China’s manufacturing sector showed tentative signs of stabilisation at the end of 2025, with business conditions edging back into expansion territory, according to the latest S&P Global/Rating Dog Purchasing Managers’ Index data. While the improvement was modest, the rebound marked a welcome shift after months of subdued momentum, driven primarily by stronger domestic demand rather than a recovery in exports.The result echoed the earlier official PMIs:China official December 2025 PMIs: Manufacturing 50.1 (exp 49.2) Non-manu 50.2 (exp 49.8)The headline seasonally adjusted PMI rose to 50.1 in December from 49.9 in November, moving just above the 50 threshold that separates contraction from expansion. The reading signalled a fractional improvement in operating conditions and marked the fourth month of improvement in the past five months, suggesting the sector may be bottoming out after a prolonged period of weakness.Manufacturing output returned to growth in December after stagnating earlier in the fourth quarter. Producers cited stronger inflows of new work, supported by domestic new product launches and business development efforts, which helped lift overall sales. However, the recovery remained uneven. New export orders declined for the second time in three months, reflecting still-subdued external demand and highlighting the ongoing drag from weak global conditions.Despite rising new orders, firms remained cautious in their purchasing behaviour. Overall purchasing activity stagnated as many manufacturers reported holding sufficient stocks of raw materials and semi-finished goods. Nevertheless, inventories of inputs increased after declining in November, partly reflecting improvements in supplier performance. Vendor delivery times shortened again in December, aided by better communication and service levels among suppliers.Employment continued to contract, with staffing levels falling for a second consecutive month. Survey respondents pointed to a combination of resignations and redundancies, with job cuts frequently linked to restructuring efforts and cost-control measures. Reduced workforce capacity, combined with higher sales volumes, contributed to a faster accumulation of backlogs, with unfinished work rising at the quickest pace in three months. To meet demand, firms increasingly drew down existing stocks of finished goods, leading to another decline in post-production inventories.Cost pressures intensified toward year-end, driven mainly by higher raw material prices, particularly metals. Input prices rose for a sixth consecutive month, with the pace of increase the fastest since September. Despite this, manufacturers continued to cut selling prices in an effort to support sales and clear inventories, extending a divergence that has weighed on profit margins. Exporters were an exception, with export prices rising for the first time in three months as firms sought to defend margins.Business sentiment remained positive heading into 2026, although optimism softened from November and stayed below historical averages. Manufacturers expressed cautious confidence that new products, expansion plans and expected policy support would underpin a gradual recovery next year, even as uncertainty around the durability of the current upturn persists. -China publishes two main PMI surveys, each capturing different parts of the industrial landscape. The official PMI is compiled by the National Bureau of Statistics and focuses primarily on large, state-owned and government-linked enterprises. Alongside this, the private-sector PMI, produced by S&P Global / RatingDog, places greater emphasis on small and medium-sized enterprises, making it a closely watched gauge of conditions in China’s private economy.The distinction matters. While the official PMI tends to reflect conditions among larger firms with better access to credit and policy support, the private-sector survey is often seen as more sensitive to shifts in domestic demand, pricing power and employment conditions. Methodological differences also play a role, with the Caixin/RatingDog survey drawing from a broader and more diverse sample of companies. Despite these contrasts, the two PMIs often move in the same direction, offering complementary signals on the health of China’s manufacturing sector. This article was written by Eamonn Sheridan at investinglive.com.

