Daily Market Outlook, December 9, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

Wall Street's four-day rally stalled as U.S. stocks dipped, with the S&P 500 falling 0.3% after nearing a record high. U.S. Treasuries joined a global bond selloff ahead of the Federal Reserve's final 2025 meeting, where a rate cut is expected, though uncertainty about 2026 reductions weighs on investors. Merger news failed to boost sentiment, with Trump raising antitrust concerns over Netflix's bid for Warner Bros, while Paramount made a competing offer. Investor caution also stemmed from doubts about the AI-driven market surge and the sustainability of recent gains. Kevin Hassett, a contender for Fed chair, urged caution on rate predictions, emphasising data-driven decisions. Inflation concerns and disrupted economic data have divided Fed policymakers. Following this week's likely rate cut, markets now foresee two adjustments in 2026, down from three last week. Global stocks followed Wall Street’s lead, taking a slight hit, and Treasury yields climbed higher as global traders grew uneasy about the Federal Reserve’s approach to easing beyond this week’s widely expected interest rate cut. MSCI Inc.’s global stock index dropped by 0.1%, while Asian equities slipped 0.5%. U.S. futures showed little movement, and contracts tied to the Euro Stoxx 50 held steady. Meanwhile, yields on U.S. Treasuries ticked upward, with Australian bonds tumbling after hawkish remarks from the nation’s central bank. In Japan, a five-year government bond auction saw lukewarm interest. The Federal Reserve is anticipated to trim interest rates by 25 basis points on Wednesday, but some traders worry that the central bank may signal a slower pace of easing going forward. Concerns stem from persistent inflation and limited fresh data during the recent government shutdown, which has sparked debate among Fed officials. The Japanese yen regained stability after Monday’s sharp drop, triggered by a magnitude-7.6 earthquake off the country’s northeast coast. On Tuesday, stocks in the construction and insurance sectors saw gains. Finance Minister Katayama announced she is closely observing market activity as the yield on 10-year Japanese government bonds nears 2%—a level last seen in 2006. Elsewhere, the U.S. dollar softened slightly, while Bitcoin slipped by roughly 1.5% before stabilising as HashKey Holdings Ltd, Hong Kong's largest licensed crypto exchange, plans to raise up to HK$1.67 billion ($215 million) via an IPO. It is offering 240.6 million shares priced between HK$5.95 and HK$6.95, potentially valuing the company at HK$19 billion. Investor orders are open from Tuesday to Friday, with trading starting on Dec. 17. Gold and silver continued to trade within a narrow range after Monday’s decline. Oil prices steadied following their sharpest drop in nearly three weeks, as investors await upcoming data to gauge the extent of the supply surplus.

ECB hawk Schnabel expressed comfort with expectations for a future rate hike, though not imminent, diverging from the Governing Council's neutral stance of policy being "in a good place." Her view is supported by surveys showing "solid expansion" and resilience in the economy post-April's trade shock. However, most Council members seem unlikely to adopt her stance soon, as the Sentix Economic Index for the euro area remains negative, and euro area growth lags behind other regions. Meanwhile, Chinese trade data reflects resilience despite trade challenges, with authorities favouring "moderately loose monetary policy", contrasting Schnabel's hawkish outlook.

Domestically, a consultation on "expanding and deepening the Treasury bill market" was announced during the UK Budget. Treasury bills (T-bills) have been declining as a proportion of total UK government marketable debt. This trend has largely aligned with shifts in the relative cost of financing, influenced by the curve-flattening theme that reduced the premium for term-debt during the post-GFC era. However, circumstances have shifted recently, with the 30-year gilt yield surging to a spread of 135 basis points over the 3-month T-bill rate. Interestingly, on two previous occasions when the curve steepness suggested increased T-bill issuance, their share of total debt stock actually declined. In both instances, expectations of higher short-term rates may have undermined the case for expanding T-bill issuance. Remember when the now Canadian Prime Minister hinted in 2014 that rates could rise "sooner than markets currently expect"? While that proved misleading, policy rates—and consequently T-bill yields—did increase from late 2022 in the second example. This time, there appears to be a notable distinction: T-bill financing could become more appealing in absolute terms, as the policy rate, closely tied to T-bill yields, remains significantly above the effective lower bound.

