Closing Recap 

U.S. stocks finished broadly higher on Monday, kicking off the holiday-shortened Christmas week on a positive note. The major indices advanced in a low-volume session, with small caps outperforming as the Russell 2000 gained over 1%. The rally was driven by continued optimism that the Federal Reserve will cut interest rates in 2026, a narrative supported by a weaker U.S. dollar. Financials, Materials, and a rebound in the Energy sector led the gains, while defensive Staples lagged. The CBOE Volatility Index (VIX) tumbled to near 52-week lows, reflecting the market’s calm and bullish mood. Precious metals were the standout performers, with both gold and silver surging to new all-time highs on a combination of dovish Fed bets and safe-haven demand. 

Key Takeaways 

• Broad Rally Kicks Off Holiday Week: U.S. stocks started the Christmas week with solid gains, with small caps and cyclical sectors leading the advance in a low-volume session. 
• Gold and Silver Hit New Stratospheric Highs: The rally in precious metals has gone into overdrive. Gold has surged to a new all-time high just shy of $4,500, and Silver has also hit a new record, smashing through the $70 level, driven by dovish Fed bets and safe-haven demand.
• Fed Commentary Remains Mixed: Fed Governor Miran reiterated his call for more rate cuts to avoid a recession, while other officials like NY Fed President Williams have recently struck a more cautious tone, highlighting the ongoing debate within the central bank. 
• Fed Chair Announcement Looms: A major new catalyst has emerged, with reports that President Trump could name the next Federal Reserve Chair as early as the first week of January, a critical event for markets.
• Yen Strengthens on Heightened Intervention Warnings: The Japanese yen was the top-performing G10 currency, with USD/JPY falling below 156.00 as Japanese officials escalated their verbal warnings against “one-sided” and “sharp” currency moves. 
• Dollar Weakens 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, despite some hawkish commentary from officials.
• Oil Bounces: WTI Crude Oil is bouncing over 2.6% on geopolitical supply risks after the U.S. intercepted a Venezuelan oil tanker.
• Data Deluge Looms Tuesday: The market is bracing for a heavy slate of delayed U.S. economic data on Tuesday, including Q3 GDP, Consumer Confidence, and PCE prices, which will be critical for the Fed’s outlook. 
• The “Santa Claus Rally” Officially Begins: Today marks the start of the historically strong “Santa Claus Rally” period. This 7-day window is statistically the most likely to be positive for stocks, with the S&P 500 rising 77% of the time.
• Crypto Rebound Stalls: After a weekend recovery, the rebound in the crypto market stalled, with Bitcoin slipping back below $88,000 as traders remain cautious. A key headwind is news that the largest corporate holder, Strategy Inc., has paused its Bitcoin purchases and is raising cash reserves.

Market Overview

Wall Street is starting the final full trading week of the year in a festive and bullish mood. The final full trading week of 2025 is starting with the bulls firmly in control. U.S. equities advanced across the board on Monday, extending the powerful rally that began after the Fed’s dovish pivot last week. The session was a classic low-volume holiday affair, but the underlying trend remains clearly positive. The outperformance of small caps and cyclical sectors like financials and materials is an encouraging sign of broadening market participation, suggesting that the rally is expanding beyond just the mega-cap tech names. The VIX tumbling to near 52-week lows further underscores the lack of fear in the market. The primary driver of this bullish sentiment remains the Federal Reserve. 

Index	Up/Down	%	Last
DJ Industrials	227.79	0.0047	48362
S&P 500	43.99	0.0064	6878
Nasdaq	121.21	0.0052	23428
Russell 2000	29.36	0.0116	2558

Despite some mixed commentary from officials over the weekend, the market is steadfast in its belief that a cycle of rate cuts is coming in 2026. This has put significant pressure on the U.S. dollar and provided a powerful tailwind for risk assets and commodities. The most spectacular moves have been in precious metals, with both gold and silver exploding to new all-time highs. However, the market’s conviction will be put to a serious test today with the release of a deluge of long-delayed U.S. economic data. These reports will provide the first clear look at the economy’s health in months and could dramatically reshape the narrative heading into the new year.

