Author: Noel Castellanos

Date: December 31, 2025

Period Covered: December 1-31, 2025

Key Takeaways

Macroeconomic Developments

• Federal Reserve delivered third consecutive rate cut to 3.50%-3.75% in most divided vote since 2019, with Chair Powell signaling pause as policy approaches neutral
• Unemployment rose to 4.6%, highest since COVID pandemic, with October payrolls declining 105,000—the largest monthly drop since late 2020—driven by federal worker exits
• Q3 GDP accelerated to 4.3% annualized growth, beating expectations and marking the strongest quarter in two years, though consumer confidence fell for fifth consecutive month
• November CPI cooled to 2.7% YoY with core at 2.6%—lowest since 2021—though economists questioned data quality following shutdown-related collection gaps
• Dollar declined 9%+ for the year, its largest annual drop since 2017, as narrowing yield differentials and political uncertainty reduced relative dollar support

Market Performance and Valuation

• S&P 500 logged 39 new all-time highs in 2025, finishing with a third consecutive year of 15%+ gains despite mid-month AI-driven correction
• Gold surged above $4,500 per ounce, gaining 70%+ for the year—its best performance since 1979—while silver topped $80 before retreating sharply
• Oracle lost $400 billion in market cap (45% of peak value) since September as AI infrastructure financing concerns intensified and Blue Owl pulled out of Michigan data center
• International equities outperformed with MSCI AC World ex-U.S. up 30%+, strongest year since 2009, as dollar weakness boosted returns
• Citadel posted 9.3% return, its weakest since 2018, returning $5 billion to investors while natural gas bets faltered