Overnight Headlines

  • RBA Stands Pat On Policy For Third Meeting, Stays Data Dependent

  • Investors Bet Fed And ECB Headed In Opposite Directions On Rates

  • QE May Be Needed If Market Queries New Fed Chair, Man Group Says

  • Trump: Will Allow Nvidia H200 Chip Sales To China, US To Take 25% Cut

  • French Premier Faces Razor-Edge Vote On Welfare Financing

  • ECB Criticises Italy On Gold Reserves, Worries About C. Bank Independence

  • Europe Scrambles For Influence In US-Led Peace Talks On War In Ukraine

  • Japan Rebuffs EU Plea To Join Russian Assets Plan

  • PepsiCo To Cut Costs, Lower Food Prices In Deal With Activist Elliott

  • Paramount Launches $108.4B Hostile Bid For Warner Bros Discovery

  • Traders Snap Up Warner Bros. Options, Avoiding Long-Term Wagers

  • Boaz Weinstein’s $2B Flagship Hedge Fund Sinks Amid Buoyant Markets

  • BHP To Sell Stake In Western Australia Power To BlackRock In $2B Deal

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

  • EUR/USD: 1.1575 (893M), 1.1590-00 (517M), 1.1615-25 (968M)

  • 1.1640-50 (1.5BLN), 1.1660-70 (1.4BLN), 1.1680-85 (401M)

  • 1.1725 (331M), 1.1795-00 (2.14BLN)

  • USD/JPY: 154.00 (505M), 154.20 (275M), 154.50 (284M)

  • 155.00 (1.74BLN), 155.65-71 (360M), 156.00-10 (1.9BLN)

  • EUR/CHF: 0.9400 (200M)

  • GBP/USD: 1.3050 (740M), 1.3100 (327M), 1.3450 (200M), 1.3500 (500M)

  • AUD/USD: 0.6550-60 (528M), 0.6595-00 (480M), 0.6665 ((302M)

  • NZD/USD: 0.5670 (453M), 0.5730 (926M), 0.5770-75 (370M)

  • 0.5785-00 (580M). AUD/NZD: 1.1475-80 (321M),

  • USD/CAD: 1.3870 (282M), 1.3900-10 (951M), 1.3930-40 (1.7BLN)

  • 1.3945-55 (370M)

  • USD/ZAR: 17.00 (230M)

CFTC Positions as of the Week Ending 7/10/25 

  • CFTC FX positioning data backlog clears January 20. Upcoming data on December 2, 5, 9, 12, 16, 19, 23, 30, followed by January 6, 9, 13, 16, 20. Normal service resumes January 23.

  • CFTC Positions (Week of October 28th):

  • - S&P 500 CME net short: +21,626 contracts (458,504 total)

  • - S&P 500 CME net long: +7,029 contracts (906,817 total)

  • - CBOT US 5-year Treasury net short: +130,976 contracts (2,404,926 total)

  • - CBOT US 10-year Treasury net short: +64,407 contracts (910,930 total)

  • - CBOT US 2-year Treasury net short: +34,053 contracts (1,312,475 total)

  • - CBOT US UltraBond Treasury net short: -2,057 contracts (297,053 total)

  • - CBOT US Treasury bonds net short: -12,678 contracts (15,103 total)

  • - Bitcoin net short: -543 contracts

  • - Swiss franc net short: -27,858 contracts

  • - British pound net short: -20,262 contracts

  • - Euro net long: 107,333 contracts

  • - Japanese yen net long: 68,115 contracts.

Technical & Trade Views

SP500

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 6860 Target 6920

  • Below 6834 Target 6770

EURUSD 

  • Daily VWAP Bearish

  • Weekly VWAP Bullish

  • Above 1.1647 Target 1.17

  • Below 1.1590 Target 1.1550

GBPUSD 

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 1.3330 Target 1.3435

  • Below 1.3280 Target 1.3228

USDJPY 

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 155.69 Target 157.79

  • Below 155.36 Target 154.59

XAUUSD

  • Daily VWAP Bearish

  • Weekly VWAP Bullish

  • Above 4274 Target 4319

  • Below 4215 Target 4151

BTCUSD 

  • Daily VWAP Bullish

  • Weekly VWAP Bearish

  • Above 90.8k Target 95.7k

  • Below 89.4k Target 86.2k