The Saxo Weekly Market Compass
8 December 2025 (recap week of 1–5 December 2025)

Where markets have been — and where they’re heading.

Headlines & introduction

Soft-landing hopes meet higher yields
 
The first week of December opened on a cautious tone as weak US manufacturing data, a sharp early-week bitcoin sell-off and firmer volatility led investors to trim risk. Sentiment improved later as softer US inflation, resilient services activity and mixed but stable labour indicators supported the soft-landing narrative. Europe saw rotation into autos and banks, while Asia balanced China concerns with renewed momentum in Hong Kong tech and consumer names.

Market pulse: investors ended the week more confident about a December Fed cut, yet more aware that global yields may stay higher for longer.

Equities

Tech pauses as cyclicals and Europe’s autos and banks take the lead

• United States:
  US equities delivered a volatile but constructive week. The S&P 500 fell 0.5% on Monday as weak ISM manufacturing, a bitcoin slump and higher equity volatility set a cautious tone. Early pressure in mega-caps such as AAPL, AMZN, GOOGL and INTC gave way to mid-week rebounds in AI and software names, with NVDA, META, CRM and PLTR supported by firmer services-sector data. Individual moves stood out: BA and INTC jumped more than 8–10% on Tuesday, while later in the week INTC, AMZN and AAPL came under renewed selling as Treasury yields drifted back toward 4.1%. Softer core PCE inflation (+0.2% MoM) and improving consumer sentiment stabilised overall sentiment into Friday.
• Europe and the rest of world: 
  European markets gathered momentum after a muted start. Autos and banks led decisively, with Stellantis rising 7.7% mid-week, Mercedes Benz, BMW and Volkswagen all climbing more than 3%, and Santander, BNP Paribas and BBVA advancing as stable ECB expectations supported rate-sensitive sectors. Retail strength was visible through Inditex, which gained 8.9% on strong earnings. Earlier pressure in European industrials and defence, including Airbus, Rheinmetall, Rolls-Royce and BAE Systems, faded as the week progressed. Across local markets, the AEX benefitted from chip-equipment strength via ASML, the BEL 20 improved modestly with support in financials, and Nordic indices such as the OMXC25 showed moderate gains. In Asia, Japan’s Nikkei advanced with tech and SoftBank, while Hong Kong’s Hang Seng fluctuated between China property concerns and renewed tech optimism, ending slightly higher.

Market pulse: equity leadership broadened beyond US mega-cap tech, with cyclicals, European autos and banks playing a larger role in weekly gains.

Volatility

Surface calm ahead of the Fed

Volatility firmed early in the week as the VIX pushed back into the high teens, reflecting Monday’s risk-off tone, before easing consistently as equities stabilised. By Friday, the VIX sat in the mid-15s, with short-dated VIX1D and VIX9D signals subdued, showing persistent demand for insurance rather than fear. SPX options into the 5 December expiry priced roughly ±1.1%, while the curve into the 12 December post-FOMC expiry implied a ±1.3% move. Skew remained modestly negative, with puts still trading at a premium to calls.

Market pulse: implied volatility is calm, but pricing leaves little room for policy surprises.

Digital assets

Crypto steadies after a sharp reset

Bitcoin began the week under pressure, briefly falling below USD 84,000, before rebounding toward USD 92,000–93,000. Ether climbed above USD 3,100–3,200 after the Fusaka upgrade improved network efficiency. ETF flows mirrored spot volatility: IBIT and ETHA saw early-week outflows before recovering alongside the underlying coins. Options activity tilted toward income-generating structures, with covered calls and put-writing across COIN and selected miners, while long-dated upside call structures in IBIT and MicroStrategy indicated constructive but risk-managed positioning.

Market pulse: the crypto complex is in rebuilding mode, favouring structured exposure rather than outright directional risk.