Data released by China's National Bureau of Statistics (NBS) for the official manufacturing and non-manufacturing PMIs in December 2025. -The screenshot adds in the priors, not mentioned in the text.The screenshot does not show the 'Composite' which has come in at 50.7, up from 49.7 in November. -China publishes two main PMI surveys, each capturing different parts of the industrial landscape. The official PMI is compiled by the National Bureau of Statistics and focuses primarily on large, state-owned and government-linked enterprises. Alongside this, the private-sector PMI, produced by S&P Global / RatingDog, places greater emphasis on small and medium-sized enterprises, making it a closely watched gauge of conditions in China’s private economy. The RatingDog PMI is due at 0145 GMT. The distinction matters. While the official PMI tends to reflect conditions among larger firms with better access to credit and policy support, the private-sector survey is often seen as more sensitive to shifts in domestic demand, pricing power and employment conditions. Methodological differences also play a role, with the Caixin/RatingDog survey drawing from a broader and more diverse sample of companies. Despite these contrasts, the two PMIs often move in the same direction, offering complementary signals on the health of China’s manufacturing sector.This release includes the official manufacturing and non-manufacturing PMIs, alongside the private-sector manufacturing PMI.Taken together, today’s PMI readings are likely to reinforce expectations for further policy support in 2026, as Chinese authorities seek to stabilise growth, shore up confidence and arrest the slide in industrial activity heading into the new year.Markets are likely to view the PMI prints as encouraging, but as still reinforcing the narrative of persistent slack in China’s industrial cycle, with limited immediate upside for risk assets. Chinese equities and broader Asia-Pacific markets may struggle to find traction, while base metals could remain capped on concerns around weak end-demand. In FX, the data should keep the yuan biased to the downside at the margin, particularly if the private-sector PMI confirms ongoing stress among smaller firms. From a policy perspective, soft PMIs strengthen expectations for additional targeted stimulus in early 2026, including fiscal support and incremental monetary easing, which may limit downside risk over the medium term. For global markets, weak China data is likely to reinforce disinflationary impulses, supporting bonds and keeping a lid on global yields, while offering modest support to the US dollar against cyclical and commodity-linked currencies. This article was written by Eamonn Sheridan at investinglive.com.

The People's Bank of China (PBOC), China's central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a "band," around a central reference rate, or "midpoint." It's currently at +/- 2%.The previous close was 6.9940.People's Bank of China injects 528.8bn yuan via 7-day reverse repos in open market operations, rate remains 1.4%.---Earlier:PBOC is expected to set the USD/CNY reference rate at 6.9945 – Reuters estimateThe daily fixing of this mid-rate is often interpreted as a policy signal rather than just a technical reference point. A higher-than-expected USD/CNY midpoint is typically read as a sign the PBOC is leaning against CNY appreciation pressure, like today. In recent months, the People’s Bank of China has taken deliberate steps to moderate the speed of appreciation in the onshore yuan, signalling a preference for stability over sharp currency gains. Rather than targeting a specific level, policymakers appear focused on preventing an overly rapid rise in CNY that could disrupt trade, capital flows and domestic financial conditions. Yesterday USD/CNY fell below 7.0 for the first time since May 2023. The PBoC is slowing the appreciation of the yuan, but hasn't stopped it. ---Piecemeal stimulus steps continue from China:China eases property taxes but avoids bold housing stimulus (property downturn drags on)China is extending a value-added tax (VAT) exemption on certain residential property sales, adding another incremental policy measure aimed at stabilising its long-running real estate downturn. While the move lowers transaction costs for homeowners, it underscores Beijing’s preference for targeted relief rather than more forceful intervention.China boosts consumer trade-in subsidies, expands scheme to digital products in 2026China is stepping up efforts to revive household spending, allocating fresh funding from ultra-long special treasury bonds to expand its consumer trade-in subsidy scheme. The programme, first launched in 2024, will be broadened in 2026 to include digital and smart products, as policymakers look to counter weak growth momentum and rebalance the economy toward consumption.---Still to come (very soon!)Economic and event calendar in Asia Wednesday, December 31, 2025 - China PMIs for December This article was written by Eamonn Sheridan at investinglive.com.

