Financial Markets Daily Report19 December 2025
Markets rallied on Thursday as US inflation eased more than expected in November (2.6% vs. 3.0% YoY), boosting risk appetite. The moderation may partly reflect delayed data collection due to the recent government shutdown. Separately, initial jobless claims fell by 13,000 last week. Treasury yields dropped and investors' rate-cut expectations for the Fed remained broadly unchanged.
In Europe, sovereign yields also retreated after the ECB held rates and upgraded its growth outlook. Inflation is projected below 2% through 2027, returning to target in 2028. Investors' expectations, according to implicit money market rates, see the ECB keeping rates steady through 2026.
Equity indices closed higher on both sides of the Atlantic, and volatility eased following the CPI release. The euro and the dollar weakened and the yen firmed ahead of todays BoJ’s rate hike. Oil prices were flat amid concerns of a market surplus.