Fixed income

Japan leads the global yield repricing

Japanese government bonds were again the focal point, with 10-year JGB yields approaching 2% and 2-year yields making fresh cycle highs as markets increasingly priced a Bank of Japan rate hike on 19 December. US Treasuries traded within narrow but upward-sloping ranges, with the 10-year around 4.1% and the 2-year between 3.5–3.6%, as softer core PCE inflation offset concerns about rising long-term supply. In Europe, the German 10-year Bund yield climbed toward 2.8%, testing the upper end of its multi-month range as investors reassessed how quickly ECB policy may ease in 2026.

Market pulse: bond markets continue adjusting to a higher-for-longer backdrop, with Japan’s shift acting as the global volatility anchor.

Commodities

Silver surges, natural gas breaks out

Silver briefly surged above USD 59 per ounce following tight-inventory narratives and short-covering flows, before pulling back into the USD 58 area. Gold lagged, trading within a well-defined range below USD 4,245, signalling hesitancy despite softer yields. In energy, US natural gas futures moved above USD 5 per MMBtu for the first time since 2022 due to cold-weather forecasts, while Brent and WTI held modest gains as geopolitical risks in the Black Sea and Venezuela offset concerns over ample supply. Copper remained supported by electrification-driven demand and supply constraints.

Market pulse: commodity markets show pockets of tightness, but broad conditions remain orderly.

Currencies

Dollar softens; yen and loonie take centre stage

The US dollar weakened over the week as markets leaned toward another Fed cut, with EURUSD pushing above 1.1650. The yen remained volatile: USDJPY dipped toward 155.00 on BoJ tightening chatter before retracing as Japan’s weak consumption data tempered hawkish expectations. Sterling outperformed after key technical levels broke in GBPUSD and EURGBP, while the Canadian dollar rallied sharply after a surprise drop in unemployment to 6.5%, which pushed front-end Canadian yields higher and sent USDCAD down more than 1%.

Market pulse: USD softness is broadening, but idiosyncratic stories in JPY, GBP and CAD are driving relative FX performance.

Key takeaways

• Fed cut expectations strengthened despite firmer long-term yields.
• US mega-cap tech paused as leadership widened into cyclicals and European autos and banks.
• Volatility drifted lower; skew signals steady demand for protection.
• Bitcoin and ether stabilised after sharp swings; ETF flows favoured structured exposure.
• JGB yields moved toward multi-decade highs, anchoring global fixed-income volatility.
• Silver neared record levels; natural gas broke above USD 5 on weather risks.
• USD softened; JPY and CAD were driven by central-bank expectations and labour data.

Looking ahead (week of 8–12 December 2025)

Fed, Powell and AI-heavy earnings dominate the calendar

The Federal Reserve’s final meeting of the year is the centrepiece. Markets widely expect a third consecutive 25 bp cut, bringing the policy rate to 3.5–3.75%. With economic data still partially delayed by the US government shutdown, Chair Powell’s press conference becomes the main source of guidance on the trajectory for labour markets, inflation persistence and the pace of easing in 2026. Updated projections and the dot plot may challenge current market pricing if policymakers signal a shallower easing path.

Corporate earnings add an important layer. AutoZone reports Tuesday, followed by Oracle, Adobe and Synopsys on Wednesday, offering insight into AI infrastructure demand and enterprise software budgets. Thursday brings Broadcom, Costco and Lululemon, with retail and semiconductor trends in focus. Macro data releases — including job openings, jobless claims, trade balance and the federal budget — will help refine expectations ahead of year-end positioning.

Market pulse: the week is dense with catalysts, and even small divergences in Fed language or earnings guidance could quickly shift volatility from its subdued levels.

Conclusion

A quiet surface over moving currents

Global markets entered December cautiously but regained composure as softer US inflation and stronger services data anchored the soft-landing narrative. Beneath the calm indices, several dynamics accelerated: Japan’s yield repricing, Europe’s rotation into autos and banks, silver’s squeeze and notable FX shifts in the yen and Canadian dollar. For long-term investors, the message is discipline and diversification. For active traders, low front-end implied volatility and multiple catalysts provide scope for selective, risk-defined positioning as the year approaches its close.