Monthly Macro Review - December 2025

Macro at a glance

The trade agreement between the EU and Mercosur became a hot topic in global trade in December, illustrating how politically fragile liberalisation remains in a world already plagued by reshoring and tariff risk. Even after significant progress, the signing has been postponed until January 2026, with leaders facing intense domestic pressure, particularly from the agricultural sector, which fears competition from imports and non-equivalent standards (called reciprocity). French President Emmanuel Macron reiterated his opposition to the agreement ‘as is’, but he is not alone: Italy's Giorgia Meloni said approval would be premature without stronger guarantees, while Poland's Donald Tusk confirmed that Poland would maintain its position of rejection. For the markets, the key takeaway is less the legal text itself than the signal it sends: trade policy is once again a source of volatility, with agricultural policy potentially delaying (or derailing) important agreements. In any case, 2025 will go down in history as a golden year for protectionism. (Euronews, Le Monde, Reuters)

Bulgaria will become the 21st member of the eurozone, adopting the euro on January 1st, 2026, after the European Commission confirmed in 2025 that Sofia met all convergence criteria. The lev will thus be converted at a long-fixed rate of 1.95583 per euro, a currency arrangement that has been in place since 1999 under ERM II. According to policymakers, euro adoption will lower transaction costs, increase investment, and bring financial stability for the EU’s poorest member. This milestone comes mere weeks after the resignation of Prime Minister Rosen Zhelyazkov and his cabinet, which followed weeks of mass protests against Bulgarian economic policy and corruption.

Market reaction to the euro adoption has been minimal and reflects already priced in expectations, while domestic opinions are divided due to concerns over price increases and sovereignty. (European Council, DW, Reuters)

Central banks are once again diverging. At the end of December, monetary policies were divided into three camps: the Fed cut rates by 25 basis points on 10 December 2025, bringing the federal funds target range down to 3.50% - 3.75%; the ECB kept its three key rates unchanged on 18 December 2025; and the Bank of Japan raised its rate to 0.75% on 19 December 2025, reinforcing Japan's slow exit from its ultra-accommodative policy. January 2026 remains marked by this divergence: the Bank of Japan will meet on 22 and 23 January, while the Fed will meet on 27 and 28 January (two key events for global rates and currencies). The ECB's next rate decision is scheduled for 5 February 2026, but markets will be analysing the ECB's accounts on 22 January to determine how solid the consensus in favour of ‘maintaining’ rates really is. This overall divergence could lead to greater volatility in the FX market, particularly if Japanese rates continue to rise as they have been doing for several months. (Reuters, Bloomberg, FT)

One Sector, One Insight

Basic Materials and Energy :

Silver ended 2025 as the most striking example of a dual-use commodity: a rare industrial input (solar energy, electrification, data infrastructure) that also trades as a monetary hedge when rates fall and the geopolitical situation deteriorates. Fundamentally, the market remains structurally constrained: the Silver Institute reported that 2025 was on track to record a fifth consecutive structural deficit (after several years of shortages), keeping the narrative of ‘physical scarcity’ alive even as recycling increases. But the main macroeconomic lesson to be learned from the last few days (24-31 December 2025) is that price discovery can still be dominated by leverage. Silver briefly reached new all-time highs (above $82/oz intraday) before falling more than 10% in a single session, one of the sharpest reversals since the start of the pandemic. The immediate trigger was the CME's margin increase (from $20,000 to $25,000 per contract), which mechanically forces deleveraging. (Reuters, FT)

Consumption and General Public Services :

Nike's (NKE) financial results for the second quarter of 2026 (18 December 2025) exceeded expectations, with earnings per share 42% higher than the consensus. However, the next day, the share price fell by nearly 12%, as the markets analysed the quarterly results and anticipated future problems: a 17% drop in sales in China and management reporting continued pressure on margins (promotions and customs duty costs). A week later, sentiment briefly improved when Apple CEO Tim Cook (Nike's lead independent director) announced a £3 million (50,000 shares) purchase on the open market, doubling his stake and sending Nike up about 5% on 24 December. (Reuters, Bloomberg)

Financial Services :