TL;DR summary:China is extending a value-added tax (VAT) exemption on certain residential property sales, adding another incremental policy measure aimed at stabilising its long-running real estate downturn. While the move lowers transaction costs for homeowners, it underscores Beijing’s preference for targeted relief rather than more forceful intervention.---China will extend a policy waiving value-added tax on selected home sales, as authorities continue to search for ways to ease the country’s persistent property slump without deploying more aggressive stimulus measures.Under the policy, individuals selling residential properties they have owned for at least two years will remain exempt from paying VAT, according to a statement from the Ministry of Finance issued on Tuesday. The exemption will take effect from Friday, 2 January 2026. Homes sold within two years of purchase will continue to attract a VAT charge of 3%.The extension marks a modest but symbolically important easing compared with previous rules in some major cities. In markets such as Shanghai, sellers of homes held for less than two years were previously subject to VAT rates as high as 5%. Many of China’s largest cities had already rolled out VAT exemptions in late 2024, but the latest move formalises and extends the policy at a national level.The measure comes against the backdrop of a prolonged real estate crisis that has weighed heavily on economic growth, local government finances and household confidence. China’s once-dominant property sector has been hit by falling home sales, weak buyer sentiment and tightening developer liquidity, leading to the collapse or restructuring of several major firms, including China Evergrande Group. Even China Vanke Co, long viewed as one of the sector’s most resilient players, has come under mounting pressure amid rising debt concerns and declining home prices.Official data showed that home prices in China recorded their steepest year-on-year decline in more than a year, underscoring the depth of the downturn. The property sector’s weakness continues to drag on consumer sentiment and investment, complicating Beijing’s efforts to stabilise growth as the economy slows.Chinese leaders have pledged to increase policy support for the housing market following a key economic meeting this month. Measures under discussion include encouraging government purchases of existing housing stock, particularly for conversion into affordable housing. However, policymakers have so far stopped short of adopting the more forceful steps some economists argue are necessary, such as direct cash subsidies for homebuyers or large-scale government investment to clear excess inventory.As a result, the VAT exemption extension is likely to be seen as another incremental step rather than a decisive turning point. While it reduces transaction costs and may help unlock some pent-up supply, analysts caution that restoring confidence in the housing market will require broader measures to address weak demand, developer balance sheets and expectations around falling prices. This article was written by Eamonn Sheridan at investinglive.com.

The People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader international FX conditions, and domestic economic considerations such as capital flows, growth momentum and financial stability objectives. The midpoint is not a purely mechanical calculation, allowing policymakers discretion to guide market expectations. Once the midpoint is announced, onshore USD/CNY is free to trade within the allowable band. If market pressures push the yuan toward either edge of that range, the central bank may step in to smooth volatility. Intervention can take the form of direct buying or selling of yuan, adjustments to liquidity conditions, or guidance through state-owned banks. As a result, the daily fixing is often interpreted as a policy signal rather than just a technical reference point. A stronger-than-expected CNY midpoint is typically read as a sign the PBOC is leaning against depreciation pressure, while a weaker fixing for the CNY can indicate tolerance for a softer currency, often in response to dollar strength or domestic economic headwinds.In periods of heightened global volatility, such as shifts in US rate expectations, trade tensions or capital flow pressures, the fixing takes on added significance. For investors, it provides insight into Beijing’s currency priorities, balancing competitiveness, capital stability and financial market confidence. This article was written by Eamonn Sheridan at investinglive.com.

TL;DR summary:China is stepping up efforts to revive household spending, allocating fresh funding from ultra-long special treasury bonds to expand its consumer trade-in subsidy scheme. The programme, first launched in 2024, will be broadened in 2026 to include digital and smart products, as policymakers look to counter weak growth momentum and rebalance the economy toward consumption. Even more summarised:LOL, this is a drop in the ocean ;-)---China will initially allocate 62.5 billion yuan (around US$11.5 billion) from ultra-long special treasury bond funds this year to support its consumer subsidy programme, according to a report by Chinese state media outlet Xinhua. The scheme offers financial incentives for households to replace older consumer goods, forming part of Beijing’s broader push to shore up domestic demand amid persistent economic and trade headwinds.Launched in 2024, the programme provides subsidies when consumers replace ageing home appliances, bicycles and vehicles. Authorities are now preparing to expand its scope further in 2026, with digital and smart products set to be included for the first time. Under the new plan, consumers purchasing smartphones, tablets, smartwatches and smart wristbands will qualify for a 15% rebate, capped at 500 yuan per item, according to a joint statement from China’s state planner and finance ministry.While the total size of the 2026 funding envelope has not yet been disclosed, China has already earmarked 300 billion yuan in special treasury bonds this year, with funds to be released in batches. Of that amount, 62.5 billion yuan will be deployed initially to support the trade-in programme.The scheme also continues to target big-ticket household and vehicle purchases. Consumers buying any of six major categories of home appliances, including refrigerators, washing machines and televisions, are eligible for subsidies of up to 15% of the purchase price, capped at 1,500 yuan per item. In the auto sector, buyers scrapping older vehicles receive subsidies equivalent to 12% of the purchase price of new energy vehicles (NEVs), capped at 20,000 yuan. Those replacing older cars with new NEVs without scrappage qualify for subsidies of up to 8%, capped at 15,000 yuan.The expanded incentives come as China’s economy showed renewed signs of strain in November, with factory output growing at its slowest pace in 15 months and retail sales recording their weakest performance since the lifting of zero-Covid restrictions. The data underline the urgency for Beijing to cultivate new growth drivers as it heads into 2026.Chinese leaders have pledged to significantly raise the share of household consumption over the next five years. Consumption currently accounts for around 40% of gross domestic product, well below levels seen in advanced economies such as the United States. Some government advisers have called for stronger policy support for services spending and argue the consumption share should be lifted to around 45% over the medium term. ---Note, coming up from China today (preview): China PMIs for December This article was written by Eamonn Sheridan at investinglive.com.

