Global News Summary 13-19 Dec 2025

The period from 13–19 December 2025 marked a shift from sharp, AI-driven volatility into a more policy-dominated market environment, where central banks rather than corporate earnings shaped sentiment. Following the sell-off last week, equities stabilised as investors reassessed valuations amid persistently high long-term yields. In the United States, economic signals became harder to interpret after earlier government disruption distorted key datasets, with easing inflation offset by signs of labour-market softening. In Europe, policymakers maintained interest rates while adopting a more balanced tone on growth and inflation risks. The UK remained under pressure, with weakening consumer demand prompting a rate cut to 3.75% and renewed debate about technology-led job displacement. In Asia, Japan surprised markets by lifting rates to around 0.75%, ending another chapter of ultra-loose policy, while China opted for stability, keeping benchmark lending rates unchanged as domestic demand stayed fragile. Overall, markets moved from exuberance to caution, reinforcing a narrative of rotation rather than systemic stress.

United States

Economic Growth / Recession
Economic momentum appeared uneven, with headline indicators sending mixed signals. Data quality issues complicated interpretation, leaving recession risks difficult to assess with confidence.

Jobs
The unemployment rate rose to around 4.6%, the highest level in several years, although analysts cautioned that temporary survey distortions may have overstated weakness.

Inflation
Headline inflation eased towards ~2.7% year-on-year, suggesting continued disinflation, but uncertainty around data completeness tempered conclusions.

Debt Securities
Long-dated Treasury yields remained elevated, weighing on equity valuations. The persistence of higher yields reinforced expectations that the Federal Reserve would proceed cautiously despite earlier rate cuts.

AI
After mid-month profit-taking, AI-related equities rebounded into week-end trading, helping lift the S&P 500 and Nasdaq, though leadership remained narrower than earlier in the year.

ESG
No major ESG-driven policy developments shaped US markets during the week; attention stayed focused on rates, inflation and technology.

United Kingdom

Economic Growth / Recession
Consumer activity remained weak, with retail sales contracting again in November, keeping the economy close to technical recession territory.

Jobs
Labour-market conditions softened, contributing to subdued household confidence and cautious spending behaviour.

Inflation
Inflation continued to moderate, easing pressure on policymakers but leaving services inflation and wage growth under scrutiny.

Debt Securities / Policy
The Bank of England cut Bank Rate to 3.75%, signalling a shift towards growth support as economic momentum faded.

AI
UK policymakers highlighted the longer-term risk that AI adoption could disrupt lower-skilled and entry-level employment, even as productivity benefits accrue over time.

ESG
ESG themes remained secondary to growth and monetary policy concerns.

European Union (Eurozone)

Economic Growth / Recession
Growth prospects stabilised, with policymakers emphasising balance rather than downside dominance in the outlook.

Inflation
Inflation hovered close to the 2% target, reducing urgency for immediate policy action while preserving flexibility.

Debt Securities / Policy
The European Central Bank held interest rates steady and stressed a data-dependent, meeting-by-meeting approach.

China

Economic Growth / Recession
Economic activity remained subdued, with softer manufacturing and retail indicators underscoring weak domestic demand and ongoing property-sector drag.

Inflation
Inflation pressures stayed muted, reflecting limited pricing power rather than overheating risks.

Debt Securities / Credit Policy
Authorities kept benchmark lending rates unchanged at 3.0% (1-year) and 3.5% (5-year), prioritising financial system stability and bank profitability over aggressive stimulus.

AI / ESG
Policy focus remained on macro stability rather than new AI or ESG initiatives.

Japan

Economic Growth
Tight labour markets and rising wages continued to support domestic demand.

Inflation
Inflation remained near 3%, comfortably above the central bank’s target.

Debt Securities / Policy
The Bank of Japan raised its policy rate by 25 basis points to around 0.75%, the highest level in decades, reinforcing Japan’s shift away from ultra-loose monetary policy. Government bond yields rose in response.

Jobs
Wage growth remained central to the policy rationale, signalling a more durable inflation cycle.

AI / ESG
Technology and sustainability themes were overshadowed by the significance of monetary normalisation.

Australia

Economic Growth / Recession
The economy continued on a soft-landing path, with no major growth shock during the week.

Jobs
Labour-market conditions showed signs of loosening, supporting the case for a cautious central bank stance.

Debt Securities / Policy
The Reserve Bank of Australia held the cash rate at 3.6%, balancing progress on inflation against still-tight conditions.

New Zealand

Economic Growth / Recession
The broader backdrop remained one of gradual recovery, with financial stability closely monitored.

Debt Securities / Policy
The policy rate remained at 2.25%, reflecting an accommodative stance aimed at supporting growth.

Inflation / Jobs
Inflation hovered around 3%, with spare capacity evident in the labour market.

Singapore

Economic Growth
Economists upgraded 2025 growth expectations to around 4.1%, reflecting improved external and domestic conditions.

Inflation
Core inflation was projected to average around 0.5% in 2025, among the lowest in developed economies.

Debt Securities / Rates
Local yields broadly tracked global movements, with no major issuance or policy surprise.

Switzerland

Economic Growth / Inflation
Switzerland remained in a low-inflation environment, with price pressures close to zero.

Debt Securities / Policy
Policy rates stayed near 0%, with authorities favouring currency management tools over rate adjustments.

What Mattered Most for Portfolios (13–19 December)

• Global rate volatility broadened, driven by Japanese tightening and continued uncertainty around long-term yields elsewhere.

• AI remained the market’s focal point, with sharp swings reflecting rotation rather than wholesale risk aversion.

• The UK stood out as the weakest major economy, reinforcing the case for geographic