In a context marked by the uncertainty generated by the tariff tensions, a topic to which we devote several articles, in this Monthly Report we update the economic forecast scenario for 2025 and 2026. We also review the forecasts for the Spanish real estate market, which is in the midst of a boom, and evaluate the economic recovery of the province of Valencia six months after the floods.
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Amidst elevated geopolitical risks, investors traded cautiously ahead of the FOMC's meeting. The Fed left rates unchanged and still forecasts two rate cuts in 2025 (showing greater dispersion and a slightly hawkish bias than before) but signalling a slower pace of easing ahead. Powell warned that tariffs could push inflation for goods higher over the summer.
The risk-on mood triggered by trade negotiations continued to support markets but lost some steam in yesterday's session. Sovereign yields rose on the back of a hawkish reading of the ECB's meeting, while euro area and U.S. stocks posted moderate gains with a mixed sectorial performance (European banks rallied on favorable earnings and higher rates).
Global stocks rebounded and sovereign yields continued to decline as investors cemented their expectations for rate cuts ahead of the Fed's next week meeting. The USD weakened moderately across other major currencies and gold prices continued to surge.
As expected, the ECB kept interest rates unchanged (depo at 2%) and reinforced its meeting-by-meeting data-dependent strategy. Euro area sovereign yields edged higher, and equities had a mixed session across the region. On the macro front, euro area GDP grew 0.2% qoq in Q3 (1.3% yoy), up from 0.1% qoq in Q2.
Investors started the week in a mixed mood. US Treasuries rose modestly amid growing divisions within the FOMC, as Miran reiterated the need for aggressive rate cuts, citing what he described as tight financial conditions, while Goolsbee warned against easing prematurely given persistent inflation.
Risk appetite deteriorated on Thursday. Sovereign yields fell in the US after a private report (the Challenger index) showed the US economy shed more jobs than expected in October, reportedly due to AI-driven layoffs. Legal uncertainty around Trump tariffs added pressure, as Supreme Court justices questioned their validity during an ongoing hearing. The move came despite Fed officials speaking on the day pushed back against rate cuts, citing inflation risks and the lack of official data.
Markets ended Friday mixed as Fed guidance revived rate-cut bets, tempering weak sentiment in Asia and Europe. Comments from Fed Williams suggesting December interest rate cuts could align with inflation goals boosted markets' expectations for such event and drove US Treasury yields slightly down.
La economía mundial se adentra en 2026 con notables muestras de resiliencia tras la incertidumbre de 2025, pero también con grandes tendencias de fondo que plantean nuevos retos. Fenómenos como la geoeconomía de un mundo más fragmentado, el auge de la inteligencia artificial o la necesidad de acelerar la transición verde marcarán el paso del nuevo año. Al mismo tiempo, la deuda pública ha aumentado de forma generalizada en la última década y alcanza niveles históricos en muchas economías, lo que enciende alertas sobre la sostenibilidad fiscal y crea un dilema para Europa: retornar a la disciplina presupuestaria sin renunciar a inversiones estratégicas clave. En este nuevo episodio de Economía Exprés, Patricia Esteban conversa con el economista David Martínez Turégano para explicar con claridad estas cuestiones: qué nos depara 2026 en el plano económico global y cómo abordar el desafío de la deuda soberana. El resultado es un análisis divulgativo y riguroso que te ayudará a entender las claves económicas del nuevo año.
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US Treasury yields ended yesterday's session mostly flat after the large sell-off they suffered on Monday. The market-implied probability of a Fed rate cut next week continued to stand close to 100%. The Japanese 2Y yield topped 1% early this week, its highest value since 2008, on continued expectations of a rate hike in two weeks.
Donating blood, making a donation or collaborating with NGOs are common forms of solidarity throughout the world. Even a gesture as simple as giving up one’s seat for an elderly person can be considered a selfless act of kindness towards others. However, there is a lack of evidence on how often and in what way we help others. In this new Dossier of the Monthly Report – a result of the collaboration between the ”la Caixa” Foundation, CaixaBank Research and Pompeu Fabra University – we provide a snapshot of Spanish solidarity, offering an overview of the forms that altruism takes and of the donations made by Spaniards: from profiling donors and the social causes to which they give, to the charitable response to the floods in Valencia.
As expected, the Federal Reserve lowered the federal funds rate by 25bp to 3.50%–3.75%. Following the announcement, Treasury yields fell, U.S. equities advanced, and the dollar weakened, leaving EUR/USD trading near 1.17. After three consecutive rate cuts, the Fed signaled it will likely pause to assess how the economy evolves.
Financial markets continued to digest the Federal Reserve’s decision to cut interest rates. Sovereign bond yields edged lower in the euro area and were stable in the U.S., while the dollar extended its recent weakening trend, leaving EUR/USD trading near 1.175. Futures markets continued to price in two rate cuts for next year, despite a seemingly divided FOMC.
Markets ended the week lower as long-term yields surged and several Fed officials expressed their worries about inflation. Sovereign curves steepened: short-end rates eased but long and ultra-long maturities rose, after hawkish remarks from Cleveland Fed President Hammack calling for higher rates to curb inflation.
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 yesterday's session, European government bond yields broadly fell after December inflation numbers for Germany and France came in lower than expected, lowering odds of future rate hikes from the ECB. Investors will be attentive to today's release of December CPI in the euro area, looking for more hints on the rate path in the short term.
Investors ended the week on a mixed note after US December jobs data showed the unemployment rate falling to 4.4%, prompting markets to push back expectations for the next Fed rate cut from March to June. As a result, 2-year Treasury yields edged higher and the US dollar strengthened. Equities nonetheless advanced to new highs.
The Spanish tourism sector enters 2026 from a position of strength, with a positive outlook after the stabilisation of post-pandemic growth. In 2025, Spain consolidated its global leadership with 97 million international arrivals and record spending of €135 billion, ranking second worldwide. Tourism GDP grew by 2.7% and is expected to maintain a growth rate of around 2.5%-2.7% in the coming years. This scenario reflects a more balanced sector, marked by the diversification of destinations and deseasonalisation of demand. In addition, luxury tourism is positioned as a strategic segment to boost the sector's added value, and silver tourism is expected to deseasonalise demand and drive the growth of rural destinations. Moreover, the restaurant/catering sector will require a higher degree of professionalisation and more scalable business models to improve its resilience.
On Friday, the Japanese yen strengthened sharply after the Bank of Japan left its policy rate at 0.75% and signaled a hawkish stance. Speculation around potential currency intervention intensified after New York Fed officials reportedly sought information on the yen’s exchange rate, and Prime Minister Takaichi warned of action against “abnormal” market moves.
Investors kicked off the week on a cautious footing, ahead of the ECB’s meeting later this week, which is widely expected to leave interest rates unchanged (depo rate at 2%), while markets continued to digest Kevin Warsh’s nomination to replace Jerome Powell as Fed Chair. Sentiment was also weighed by the sharp sell-off in precious metals that began late last week.