Quicktakes: Market Insights: December 8, 2025

Markets enter December with a mix of optimism and caution as investors navigate delayed economic data, evolving Fed policy, and shifting sector leadership. While inflation remains stubbornly above target and rate cuts are widely anticipated, uncertainty persists around the pace of future easing and fiscal pressures. Against this backdrop, equities and fixed income have delivered strong year-to-date returns, though concentration risks warrant close attention.

Economic Backdrop

  • The 43-day U.S. government shutdown delayed official releases of important data such as jobs, CPI and GDP; making for stale data of August & September 2025.  As of September, the unemployment rate raised slightly MoM to 4.4%, but overall labor market remains healthy.
  • With federal data stalled, markets turned to private sector data. These show a resilient yet cooling labor market. Meanwhile, AI-centric companies continue outpacing broader market performance—highlighting a growing divergence.

Inflation & Fed Policy

  • The September CPI rose 3.0% YoY and core inflation matches at 3.0%, marking over four years without the Fed’s 2% target being reached.
  • The Fed cut rates as of December 10th, bringing the target range to 3.5–3.75%. Market expectations for 2026 are currently predicting two cuts but interested eyes are watching for possible changes amid elevated inflation and the upcoming Fed chair transition in May 2026. (updated as of 12/11/2025)
  • Yield curve steepening: short end falling with Fed cuts, long end stable—raising concerns about fiscal deficits and crowding out.

Asset Class Correlations

  • Equity–fixed income correlation: Over the past six months, this correlation has hovered around zero as equities continue to move higher while bonds have been more focused on governmental policies.
  • U.S. Dollar trends: After weakening early in 2025, the dollar seems to have stabilized. Year-to-date the weakening dollar benefited international equities and emerging‑market debt.

Volatility & Market Stability

  • Equity volatility ticked up in late November but remains below historical averages. Interest rate and currency volatility declining; commodity volatility stable.
  • Overall financial stability: Despite pockets of stress, the overall financial system remains orderly and robust.

Sector Trends

  • Market leadership still concentrated in IT, Communication Services and Consumer Discretionary but with signs of broadening as Utilities, Health Care and Industrials are all producing double digit returns YTD.

Market Observations as of 12/8/2025, subject to change and not to be used, or interpreted, as a recommendation.

IMPORTANT INFORMATION

Definitions:
S&P 500 Index is a weighted index of common stocks of 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities. The index is capitalization weighted, thereby giving greater weight to companies with the largest market capitalizations.


Russell 1000® Growth Index measures the performance of those Russell 1000® Index companies with higher price-to-book ratios and higher forecasted growth values. It is market-capitalization weighted.


A basis point (BPS) is a unit of measure used to indicate percentage changes in financial instruments. Basis points are typically expressed with the abbreviations "bp," "bps," or "bips." One basis point is equal to 1/100th of 1%, or 0.01%. In decimal form, one basis point appears as 0.0001 (0.01/100).

Information provided in this newsletter is general in nature, is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed are those of the author(s) as of the stated date of their contribution and any such views and opinions are subject to change at any time based on market, or other conditions, and are not intended to be a forecast of future events, a guarantee of future results or investment advice. Securities and sectors referenced should not be construed as a solicitation or recommendation, or be used as the sole basis for any investment decision.

All investments contain risk and may lose value. Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.

Past performance is not a guarantee of future results. Portfolio rebalancing and diversification do not guarantee a profit or protection against loss in a declining market.

No guarantee or representation is made that investment objectives and/or opinions stated will be achieved. The experience of each specific client or investor may vary.

Due to the subjective aspect of these analyses, the effective evolution of the economic variables and values of the financial markets could be significantly different from the projections, forecasts, anticipations and hypotheses, which are communicated in this material.

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GE-8665774.1 (12/2025) (Exp. 12/2029)