Market Note
Reflation breakouts
December 5th, 2025
Chart Source(s): Koyfin
The Russell 2000 is now up almost 10% since November 20th driven by anticipation of a continued fall in US interest rates. All eyes are on the Fed meeting next week to shape the risk taking environment for the remainder of 2025.
The prospect of easier financing conditions in the USA in the months ahead is igniting reflation themes. Metals and small caps have gone wild since the Fed pivot on November 21st.
Global Markets & Economic Data
- US: ADP private payrolls data was surprisingly lower than expected driven by 120k of job losses at small businesses. Wage growth cooled, especially for job seekers. Mortgage applications are increasing in the wake of a fall in interest rates. Both services and manufacturing PMI data were still solidly in expansion territory.
- Switzerland/UK/Eurozone: The Swiss unemployment held steady at 2.9% in November and its manufacturing PMI hit the highest level since 2022 (but still remains slightly in contraction territory at 49.7. UK construction PMI data remains negative. Euro area energy inflation is forecast to fall in 2026. Spanish consumer confidence fell in Nov.
- Japan: A 10-year JGB auction hit 1.872%, up from 1.658% at the previous sale. Japanese manufacturing PMI is negative while services is positive.
Index Returns Summary
| Asset Class | MTD | YTD |
|---|---|---|
| MSCI World | +0.31% | +20.53% |
| MSCI Asia Pacific | -0.98% | +22.52% |
| MSCI Europe | +1.49% | +30.67% |
| MSCI China | -2.50% | +33.94% |
| Bloomberg Barclays Global Aggregate Index | +0.23% | +7.87% |
| Bloomberg Commodities Index | +2.90% | +11.54% |
| HFRX Global | +0.14% | +6.51% |
| HFRX Macro/CTA | +0.19% | +4.22% |
| HFRX Equity Hedge | +0.04% | +9.05% |
Index data as of November 30, 2025
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