The Last 2025 Recap - Holding the Line as the Year Winds Down

During the week, economic news in the United States was dominated by strong growth performance and mixed signals in other indicators. GDP grew at an annualized rate of 4.3% in the third quarter, the highest in two years, far exceeding expectations of 3.3%, driven by resilient consumption, strong investment in data centers, and a lower trade deficit. However, a slowdown to 1.8% is expected in the fourth quarter, partly due to the federal government shutdown. In activity data, durable goods orders fell 2.2% in October, although underlying investment—measured by non-defense capital goods excluding aircraft—rose 0.5%. The labor market continued to show strength: initial jobless claims fell to 214,000, the lowest level since January, while continuing claims rose slightly to 1.92 million, reflecting a market with low turnover. In contrast, consumer confidence declined, with the Conference Board index falling to 89.1 in December from 92.9 in November.

In financial markets, the strong growth data further reduced expectations of immediate rate cuts by the Federal Reserve: the implied probability of a cut in January fell to 13%, pushing up Treasury bond yields. Even so, Wall Street remained positive, and the S&P 500 reached a new all-time high of 6,937 points. In fixed income, investment-grade corporate bond issuance reached nearly US$1.7 trillion in 2025, very close to the 2020 record, with about 30% linked to financing for artificial intelligence infrastructure. This increased borrowing by large technology companies reinforces the prospects for more issuance in 2026 and could put pressure on current spreads, which are now at historically tight levels.

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