Closing Recap 

U.S. stock futures are pointing to a slightly higher open on Monday, kicking off the final full trading week of the year on a positive note. The mood is cautiously optimistic as investors look ahead to a holiday-shortened schedule, with markets supported by firm expectations of Federal Reserve rate cuts in 2026. Last week, the S&P 500 closed out its third consecutive year of gains, and historical data suggests a “Santa Claus Rally” could be in the cards. 

In currency markets, the Japanese yen is a notable outperformer, strengthening after officials escalated their verbal warnings against excessive currency moves. Precious metals are a clear bright spot, with both gold and silver surging to new all-time highs on a combination of safe-haven demand and dovish Fed bets. Crude oil is also finding a bid on rising geopolitical tensions. 

Key Takeaways 

• Futures Point to Cautious Open: U.S. stock futures are slightly higher, but with markets heading into a holiday-shortened week, volumes are expected to be subdued. 
• “Santa Claus Rally” in Focus: Historical data shows a strong tendency for stocks to rise in the final days of December, a pattern bulls are hoping will repeat to cap a strong three-year run for the S&P 500. 
• Gold and Silver Hit New All-Time Highs: Precious metals are surging on a perfect storm of dovish Fed bets, geopolitical jitters, and a softer U.S. dollar, with silver hitting a record above $69 and gold pushing past $4,400. 
• Yen Gains on Heightened Intervention Warnings: The Japanese yen is strengthening after Japan’s top currency diplomat warned of “appropriate actions” against “one-sided and sharp” moves, nudging USD/JPY lower. However, a massive new stimulus package and a dovish BoJ are major headwinds for the currency.
• Crypto Remains Worst-Performing Asset of 2025: Despite a modest weekend bounce, cryptocurrencies are on track to be the worst-performing asset class of the year, with Bitcoin still down YTD. 
• Fed Leadership and Data in Focus: The market is watching for President Trump’s choice for the next Fed Chair and awaits a final batch of delayed U.S. data to gauge the policy outlook for 2026. 
• Geopolitical Tensions Support Oil: Crude oil prices are higher as the U.S. intercepted a Venezuelan oil tanker and tensions between Israel and Iran remain elevated, rebuilding a modest risk premium. 
• Bullish S&P 500 Targets for 2026 Emerge: Despite recent volatility, major Wall Street banks like Oppenheimer and Deutsche Bank are rolling out very bullish 2026 targets for the S&P 500, with some calling for a move to 8,100, citing strong AI-driven earnings growth. 
• Crypto Remains the Worst Performing Asset in 2025: In a stark divergence from traditional markets, cryptocurrencies have been the worst-performing asset class this year, with Bitcoin down 6% and altcoins down over 40%.

Market Overview 

The final full trading week of 2025 is starting on a quiet but cautiously optimistic note. U.S. stock futures are modestly higher, suggesting that the bullish momentum that has defined the market for three straight years has not yet faded. The primary driver of this positive sentiment remains the Federal Reserve. After a dovish pivot, the market is now firmly convinced that a cycle of rate cuts is coming in 2026, a narrative that is providing a strong tailwind for risk assets. With the S&P 500 having already logged impressive double-digit gains for three consecutive years, investors are now looking to the historically strong “Santa Claus Rally” period to provide a final boost to cap the year. However, the path forward is not without risks. In a hawkish weekend interview, Cleveland Fed President Beth Hammack pushed back against dovish expectations, a reminder that the Fed’s path is not set in stone. 

Index	Up/Down	%	Last
DJ Industrials	119	0.0025	48254
S&P 500	30.11	0.0044	6864.61
Nasdaq	153	0.006	25499
Russell 2000	(N/A)	–	2507

The tech sector, the market’s undisputed leader, remains under scrutiny over stretched valuations. Geopolitical tensions are also simmering, with renewed hostilities between Israel and Iran and a brewing conflict between the U.S. and Venezuela providing a bid for safe-haven assets and oil. The most significant development is in the currency market, where Japanese officials are becoming more aggressive in their attempts to support the yen, raising the risk of a disorderly market reaction.

Economic Calendar 

With U.S. markets heading into a holiday-shortened week, today’s session is expected to be quiet, with no major U.S. data releases scheduled. Data Released Earlier / Overnight: 

• UK Q3 Final GDP: Confirmed at +0.1% q/q, in line with estimates, showing a stagnating economy. 

Today’s Economic Calendar: 

• U.S. Markets Close Early on Wednesday and are Closed on Thursday for Christmas. 
• European Session: An extremely light calendar with no major data releases. 
• U.S. Session: The U.S. data calendar is empty. 

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

Precious metals are stealing the show, with both gold and silver surging to new all-time highs. Spot gold jumped 1.4% to a record above $4,400 an ounce, while spot silver rallied over 3% to a peak of $69.45. The rally is being fueled by a powerful combination of dovish Fed bets and safe-haven demand from rising geopolitical tensions. Crude oil prices are also higher, with WTI gaining over 1% as the U.S. intercepted a third Venezuelan oil tanker, adding to supply disruption fears. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.59	0.0104	57.11
Gold	61	0.0139	4448.3
EUR/USD	0.0022	0.0019	1.1732
USD/JPY	-0.3	-0.0019	157.46
Bitcoin	519	0.0059	89024
10-Year Note Yield	0.014	0.0034	0.04166

The U.S. dollar is starting the week on a slightly softer note, while the yen is outperforming. 

• USD/JPY: The yen is the main mover, with the pair slipping towards 157.25 after Japan’s top currency diplomat escalated his verbal intervention, warning of “appropriate actions” against “sharp” moves. 
• EUR/USD: The pair is trading with a mild positive bias around 1.1720, benefiting from the softer U.S. dollar and a stable ECB outlook. The technical picture is bullish, with the pair holding above its ascending channel.
• GBP/USD: The pound is trading in a tight range around 1.3410. While dovish Fed expectations are supportive, the market has fully priced in a BoE rate cut in June 2026, 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 is trading around the $89,000 level, attempting to find a floor after the recent sharp declines. However, on a year-to-date basis, crypto remains the worst-performing asset class, with Bitcoin still down for the year. U.S. Treasury yields are slightly higher as investors adopt a cautious stance. The benchmark 10-year yield is trading around 4.16%, 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 Christmas holiday. With no major U.S. data on the calendar, sentiment will be driven by any fresh headlines on the Fed leadership transition, geopolitical developments, or central bank commentary. While the historical odds favor a “Santa Claus Rally,” 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.

What to Watch

• The “Santa Claus Rally” Has Begun: The market has now entered the historically strong “Santa Claus Rally” period. With the S&P 500 having posted gains in 16 of the last 20 Christmas weeks, seasonal tailwinds are firmly in the bulls’ favor. 
• The Fed Leadership Question: President Trump’s impending decision on the next Fed Chair is a major source of uncertainty. The market is on edge, as the choice will have significant implications for the path of monetary policy in 2026 and beyond. 
• The AI Boom vs. Bubble Debate: Goldman Sachs’s analysis comparing the current AI boom to the 1997-98 period provides a bullish framework. This narrative will be a key theme for the remainder of the year and will be heavily influenced by any further signs of froth or fundamental weakness in the tech sector.
• The Crypto Crash Aftermath: After a brutal sell-off that has seen Bitcoin erase all of its 2025 gains, the key question is whether this is a healthy correction or the start of a prolonged bear market. The lack of institutional inflows and the bearish technicals are major headwinds.