Summary: The December meeting minutes from the Federal Open Market Committee reveal a finely balanced debate over the decision to cut interest rates, with policymakers divided between growing labour-market risks and lingering concerns over inflation credibility. While most participants see scope for further easing if disinflation resumes, several warned against moving too quickly while inflation remains above target.---Minutes from the Federal Reserve’s December policy meeting, released on December 30, show a central bank increasingly split between supporting a softening labour market and preserving confidence in its inflation-fighting credentials.Several participants who ultimately supported lowering the federal funds rate said the decision was “finely balanced,” noting they could have supported leaving rates unchanged. Some policymakers preferred holding steady to gain greater confidence that inflation is returning to the Fed’s 2% target, while one participant (political appointee Miran) favoured a larger 50-basis-point reduction. Those backing the cut judged that downside risks to employment had increased, while upside inflation risks appeared to be easing.Most participants supported lowering the target range to 3.50%–3.75%, and judged that further rate cuts would likely be appropriate if inflation continued to decline broadly in line with expectations. However, two(Goolsbee and Schmid dissented in favour of no rate cut) argued for keeping rates unchanged for a period following the December move, in order to assess the lagged effects of recent policy easing as the Fed shifts toward a more neutral stance.Inflation remained a key source of caution. Participants noted that price pressures had risen through September and remained above target, with core services inflation easing but core goods inflation picking up, a development staff largely attributed to higher tariffs. While many expected near-term inflation to remain elevated before gradually returning to 2% as tariff effects faded, several warned that cutting rates too aggressively could risk inflation becoming entrenched or be misinterpreted as weakening the Fed’s commitment to its target.On the labour market, most participants observed continued softening, with hiring subdued and unemployment edging higher. Labour-market risks were broadly seen as tilted to the downside, particularly for cyclically sensitive groups, even as overall economic activity was judged to be expanding at a moderate pace. Consumption remained supported by higher-income households, while lower-income spending was more muted. Many participants expect growth to pick up in 2026 and run near potential over the medium term, albeit with elevated uncertainty.The minutes also highlighted technical discussions around balance-sheet policy, with agreement that reserves have declined to ample levels and that reserve-management purchases may soon be warranted to maintain smooth money-market functioning. This article was written by Eamonn Sheridan at investinglive.com.

