Market drivers and catalysts
Equities: Equities slipped across US, Europe and Asia as traders awaited Fed cuts and digested deal drama and China policy signals
Volatility: VIX mixed, cautious downside hedging, selective call demand
Digital Assets: BTC consolidates, ETH stable, ETF flows firm, options favour structured upside
Fixed Income: German 10-year yield leaps to new highs since March, US 10-year treasury yield eyes top of range.
Currencies: JPY weakness remains a theme as bonds under pressure everywhere. USD quiet ahead of FOMC.
Commodities: Crude holds near support with supply in focus; high-flying metals see profit-taking ahead of FOMC
Macro events: US Oct. JOLTS Survey, US Treasury to auction 10-year notes
Macro headlines
US President Trump stated that he informed Chinese President Xi the US will permit NVIDIA (NVDA) to ship its H200 products to approved customers in China and other countries. He added that the same policy will apply to AMD (AMD), Intel (INTC), and other leading US companies.
US President Trump announced a USD 12 billion aid package for farmers, stating his intention to support the agricultural sector. He criticised the rising costs of farming equipment and indicated plans to remove regulations to help lower these prices.
Australia’s Reserve Bank left the Cash Rate Target unchanged at 3.60% as expected, and Governor Michelle Bullock ruled out further interest rate cuts for the foreseeable future, citing inflation concerns. Australia’s 2-year yields rose another ten basis points, rising toward 4.07%, the highest in 2025 and indicating eventual rate hikes ahead in 2026.
UK retail sales rose 1.2% year-on-year in November 2025, the slowest in six months, as consumers awaited Finance Minister Reeves' budget and Black Friday sales disappointed. Food sales increased by 3.0%, while non-food sales rose by 0.1%, rebounding from a 7.9% decline a year earlier.
Macro calendar highlights (times in GMT)
1100 – US Nov. NFIB Small Business Optimism
1500 – US Oct. JOLTS Job Openings
1700 – EIA's Short-term Energy Outlook
1700 - USDA's World Agriculture Supply and Demand Estimates
1800 – US Treasury to auction 10-year notes
Earnings this week
Today: Autozone
Wed: Oracle, Adobe, Synopsis
Thu: Broadcom, Costco, Lululemon
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: US stocks slipped on Monday, with the S&P 500 down 0.4%, the Dow 0.5% and the Nasdaq 0.1% as investors weighed the Fed’s 2026 policy path ahead of Wednesday’s widely expected 25 basis point rate cut. Deal headlines dominated media and telecoms as Warner Bros. Discovery gained 4.4% after Paramount’s 9.0% surge on a higher takeover bid, while Netflix fell 3.4%. Confluent jumped 29.1% after IBM agreed to buy the data-streaming firm for about 11 billion dollars. Tesla lost 3.4% on a broker downgrade, Carvana climbed around 12.1% on news of S&P 500 inclusion, and Broadcom rose 2.8% on reports of AI chip talks with Microsoft, with markets now watching the Fed’s new dot plot.
Europe: European equities were subdued, with the Euro Stoxx 50 basically flat and the Stoxx 600 slipping 0.1% as traders stayed cautious ahead of key central bank meetings led by the Fed. Markets still price a 25 basis point US rate cut, while comments from ECB policymaker Isabel Schnabel flagged a risk of renewed tightening if inflation flares up. Unilever fell about 6.6% after its Magnum ice cream unit began trading separately, highlighting uncertainty around the reshaped group. By contrast, Ageas rose after agreeing to buy the remaining 25% of Belgian insurer AG Insurance, and UBS added around 1.8% on reports of up to 10,000 job cuts by 2027, with investors now focused on updated policy projections and guidance.
Asia: In Hong Kong, the Hang Seng Index fell 1.2% to 25,765 as financials, property and consumer names pulled back on renewed concern about China’s weak prices. Investors stayed cautious ahead of mainland CPI and PPI data and possible policy signals from a Politburo meeting and the Central Economic Work Conference, which will shape the 2026 growth stance. Pop Mart slid about 8.1% amid worries over slowing demand for its key collectibles line, while Zijin Mining and Anta Sports lost ground with metals and consumption plays. Baidu gained roughly 4.0% after plans to spin off its Kunlun AI chip unit underlined progress in China’s domestic semiconductor push, with the market watching whether coming stimulus can stabilise earnings momentum.