Economic Calendar 

With U.S. markets heading into a holiday-shortened week, today’s session is packed with a backlog of important economic data releases. Data Released Earlier / Overnight: 

• RBA Meeting Minutes: Revealed a more hawkish tone, with the board discussing conditions under which rate hikes could be considered in 2026, providing support for the AUD. 
• German November Import Prices: Showed a sharp -1.9% y/y decline, highlighting disinflationary pressures in Europe’s largest economy. 

Today’s Economic Calendar: U.S. Markets Close Early on Wednesday and are Closed on Thursday for Christmas. 

• U.S. Data Deluge (Starting at 8:30 AM ET): 
• Q3 GDP (Advance Estimate) 
• Q3 PCE Prices (Advance Estimate) 
• October Industrial Production & Capacity Utilization 
• December Consumer Confidence 
• October New Home Sales 

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

The big story is the explosive, ongoing rally in precious metals. Precious metals are stealing the show, with both gold and silver surging to new all-time highs. February gold settled up 1.87% at a record $4,469.40 an ounce, while silver hit an intraday peak of nearly $70. The rally is being fueled by a powerful combination of dovish Fed bets and safe-haven demand from rising geopolitical tensions. Crude oil prices also rallied, with WTI gaining over 2.6% on supply disruption fears after the U.S. intercepted a Venezuelan oil tanker.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	1.49	0.0264	58.01
Gold	82.1	0.0187	4469.4
EUR/USD	0.0041	0.0035	1.1749
USD/JPY	-0.76	-0.0048	156.98
Bitcoin	-1200	-0.011	87815
10-Year Note Yield	0.02	0.0048	0.04171

The U.S. dollar is starting the shortened Christmas week on the back foot, while the yen is outperforming on heightened intervention warnings. 

• USD/JPY: The yen is the main mover, with the pair sliding below 156.00 after Japan’s top currency diplomat and Finance Minister escalated their verbal warnings against “one-sided” and “sharp” currency moves. 
• EUR/USD: The pair is extending its gains for a second day, trading around 1.1780. The euro is benefiting from broad dollar weakness and a stable ECB outlook, as it enters a historically bullish period. 
• GBP/USD: The pound rallied to a ten-week high, with GBP/USD climbing back above 1.3450 as the weaker U.S. dollar overpowered domestic concerns. 
• CHF (Swiss Franc): The franc is in focus after MUFG warned that the SNB could be forced to reintroduce negative interest rates if the currency remains strong. 

Cryptocurrencies: After a weekend recovery attempt, the rebound in the crypto market has stalled. Bitcoin fell back below $88,000 on Tuesday as traders remained cautious ahead of the week’s key U.S. economic data. The recent pause in purchases by major corporate holder MicroStrategy is also being watched closely. 

U.S. Treasury yields were slightly higher as investors adopted a cautious stance. The benchmark 10-year yield is trading around 4.17%, reflecting ongoing uncertainty about the Fed’s future policy path. 

Looking Ahead 

Today’s trading will be dominated by the release of a heavy slate of delayed U.S. economic data. These reports will provide the first comprehensive look at the U.S. economy in months and have the potential to significantly impact the market’s dovish Fed narrative. Stronger-than-expected data could challenge the market’s conviction and lead to a reversal in the dollar and a pullback in stocks. Conversely, weak numbers would all but guarantee further easing from the Fed and could fuel the next leg higher for the “Santa Claus Rally.” With liquidity set to dry up for the holiday, traders should be prepared for a volatile session.

What to Watch

• The Data Deluge is Here: This is the main event. After weeks of flying blind, the market will finally get a flood of delayed economic data. Today’s Q3 GDP and PCE reports will be critical in confirming or denying the dovish narrative that is currently driving markets. Expect significant volatility. 
• The “Santa Claus Rally”: 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 backlogged data is a major wildcard. 
• The Yen’s Intervention Risk: The verbal intervention from Japanese officials has clearly escalated. With the market on high alert for physical intervention, any sharp, disorderly moves in the Yen could be met with a swift and powerful response. 
• The Precious Metals Parabola: The moves in Gold and Silver are historic but are also becoming extremely extended. While the underlying fundamentals are strong, the risk of a sharp, violent pullback on profit-taking is very high.
• The Fed Chair Announcement Looms: The report that President Trump could name the next Fed Chair as early as the first week of January is a major new catalyst. The market will be on high alert for any leaks or official announcements, as the choice will have significant implications for monetary policy.