Via oilprice.com:While the headline and distillates showed smaller builds than expected the gasoline build was much greater. --Expectations I had seen centred on:Headline crude +2.39 mn barrelsDistillates +1.75 mn bblsGasoline +1.55 mn---This data point is from a privately-conducted survey by the American Petroleum Institute (API).It's a survey of oil storage facilities and companiesThe official government inventory report is due Wednesday morning US time.The two reports are quite different.The official government data comes from the US Energy Information Administration (EIA)Its based on data from the Department of Energy and other government agenciesWhereas information on total crude oil storage levels and variations from the previous week's levels are both provided by the API report, the EIA report also provides statistics on inputs and outputs from refineries, as well as other significant indicators of the status of the oil market, and storage levels for various grades of crude oil, such as light, medium, and heavy.the EIA report is held to be more accurate and comprehensive than the survey from the API--- There are plenty of moving parts in oil markets right now, including a resurfacing of tensions amongst ostensible close allies:Oil traders note - Saudi airstrikes in Yemen expose escalating tensions with UAEFrom yesterday:Saudi Arabia said it carried out strikes targeting weapons depots linked to the Southern Transitional Council (STC), a UAE-backed southern separatist faction seeking to restore an independent South Yemen along pre-1990 borders. According to Saudi officials, the weapons were delivered via two ships from Fujairah port in UAE, a claim that sharply escalates the political significance of the operation. Any visible rupture between Riyadh and Abu Dhabi introduces a new layer of uncertainty for energy markets. Both countries sit at the heart of global oil supply chains, and rising intra-Gulf tensions risk inflating geopolitical risk premiums, particularly if disputes spill into maritime chokepoints or shipping logistics.For now, the confrontation remains indirect. This article was written by Eamonn Sheridan at investinglive.com.

China is set to publish a fresh round of Purchasing Managers’ Index (PMI) data later today, Wednesday, December 31, offering another timely snapshot of economic momentum at the end of a difficult year for the world’s second-largest economy. China publishes two main PMI surveys, each capturing different parts of the industrial landscape. The official PMI is compiled by the National Bureau of Statistics and focuses primarily on large, state-owned and government-linked enterprises. Alongside this, the private-sector PMI, produced by S&P Global / RatingDog, places greater emphasis on small and medium-sized enterprises, making it a closely watched gauge of conditions in China’s private economy.The distinction matters. While the official PMI tends to reflect conditions among larger firms with better access to credit and policy support, the private-sector survey is often seen as more sensitive to shifts in domestic demand, pricing power and employment conditions. Methodological differences also play a role, with the Caixin/RatingDog survey drawing from a broader and more diverse sample of companies. Despite these contrasts, the two PMIs often move in the same direction, offering complementary signals on the health of China’s manufacturing sector.Today’s release includes the official manufacturing and non-manufacturing PMIs, alongside the private-sector manufacturing PMI. Economists surveyed by Reuters expect China’s official manufacturing PMI to remain at 49.2 in December, unchanged from November and firmly below the 50 threshold that separates expansion from contraction. If confirmed, it would mark a ninth consecutive month of contraction in factory activity.Persistent weakness reflects a combination of subdued domestic demand, falling industrial profits and ongoing uncertainty around global trade. Chinese manufacturers continue to face the lingering effects of high U.S. tariffs, even as they attempt to diversify export markets. A broader global slowdown has also weighed on orders, complicating Beijing’s efforts to rebalance the economy away from heavy reliance on exports and investment.Separate data released over the weekend showed China's industrial profits falling 13.1% year-on-year in November, the sharpest decline in more than a year, underlining the pressure on the manufacturing sector. Against that backdrop, analysts expect the private-sector PMI to edge down to 49.8 from 49.9 previously, remaining in contractionary territory.Taken together, today’s PMI readings are likely to reinforce expectations for further policy support in 2026, as Chinese authorities seek to stabilise growth, shore up confidence and arrest the slide in industrial activity heading into the new year. Markets are likely to view another sub-50 PMI print as reinforcing the narrative of persistent slack in China’s industrial cycle, with limited immediate upside for risk assets. Chinese equities and broader Asia-Pacific markets may struggle to find traction, while base metals could remain capped on concerns around weak end-demand. In FX, the data should keep the yuan biased to the downside at the margin, particularly if the private-sector PMI confirms ongoing stress among smaller firms. From a policy perspective, soft PMIs strengthen expectations for additional targeted stimulus in early 2026, including fiscal support and incremental monetary easing, which may limit downside risk over the medium term. For global markets, weak China data is likely to reinforce disinflationary impulses, supporting bonds and keeping a lid on global yields, while offering modest support to the US dollar against cyclical and commodity-linked currencies. This article was written by Eamonn Sheridan at investinglive.com.