A growing consumer debt strain is coming into focus with more than 9 million Americans missing student loan payments, many of which are severely delinquent and/or in default (270 overdue days, in the US) after federal repayment requirements have resumed in 2023. Economists warn this trend could lower consumer spending as borrowers cut back on housing and durable goods to meet debt obligations. Default also affects credit score and makes it harder to access mortgages and auto loans, further slowing housing markets and the overall economy. On the policy front, the US Department of Education restarted collections and offset actions in 2025 and plans to issue wage garnishment warnings in early 2026, which marks the end of pandemic-era leniency. (PYMNTS, FT, NBC)

Healthcare :

Novo Nordisk (NVO) ended 2025 on an uncertain note: its share price had fallen by more than 50% since the start of the year at one point in December, following a year marked by tougher competition and disappointments regarding its pipeline. The tide turned on 23 December 2025, when the share price jumped 7% after the FDA approved an oral version of Wegovy (decision announced on 22 December 2025), giving Novo a short-term advantage in the race to market an effective obesity drug. The macroeconomic analysis is simple: demand is real, but pricing power is the battleground. Just a few days later, Novo decided to lower Wegovy prices in certain regions of China (29 December 2025), underscoring how GLP-1s are becoming a competitive, market-priced category rather than a rare commodity. (Reuters, FT)

Industrials :

The European Commission formally proposed reversing its total ban on internal combustion engine (ICE) vehicles on December 18, replacing the 2035 zero-emission target with a "technology-neutral" 90% reduction goal. This pivot allows the continued sale of hybrids and vehicles running on synthetic e-fuels, a victory for German lobbyists who argued the original timeline threatened industrial stability. Despite the regulatory reprieve, the market reaction was tepid. Volkswagen (VOW.DE) fell 1% and BMW (BMW.DE) slid nearly 2% following the announcement. Investors appear concerned that the policy U-turn signals a lack of long-term commitment to electrification, potentially handing the technological advantage to Chinese competitors like BYD (1211) while prolonging legacy capital expenditures. (Reuters)

Technology and Network Equipments :

Warner Bros. Discovery (WBD) is at the center of a historic $100bn+ bidding war that could reshape the global media landscape. After WBD’s board agreed on December 5 to sell its studio and streaming assets to Netflix (NFLX) for $82.7bn, Paramount (PSKY) launched a hostile $108.4bn all-cash offer for the entire company. On December 22, Paramount sweetened its bid with a $40bn personal guarantee from Oracle founder Larry Ellison to address financing concerns. Despite the higher valuation from Paramount, WBD’s board unanimously rejected the offer on December 17, citing regulatory risks and the superior strategic fit of the Netflix deal, which involves spinning off linear networks into a new entity. WBD shares rose 3.6% following the latest counter-bid, as investors weigh the certainty of Netflix’s partial acquisition against Paramount’s aggressive consolidation play. (BBC, The Guardian)

The stock of the month

Rocket Lab (RKLB) surged more than 66% in December, reaching a market capitalization of $37 billion, after winning an $816 million contract with the US Space Development Agency to build 18 satellites for the Tracking Layer, consolidating its transition from launch to defence space systems. The revaluation was amplified by year-end momentum and speculative positioning, with investors seeking visibility on order books and favourable defence spending winds. (Yahoo Finance)

Key performances

Name	As of December  31	Monthly change	YTD
S&P500	6845.50	-0.05%	16.39%
Dow Jones	48063.29	0.73%	12.97%
NASDAQ	23241.99	-0.53%	20.36%
FTSE100	9931.38	2.17%	21.51%
CAC40	8149.50	0.33%	10.42%
DAX	24490.41	2.74%	23.01%
SMI20	13267.48	3.38%	14.37%
MSCI WORLD	4430.38	0.73%	19.49%
VIX	14.95	-0.43%	-5.76%
CHF/USD	1.2599	1.44%	14.63%
CHF/EUR	1.0737	0.20%	0.97%
Brent $/bbl	60.84	-3.73%	-18.21%
Gold Spot $/oz	4218.30	2.70%	66.23%

Upcoming events

Jan 19-23: World Economic Forum Annual Meeting (Davos)

Jan 22-23: Bank of Japan Monetary Policy Meeting

Jan 27-28: US FOMC meeting

Written by Hippolyte Metzger-Otthoffer, João Vieira, Leo Thelen, Cyrille Desponds and Jason Louis