Volatility
Market volatility firmed modestly, with VIX up to 16.66 and short-dated measures diverging: VIX1D slipped to 9.39, while VIX9D jumped over 17% as traders positioned around the Fed meeting and today’s JOLTS data. SPX drifted lower to 6,846, but the options market continues to price a very contained session. The at-the-money 0DTE strangle is implying only ±28 points, or ~0.4% expected move, reinforcing the view that investors expect controlled, event-specific volatility rather than broad-based stress.
Order flow echoes the same pattern. Premium allocation across indices remains constructive at the surface, yet the tape underneath shows caution: substantial new premium went into long-dated QQQ and IWM puts, while SPY call demand stayed steady for year-end participation. Skew remains stable, intraday hedging is concentrated around tight wings, and the volatility curve holds a mild upward tilt into the Fed meeting. For traders, this supports selective premium selling at the extremes and keeping optionality open for any policy-surprise reaction later in the week.
Digital Assets
Crypto markets are consolidating after a strong multi-week run. Bitcoin trades near USD 90k, slipping slightly as investors step back ahead of the Fed decision, while ether holds just above USD 3,100, continuing its pattern of quiet relative strength. Altcoins are softer across the board, reflecting a broader wait-and-see stance as markets price a high probability of a 25-basis-point cut but remain alert to the risk of a hawkish hold.
Spot ETFs show a more constructive tone: IBIT is up roughly 1.6%, and ETHA gains nearly 4%. Options flows remain disciplined rather than speculative. Roughly USD 167m in confirmed opening premium moved through crypto names, skewed toward downside puts in MSTR and structured upside in COIN and ETH-linked products. Investors continue to favour call spreads, covered calls and deep ITM replacement calls, signalling expectations for higher prices but within a more gradual, controlled volatility regime rather than explosive breakouts.
Fixed Income
Japanese government bonds were steady near the highs for the cycle for the 2-year and 10-year JGB benchmarks
- US treasuries found support yesterday after selling off intraday, with the 2-year benchmark treasury yield back toward 3.58% after a 3.61% high, while the 10-year benchmark yield rose to a new high since late September at 4.19% before edging back lower, closing the day up three basis points near 4.17%
The German 10-year Bund yield lifted sharply yesterday as European sovereign bonds sold off sharply, with the benchmark rising some six basis points to 2.86%, the highest level since March.
Commodities
US natural gas has entered its high-volatility season, where shifting weather forecasts exert an outsized influence on price direction. After touching a three-year high early this month on colder conditions and record LNG export flows, prices have since posted their steepest weekly drop in five months as mid-December temperature models turned milder.
LME copper briefly printed a fresh record at USD 11,771 per ton on Monday before easing ahead of the FOMC meeting. The rally remains underpinned by a blend of speculative momentum tied to hyperscale data-centre demand, tariff-driven stock relocations that have tightened markets outside the US, and mining disruptions that continue to raise questions about available supply for one of the key energy-transition metals.
Crude oil slipped on Monday with Brent holding just above recent lows near USD 62. While geopolitical risk premiums still pulse through the market, the dominant narrative has returned to the prospect of a swelling surplus into early 2026. Traders now turn to the monthly updates from the EIA today and from OPEC and the IEA later this week for fresh guidance on balances and demand assumptions.
Precious metals trade slightly softer ahead of tomorrow’s FOMC rate decision, as the market weighs the impact of a potentially hawkish cut on high-demand metals. A combination of rising long-end yields, a steeper curve and a softer dollar adds another layer of complexity for positioning in gold, silver and platinum.
US soybeans futures slumped back below USD 11 a bushel on Monday for the first time since October on growing uncertainty whether China will buy as much U.S. supply as Washington expected. Prices also being weighed down by the potential for a large soy harvest in Brazil, starting in around a month. Corn and wheat futures followed the weaker trend.
Currencies
The dollar traded with very little volatility ahead of the FOMC meeting tomorrow as EURUSD was sticky around the 1.1650 level, while JPY weakness remains a theme, as USDJPY lifted above 156.00 at one point overnight and EURJPY rose above 181.50 as it eyes the all-time highs from November at 182.01.
The Australian dollar rallied on the RBA’s ruling out of further interest rate hikes for the foreseeable future on Tuesday, as Australian rates markets indicate rate hikes ahead in the second half of next year. AUDUSD bounced back from a 0.6609 low to rally just short of 0.6650 in late trading in Sydney.