Seems like everyone wants to get in the gold crowded Long. Even Goldman Sachs says to buy gold and sell oil, but what about our Euro traders and investors? EURUSD continues to trade in a technically sensitive zone, where order flow dynamics reveal more than standard price charts alone. While spot price action may appear orderly, under-the-hood execution tells a clearer story about who is in control and where the pressure points lie.Using orderFlow Intel, which tracks buy and sell aggression, delta behavior, and value acceptance, we can frame the current EURUSD environment as one that still leans bearish, unless proven otherwise by sustained acceptance above key reference levels.EURUSD Tecnical Analysis and Bigger Picture: Distribution, Not AccumulationFrom a higher-level perspective, order flow suggests that EURUSD has been distributing rather than building a base.Key observations:Buying activity has become less efficient, requiring more volume to achieve less upside progress.Value has gradually migrated lower instead of expanding upward.Positive delta bursts have repeatedly failed to translate into sustained acceptance at higher prices.This combination typically reflects seller control through absorption, not panic selling, but persistent enough to keep rallies capped.In short, the market is not collapsing, but it is also not preparing for a clean bullish continuation.Another technical analysis perspective, the 1hr chart below for EURUSD futures, shows price activated te bear flag (yellow channel broken to the downside) and price travelling in a downtrend, shown via the pitchfork below.EURO USD Lower-Timeframe Insight: Execution Confirms the BiasZooming into the lower-level order flow reveals how this weakness is expressing itself intraday.What stands out:Multiple pullbacks show little to no buyer defense at the lows.Temporary positive delta readings appear reactive, not initiative-driven.After brief bounces, selling pressure quickly reasserts itself.This behavior supports a sell-the-rally environment, rather than a buy-the-dip one, as long as price remains below key VWAP-based references.Key Levels That Matter Right Now for EURUSD Futures (6E1!)Several levels stand out as decision points, not predictions.1. 1.18135 - Yesterday’s VWAPThis level acts as a line in the sand for the bearish case.As long as price remains below and rejected from this level, downside scenarios remain valid.Sustained acceptance above yesterday’s VWAP would challenge the bearish premise and signal that sellers are losing control.This is not about a quick spike above, but about holding and building value above it.2. 1.1806 - Today’s VWAPThis is a near-term execution level.If price retraces upward toward 1.1806 and shows weak buying response, it could act as a potential short-entry area to consider.From an order flow perspective, this level often attracts both liquidity and algorithmic interest.As always, execution decisions are at your own risk, and confirmation matters.3. 1.18 - Semi-Round Psychological LevelThe 1.18 handle carries psychological and structural significance.Repeated interaction around this area increases its importance.A clean break below with acceptance would strengthen the bearish continuation case.Failure to break, followed by strong acceptance above VWAP levels, would weaken it.Markets often rotate around such semi-round numbers before committing to direction.What Would Change the Bias for the Bearish Bias on EURUSD?For EURUSD to shift away from its current bearish tilt, orderFlow Intel would need to show:Sustained positive delta with improving efficiency.Clear buyer defense at pullbacks.Value building and holding above yesterday’s VWAP.Until then, rallies are suspect, and patience favors waiting for price to come to key reference levels rather than chasing moves.Final Thoughts for Euro Traders and InvestorsEURUSD is currently offering a structured environment for decision support, not a high-conviction breakout. OrderFlow Intel suggests that sellers still have the upper hand, but also defines clear invalidation points.For traders, this means focusing on context, levels, and confirmation, not prediction. For investors, it highlights a market that remains fragile near resistance, rather than one that has decisively turned higher.As always, this analysis is a decision-support tool, not financial advice. Trade at your own risk. Visit investingLive.com for additional views. This article was written by Itai Levitan at investinglive.com.

