Business World Plows On In Spite of Dystopic Newsfeed
December 15, 2025
(161) The coming week will be the last one of 2025 in which financial markets are not heavily affected by year-end factors. A heavy menu of economic data releases, including belated U.S. ones due to the government shutdown. Oftentimes particularly in the early years of the floating exchange rate era, the dollar exhibited a downward bias in the second half December countered by an upward bias in early January.
2025 has been nothing like a typical year. An overhaul of the 250-year U.S. experiment in rule by law with checks and balances has been overhauled broadly and with lightening speed. Multiple wars around the world have also generated shocking visuals. The past weekend’s headlines — mass shootings in Australia and at Brown University as well as the stabbing death of the Rob Reiner and his wife allegedly by their son — have sadly been merely representative of year’s relentless drumbeat of disturbing developments.
Up to now, financial markets have behaved remarkably well, all things considered. To be sure, extreme choppiness has occurred, and the dollar for one thing has not done as well as imagined back in January. But depreciation has occurred gradually and in an orderly fashion. Taken as a whole, investors can look back with some gratitude at the net results.
In overnight financial market action, the dollar lost marginal ground. Ten-year sovereign debt yields nudged a basis point higher in Japan but slipped three basis points in the U.K., two bps in the U.S., France, Italy and Spain, and a basis point in Germany. Stock markets in Asia and the Pacific rose 1.8% in Hong Kong and 1.4% in Japan but also fell sharply in South Korea and Taiwan. Equities have risen at least 1% in Italy, Spain and Britain but not in Germany or the United States. Bitcoin has sunk over 2% and is below $87000, whereas gold climbed 0.9%.
November data reported today by China revealed the largest year-on-year declines of retail sales in 35 months and industrial production in 16 months. A 2.6% January-November average drop in fixed asset investment was the most in over five years, and property prices were 2.4% lower than a year earlier. China’s jobless rate matched October’s four-month low of 5.1%.
The Bank of Japan, which is thought likely by a majority of market participants to raise its interest rate at the end of this week, released results of its latest quarterly Tankan survey of corporate perceptions and expectations. The diffusion index among large manufacturers exuded the most optimism in four years, and the index for all participants in the survey were also more optimistic than in September’s survey. A projected 12.6% rise investment spending this fiscal year was similar to what the previous survey had shown.
A separate Japanese release, measuring the mood of service sector workers, rose 0.9% on month in October and 3.1% from a year earlier. These increases surpassed market expectations.
Wholesale prices in India last month (-0.3% year-on-year) produced a sub-zero change for the second straight month and the fourth time in the past six reported months.
A 0.8% monthly increase in Euroland industrial production during October was the biggest rise in five months and yielded a 5-month on-year high increase of 2.0%.
Switzerland’s combined producer price and import price index fell 0.5% in November but yielded the smallest year-on-year decrease (-1.6%) in four months. Reflecting the buoyant Swiss franc in part, import prices were 2.5% lower than in November 2024, while domestic producer prices recorded a 1.2% drop.
Danish producer prices were 1.1% lower in November than a year earlier.
This Monday’s consumer price reports included news that
- Canada’s CPI ticked up 0.1% on month and retained October’s 2.2% on-year advance, essentially an in-target outcome.
- Bulgarian CPI inflation slid to a 5-month low of 5.2%.
- Croatian inflation of 3.8% was above October’s 3.6% and last September’s 1.2% trough but under September’s 4.2%.
- After the first sub-zero reading (-0.2%)in more than 5 years, Finnish inflation edged up to -0.1% last month.
- High but the above standards, Nigerian CPI inflation of 14.5% was its lowest reading in 61 months.
- Slovakian CPI inflation stayed at October’s year and a half low of 3.7%.
- Polish inflation slowed to an 8-month low of 2.5% in November from a recent high of 4.1% 5 months earlier.
Updated Swiss government forecasts now envisage GDP expanding by 1.4% this year, 1.1% in 2026 and 1.7% in 2027 alongside CPI inflation of 0.2% in 2025 and 2026 and then just 0.5% in 2027.
Canadian housing starts had plunged 17% in October but recovered 9.4% last month. Canadian factory sales slid 1.0% in October.
The NY Fed-conducted Empire State manufacturing survey weakened much more than anticipated this month with a reading of -3.9 after November’s one-year high of 18.7. The National Association of Home Builders housing market survey index rose a point to an 8-month high of 39.
New York Fed District President Williams and FRS Governor Miran presented differing views on U.S. monetary policy. Williams believes the current stance is well positioned to handle what’s needed in 2026, while Miran provided more detail for why he believes the future path of inflation will be lower than do many of his colleagues on the Federal Open Market Committee.
Investors were surprised by the State Bank of Pakistan’s 50-basis point interest rate cut today to 10.5%. This was the eighth reduction in a sequence that began in June 2024 from a peak of 22% that had been maintained for a year. Pakistani CPI inflation of 6.1% last month was within the 5-7% target corridor.
Copyright 2025, Larry Greenberg. All rights reserved.
Tags: Bank of Japan Tankan survey, Chinese retail sales and industrial production, Euroland industrial production, State Bank of Pakistan
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