Weekly Market Pulse - Week ending December 12, 2025

Market developments

Equities: U.S. equities retreated after recent record highs as a sharp selloff in AI-related stocks, triggered by Broadcom’s weak sales outlook and Oracle’s spending-heavy forecast, sparked profit-taking. Concerns about stretched valuations and delays in AI infrastructure projects added pressure, while investors weighed mixed signals from Fed officials following a third consecutive rate cut. Strategists emphasized diversification beyond tech, highlighting opportunities in Asia and emerging markets.

Fixed Income: U.S. 10-year treasury yields trended higher and climbed to ~4.2%. This reluctance is attributed to a divide within the Federal Reserve committee, with some signaling for multiple rate cuts in 2026 while others prefer holding the Fed Funds rate steady. Investors are reducing duration risk as the year-end approaches.

Commodities: A divergence occurred, with metals surging while energy slumped. Energy markets were weak due to concerns about a developing surplus, while silver and copper reached fresh highs and gold showed renewed strength.

Performance (price return)

SECURITY	PRICE	WEEK	1 MONTH	3 MONTH	YTD
Equities ($Local)
S&P/TSX Composite	31,527.39	0.69%	2.27%	7.66%	27.50%
S&P 500	6,827.41	-0.63%	-0.34%	3.69%	16.08%
NASDAQ	23,195.17	-1.62%	-0.90%	4.76%	20.12%
DAX	24,186.49	0.66%	-0.80%	2.06%	21.48%
NIKKEI 225	50,836.55	0.68%	-0.44%	13.56%	27.43%
Shanghai Composite	3,889.35	-0.34%	-2.77%	0.48%	16.04%
Fixed Income (Performance in %)
Canada Aggregate Bond	240.09	0.17%	-1.43%	-0.42%	2.01%
US Aggregate Bond	2343.05	0.09%	0.00%	0.60%	7.04%
Europe Aggregate Bond	246.07	-0.33%	-0.91%	0.06%	0.95%
US High Yield Bond	29.01	-0.03%	0.58%	1.05%	8.10%
Commodities ($USD)
Oil	57.48	-4.33%	-1.73%	-8.31%	-19.85%
Gold	4299.45	2.42%	2.48%	18.01%	63.82%
Copper	528.35	-1.83%	3.49%	15.15%	31.22%
Currencies ($USD)
US Dollar Index	98.37	-0.63%	-1.13%	0.84%	-9.33%
Loonie	1.3765	0.38%	1.75%	0.57%	4.50%
Euro	0.8516	0.86%	1.29%	0.07%	13.42%
Yen	155.82	-0.31%	-0.66%	-5.22%	0.89%

Source: Bloomberg, as of December 12, 2025

Central Bank Interest Rates

Central Bank	Current Rate	March 2026 Expected Rate*
Bank of Canada	2.25%	2.26%
U.S. Federal Reserve	3.75%	3.50%
European Central Bank	2.00%	1.93%
Bank of England	4.00%	3.59%
Bank of Japan	0.50%	0.74%

Source: Bloomberg, as of December 12, 2025

*Expected rates are based on bond futures pricing

Macro developments

Canada – Bank of Canada Maintains Rates as Growth Surprises

The Bank of Canada kept its overnight rate at 2.25% in December 2025. GDP grew 2.6% in Q3 and unemployment fell to 6.5%. CPI inflation slowed to 2.2%, with core measures around 2.5%. Policymakers cited global uncertainty and tariff pressures but see the current rate as appropriate unless conditions change.

U.S. – Inflation Holds Steady Despite Energy Surge, Federal Reserve Cuts Rates Again Amid Divisions

The U.S. PCE price index rose 0.3% in September, matching August and expectations. Goods prices jumped while services slowed. Core PCE increased 0.2%, unchanged from August. Annual headline inflation accelerated to 2.8%, the highest since April 2024, while core inflation eased slightly. The report was delayed due to a government shutdown.

The Federal Reserve lowered the federal funds rate by 25 bps to 3.5%–3.75%, its third cut in 2025. Some members opposed the move, while one pushed for a deeper cut. Growth forecasts for 2025 and 2026 were revised higher and inflation projections slightly lower. Unemployment forecasts remain unchanged.

International – U.K. Economy Contracts for Fourth Straight Month, Japan’s Economy Contracts Amid Tariff Pressure

The British economy shrank 0.1% in October, following a similar decline in September and missing expectations for growth. Services and construction fell sharply, while production rebounded on gains in manufacturing and mining. GDP also contracted 0.1% in the three months to October.

Japan’s GDP fell 0.6% QoQ in Q3 2025, worse than the flash estimate and forecasts. Business spending declined for the first time in three quarters, while private consumption and government spending remained weak. Net trade dragged growth as exports plunged after Washington imposed a 15% tariff on most Japanese goods.

Quick look ahead

DATE	COUNTRY / REGION	EVENT		SURVEY	PRIOR
14-Dec-25	China	Retail Sales YoY	Nov	2.90	2.9
14-Dec-25	China	Retail Sales YTD YoY	Nov	4.25	4.3
15-Dec-25	Canada	CPI NSA MoM	Nov	0.10	0.2
15-Dec-25	Canada	CPI YoY	Nov	2.30	2.2
15-Dec-25	Japan	S&P Global Japan PMI Composite	Dec P		52
16-Dec-25	Eurozone Aggregate	HCOB Eurozone Composite PMI	Dec P	52.65	52.8
16-Dec-25	United States	Change in Nonfarm Payrolls	Nov	50.00
16-Dec-25	United States	Change in Private Payrolls	Nov	60.00
16-Dec-25	United States	Change in Manufact. Payrolls	Nov	-5.00
16-Dec-25	United States	Unemployment Rate	Nov	4.40
16-Dec-25	United States	Retail Sales Advance MoM	Oct	0.20	0.2
16-Dec-25	United States	Retail Sales Ex Auto MoM	Oct	0.27	0.3
16-Dec-25	United States	Retail Sales Ex Auto and Gas	Oct	0.37	0.1
16-Dec-25	United States	S&P Global US Manufacturing PMI	Dec P		52.2
16-Dec-25	United States	S&P Global US Services PMI	Dec P		54.1
16-Dec-25	United States	S&P Global US Composite PMI	Dec P		54.2
18-Dec-25	United Kingdom	Bank of England Bank Rate		3.75	4
18-Dec-25	Eurozone Aggregate	ECB Deposit Facility Rate		2.00	2
18-Dec-25	Eurozone Aggregate	ECB Main Refinancing Rate		2.15	2.15
18-Dec-25	Eurozone Aggregate	ECB Marginal Lending Facility		2.40	2.4
18-Dec-25	United States	CPI YoY	Nov	3.07
18-Dec-25	United States	Core CPI YoY	Nov	3.00
18-Dec-25	United States	CPI Index NSA	Nov
18-Dec-25	United States	Core CPI Index SA	Nov
19-Dec-25	Canada	Retail Sales MoM	Oct		-0.7
19-Dec-25	Canada	Retail Sales Ex Auto MoM	Oct		0.2

P = Preliminary

The Asset Allocation Team at NEI Investments

Judith Chan, CFA – Vice President, Head of Asset Allocation

Mateo Marks, CFA – Director, Asset Allocation

Adam Ludwick, CFA – Director, Asset Allocation

Anthony Rago, B.A.Sc. – Senior Asset Allocation Analyst

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