The team at Goldman Sachs is out with their big 2026 Commodities Outlook, and they aren't mincing words. If you’re looking for a theme to hang your hat on next year, Daan Struyven and the team call it: "Ride the Power Race and Supply Waves."The gist? The US-China fight for AI and geopolitical dominance is going to light a fire under metals, while a massive wave of new supply is going to drown energy markets.We’ve seen this divergence already in 2025—precious metals ripping higher while oil lags—and Goldman thinks that trade will continue.Here are the 5 themes:Goldman’s Top Trade: Long Gold to $4,900/oz by Dec ’26Brent seen averaging just $56 in 2026The "LNG Supply Wave" is huge: US exports to surge 50% by 2030Copper to consolidate near $11,400 before the next AI leg higherBattery metals (lithium/nickel) to get crushed by Chinese supplyGoldman’s framework is simple. On the macro side, you have the "Power Race"—the US and China competing for AI supremacy and geopolitical leverage. That is bullish for strategic metals. On the micro side, you have "Supply Waves"—massive new capacity coming online in energy.Here is the breakdown of the actionable ideas:1. Buy GoldGoldman calls gold their "single favorite long commodity." They see prices hitting $4,900/oz by the end of 2026. The driver is central banks Goldman expects them to buy 70 tonnes per month in 2026. That is 4x the pre-2022 average.Goldman Sachs also notes that gold ETFs are just 0.17% of US private portfolios. We're not even close to crowded on the retail side yet.Sell OilThey see oil as a supply victim with brent averaging $56/bbl and WTI at $52/bbl next year (spot at $62 and $58, respectively). They say the supply wave will end in 2026 but it doesn't matter because the surplus is already here. Unless OPEC+ makes massive cuts or we see major disruptions (Russia/Iran), the inventory builds are going to weigh on price.3. Hold copperCopper has had a monster run -- one I've been forecasting for years -- but Goldman sees it taking a breather, consolidating around $11,400/t in 2026. They say not to 't get shaken out by the consolidation. They call copper their "favorite industrial metal" for the long run. The AI/Data center build-out and electrification demand will put a floor under prices. If China stockpiles strategic metals,, that floor gets even higher.4. Avoid battery metalsIf you're looking for a bottom in Lithium or Nickel, Goldman says keep waiting. China is heavily investing in overseas supply (Africa, Indonesia) to guarantee security for the AI/Tech race. That means a flood of supply is hitting the market regardless of price. They see lithium prices dropping another 25% by year-end 2026.5. Natural gas: global glut, but the US is differentThey see a multi-year LNG supply wave: global LNG supply +50% by 2030 vs 2024, implying lower ex-US gas prices over time. But because the US is the big supplier, LNG exports become export demand for US gas — tightening the US market enough to keep Henry Hub supported in 2026/27. That shows up in the spread call: TTF–Henry Hub narrowing from $8.40 to $5.40/$3.05 in 2026/27, with TTF at 29/20 EUR/MWh and US gas at $4.60/$3.80.Another notable tidbit is that they estimate US power demand growth near 3%, with many regions already at/below critical spare capacity levels. This article was written by Adam Button at investinglive.com.

Sector OverviewThe industrials sector is showing notable gains today, with Boeing (BA) leading the pack with a rise of 1.24%. This uptick might be attributed to positive developments in aerospace and defense, providing a lift to the overall sector.Conversely, the consumer cyclical sector appears to be under pressure. Amazon (AMZN) has dipped by 0.70%, highlighting investor caution or potential apprehension regarding future consumer spending trends.The semiconductor sector, with companies like LAM Research (LRCX) gaining 0.59%, and slight advances in Intel (INTC) at 1.28%, indicates a cautiously optimistic mood among investors.Market Mood and TrendsToday’s market sentiment is a mix of cautious optimism and sector-specific reactions. The positive sentiment in the industrials sector contrasts sharply with the hesitancy seen in consumer cyclicals. This divergence might signify a focus on durable goods and infrastructure improvements, overshadowing short-term consumer behavior concerns.The fluctuations within technology, particularly semiconductors, underscore a nuanced market outlook, where tech giants maintain strategic importance despite mixed performances.Strategic RecommendationsGiven the current climate, investors might consider reinforcing positions in industrial stocks, particularly within the aerospace sector, to capitalize on stability and growth potential. Attention should be paid to potential catalysts in defense and manufacturing that could drive further gains.On the other hand, caution is advised regarding consumer cyclical stocks, with a focus on understanding consumer sentiment and spending behavior assumptions.The modest advancements in semiconductors suggest room for strategic investment, especially in companies showing resilience amid fluctuating market conditions.To stay informed on these dynamic market shifts, continually follow up-to-date reports and analyses at InvestingLive.com for strategic adjustments and opportunities. This article was written by Itai Levitan at investinglive.com.

