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Global Financial Markets

The canary in the coal mine

Thursday, 18 December 2025, written by Edward Markus

The markets expect further rate cuts by the Fed, partly due to increasing political pressure. We do not expect this to happen because the US economy may perform better than expected next year, with much depending on the interaction between the labour market and economic growth and the US Supreme Court's ruling on import tariffs. The ten-year US interest rate is the canary in the coal mine and determines how far the Fed can go with interest rate cuts.

This report is published: Bi-weekly

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Previous reports

What could possibly go wrong?

Thursday, 04 December 2025

The outlook for shares and economic growth is fairly positive for 2026. But what if things go wrong? We see three potential spoilers.
 

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Will AI remain positive for equities and the economy?

Thursday, 20 November 2025

Global markets are approaching an inflection point. AI is still powering growth, but inflation, swollen deficits and geopolitical uncertainty are quietly reshaping the outlook. This report explains why the “near-perfect future” priced in by investors is becoming increasingly unlikely.
 

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Sailing in the fog

Thursday, 06 November 2025

With the longest government shutdown in history and Supreme Court hearings on Trump’s tariffs in full swing, the U.S. economy is sailing blind. We examine how political fog, rising debt and AI-fueled growth shape the outlook for rates, currencies and risk assets.

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Eddy's Weekly Market Insight

Friday, 19 December 2025

Eddy's Weekly Market Insight

Higher interest rates are not always positive for the exchange rate: At first glance, the outlook for next year appears positive. Economic growth of around 1% is expected for Europe and over 2% for the United States. The general expectation is also that long-term interest rates will not change much, especially since inflation is widely expected to decline gradually. This provides a favorable backdrop for equities, and this expectation has recently been reinforced by: better-than-expected U.S. inflation figures; an oil price that, from a technical chart perspective, appears on the verge of breaking downward. If this happens, a further decline of $10 to $15 can be expected. Should this trend continue, it would give central banks additional room to cut interest rates further. However, the situation is more complicated...
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— Eddy Markus, Founder & Chief Economist