of Dec 22) 

The final full week of the year is shortened by the Christmas holiday. Calendar A holiday-shortened week with a focus on delayed US GDP data and Japanese inflation. 

MON (Dec 22): UK GDP & China Policy 

• Event: UK Q3 GDP (Final). 
• Context: After weak retail sales, a GDP miss could further pressure the Pound. Also, watch China’s National People’s Congress (Dec 22-27) for stimulus/trade law updates. 
• UK Q3 GDP (Final): A final look at British economic growth, expected to confirm a sluggish 0.1% QoQ expansion. 
• China NPC Standing Committee: A week-long meeting begins, potentially offering clues on legislation regarding trade and national planning.

TUE (Dec 23): US GDP & RBA Minutes 

• Event: US Q3 GDP (2nd Estimate) & Durable Goods. 
• Expectation: GDP annualized growth of 3.2%. 
• Context: This is the last major US data point of the year. Any deviation from the “Soft Landing” narrative (3.2%) will move markets in thin liquidity. 
• RBA Meeting Minutes: Traders will look for clues on the RBA’s pivot strategy for 2026.

WED (Dec 24): Christmas Eve 

• US Markets Close Early: Stock and bond markets will close early for Christmas Eve (1:00 PM ET). 
• Liquidity will be non-existent. 

THU (Dec 25): Christmas Day 

• Christmas Day: Markets Closed Globally.
• BOJ Governor Ueda speaks (risk for JPY crosses). Any hawkish comments could inject volatility into thin holiday markets for the Yen.

FRI (Dec 26): Tokyo Inflation (Boxing Day) 

• Event: Tokyo CPI (Dec). Expectation: 2.7%. 
• Context: Following the BOJ rate hike, hot inflation data here could arrest the Yen’s recent slide.
• Tokyo CPI (Dec): A critical release for the Yen. Inflation is expected to moderate to 2.7%, but a hot print could fuel bets on further BoJ hikes in Q1 2026. 
• Japan Industrial Production/Retail Sales: A data dump assessing the health of the Japanese economy post-stimulus announcement.

Asset Class Spotlight: Commodities, Currencies, Crypto & Treasuries

In commodities, Silver was the undisputed star, pushing into the $67 range. Silver has decoupled from the pack, entering a parabolic ‘new regime’ at $67/oz. It is being driven by a perfect storm of ETF flows, Fed cut bets, and tight physical supply. Gold also shone, rising 0.52% to $4,387, supported by the U.S. blockade of Venezuelan tankers and continued central bank buying. Gold also found support from implied 2026 rate cut expectations (the market currently sees rates at ~3.03% by Dec ’26). WTI Crude rose nearly 1% to $56.52, finding a floor on geopolitical tensions despite broader demand concerns.

Asset	Last Level	Friday’s Change	Unit / % Change
WTI Crude	56.52	0.52	USD/bbl (+0.93%)
Brent Crude	60.47	0.65	USD/bbl (+1.09%)
Gold (Feb)	4387.3	22.8	USD/oz (+0.52%)
Silver	67.00+	1.97	USD/oz (Record Highs)
EUR/USD	1.1714	-0.0015	Rate (-0.26% Wk)
USD/JPY	157.66	2.01	Rate (+1.21%)
10-Year Note	0.04151	0.035	Yield (%)
Bitcoin	88207	0.007	USD

The currency market was defined by the Bank of Japan’s hawkish move and the resulting volatility in the Yen. 

• USD/JPY: The move of the week. The pair experienced a volatile week, initially breaking below 155.00 before surging to a one-month high of 157.72 following the BoJ’s rate hike to 0.75%. The pair closed the week up significantly (+1.21%). Despite the BOJ hiking rates to 0.75% (a hawkish move on paper), the pair jumped to 157.72. While the hike supports the Yen fundamentally, the “buy the rumor, sell the fact” reaction combined with U.S. economic resilience kept the pair elevated. Yields in Japan rose, but the Yen collapsed.
•  EUR/USD: The pair snapped a three-week winning streak, closing down 0.26% at 1.1714. The Euro struggled after the ECB held rates steady but offered no hawkish surprises, while U.S. inflation data (CPI) came in cooler than expected at 2.7%, creating a mixed picture for the dollar. 
• GBP/USD: Sterling finished effectively flat (+0.04%) at 1.3376. The Pound was weighed down by disappointing Retail Sales data (-0.1% MoM), which highlighted the cost-of-living squeeze even after the Bank of England’s recent rate cut.The BoE cut rates (5-4 vote), and subsequent weak Retail Sales data has capped upside. The divergence between a cutting BoE and a “pause-likely” Fed is weighing on the pair.

Bitcoin remains the wildcard. After plummeting earlier in the month, it has found stability around $88,000. Institutional interest remains, but the asset is currently decoupling from the broader risk-on rally in equities as it digests the recent $1 trillion market wipeout. The $23B crypto options expiry has passed, which often clears the deck for a directional move. With liquidity thinning, Bitcoin is susceptible to macro headlines. On the bond side, the 10-year yield rose to 4.151%, signaling that the bond market isn’t fully buying the “aggressive cuts” narrative from the Trump camp yet.

What to Watch Next Week 

• The “Santa Rally” Trade: The stats are overwhelming: The S&P 500 has never had three consecutive red Santa windows. With 2023 and 2024 being red, 2025 is statistically primed for green. The strategy is Trend Following—do not try to be a hero and short the indices this week. Watch for end-of-quarter “window dressing” to bid up year-to-date winners (AI & Semis). 
• The “Santa Rally” Execution: With institutional managers looking to “window dress” their portfolios before year-end, the bias is to the upside. However, traders should be wary of low-volume “melt-ups” or sudden reversals. The statistical anomaly suggests a green finish to the year is highly probable.
• The Liquidity Vacuum (Flash Crash Risk): With most desks empty for Christmas, volume will be low. This makes the market dangerous. Headlines regarding the US/Venezuela blockade could trigger outsized moves in Oil and Gold. If WTI spikes, it could spook the equity market in a low-volume environment. 
• The Yen Reversal? The market reaction to the BOJ hike (selling the Yen) was extreme. At 157.66, USD/JPY is approaching the psychological 160.00 danger zone. Watch for any comments from Japanese officials regarding intervention, or for Friday’s Tokyo CPI to surprise to the upside, which could trigger a sharp reversal of Friday’s Yen weakness.
• 2026 Positioning: As the week winds down, attention will shift entirely to 2026 themes: The Supreme Court tariff ruling in January and President Trump’s pick for Fed Chair. These are the twin pillars of uncertainty that will define Q1.