Financial Markets Update 19 December 2025
Only the Bank of Japan left
News Overnight
Bank of England cuts 25bps
The Bank of England’s Monetary Policy Committee (MPC) voted 5-4 to cut the Bank Rate by 0.25 percentage points to 3.75%. This decision reflects ongoing efforts to manage inflation, which stood at 3.2% in November 2025—above the 2% target—but is projected to near 2% by Q2 2026. The MPC cited a weakening jobs market with unemployment at its highest since 2021, slowing pay growth, and a revised forecast of zero GDP growth in Q4 2025 (down from 0.3%). Officials signalled caution on further rate cuts, emphasising gradual reductions dependent on easing wage and services inflation.
European Central Bank holds
The European Central Bank’s Governing Council decided to keep its three key interest rates unchanged, with the deposit facility rate at 2.00%. Updated projections show headline inflation averaging 2.1% in 2025 (up from prior estimates), 1.9% in 2026, 1.8% in 2027, and 2.0% in 2028, while core inflation is forecasted at 2.4% in 2025. Economic growth outlook was upgraded to 1.4% for 2025, driven by stronger domestic demand, with the ECB signalling a data-dependent approach and no pre-commitment to further rate changes.
Finally US November CPI was released, or at least some of it. Numbers showed a big drop in YoY and although markets rallied, no-one believes that these numbers are accurate.
Breaking
Economists warn of flaws in US inflation report [FT]
Trump Praises Waller and Bowman, Says Fed Pick Coming in Weeks [Bloomberg]
Stocks Stage Comeback as CPI Fuels Treasury Gains: Markets Wrap [Bloomberg]
JPMorgan Is Bank Behind The Repo Crisis And The Fed’s Decision To Launch QE Lite... Again [Zerohedge]
Putin’s retaliation threat over frozen assets rattles EU capitals [FT]
For Free Subscribers
AUD/USD Update 19 December 2025
The next big direction for the USD is most clear in AUD/USD. Since July price has been glued to the 15 year downtrend line. We thought a weak USD would move price significantly away from the line. But it hasn’t.
Dow Jones Update 19 December 2025
The S&P 500 and NASDAQ rallied as US CPI came in significantly lower than expected. However traders and economists were, like lightning striking twice, in agreement that the numbers were totally cooked. What a disgrace!
For Paid Subscribers
Bitcoin Update 19 December 2025
For the second day in a row a big rally was squashed leaving big wicks on the upside. The selling is relentless and price action is telling me there is a really big seller(s) on top.
German 10 Year Yield Update 19 December 2025
Rates have jumped in the EU as the colossal task of re-arming Europe for the battle against Russia, is assessed financially. Post COVID 3% has been the high in 10 year Bund yields and now that’s in clear view.
Economic Indicators Today