The latest CaseShiller housing price index of the 20-largest US cities showed prices up 1.3% year-over-year, just a shade above the +1.2% consensus but a deceleration from the +1.4% y/y reading in September.On a monthly basis, home prices rose 0.3%, beating the +0.1% consensus. The September reading was revised to +0.2% from +0.1%.A separate data set from the FHFA painted a similar picture with prices up 1.7% year-over-year nationally. That number was the lowest in 13 years. It's a weak data point to cap off a miserable year for home builders. There is some regional disparity with Mid-Atlantic prices rising 5.3% and lower Midwest prices down 0.7% y/y.The silver lining is that it improves affordability for home buyers, at least in inflation-adjusted terms. Home affordability is a major and growing political issue.Trump promised "aggressive' housing reform next year, though few details have leaked.“There are a lot of things that we can do with regulations to try to help get stuff approved quicker,” said National Economic Council Director Kevin Hassett said on Fox Business. “And we can also do things like reward states that make it easier for people to build a new home.” At the same time, Trump acknowledge the conflict of improving affordability while preserving home values."I don't want to knock those numbers down, because I want them to continue to have a big value for their house. At the same time, I want to make it possible for young people out there and other people to buy housing," he said."In other words, you create a lot of housing all of a sudden, and it drives the housing prices down. So I want to take care of the people that have houses that have a value to their house that they never thought possible, that have sort of made them wealthy and happy, and especially in their later years. Got to be careful with that. I want to keep them up. At the same time, I want to make it possible for people to go buy houses," he continued.That's a tough needle to thread but one thing Trump is sure to do is try to drive down borrowing costs, something he will lean on a new Fed chair to do. He also floated the idea of suing Fed chair Powell on Monday. This article was written by Adam Button at investinglive.com.

There has been a lot of talk lately about the rise in U.S. debt, and rightly so. This year alone, it has increased by more than $2 trillion. What is even more worrying is that interest payments on the debt continue to rise. According to the Congressional Budget Office's summary for fiscal year 2025, net interest on the public debt has exceeded $1 trillion for the first time as the debt continues to grow.Even if the Federal Reserve continues to cut rates despite the economy's strength and persistent inflation risks, interest costs are unlikely to fall in the short term. The public debt is expected to continue to rise, especially after this year's “One Big Beautiful Bill Act,” which, according to the CBO, will add $3.4 trillion to the deficit over the next decade. In the longer term, the outlook is not much better. The CBO's long-term budget outlook for 2025-2055 predicts that by 2055, U.S. debt could reach 156% of GDP, and it is expected to continue rising after that date. Such enormous debt could slow economic growth, increase payments to foreign holders of U.S. debt, and pose serious risks to the country's fiscal and economic health.Given all this, the dollar index is expected to weaken, and Treasury yields are unlikely to drop anytime soon, even if the Fed maintains a loose monetary policy and the S&P 500 continues to rise. But it’s worth remembering that the U.S. isn’t alone in this. Besides Japan, where sovereign debt exceeds $10 trillion — approximately 2.4 times the country's GDP — with interest payments consuming nearly 25% of the national budget, China is facing its own debt challenges. IMF data shows that over the past 15 years, China’s gross debt as a percentage of GDP has jumped from 33% to over 96%. With China planning to expand fiscal spending in 2026 to support growth in a challenging global environment, things are unlikely to improve soon.At first glance, it might seem that China’s debt situation isn’t as dire as the U.S., but that figure doesn’t include hidden local government debt. Using the IMF’s broader definition, China’s general government debt jumps to an estimated 124% of GDP once off-budget local obligations are counted. Meanwhile, total non-financial debt exceeds 300% of GDP.If China's debt burden continues to rise, it could lead to higher government financing costs, local defaults, and increased stock market volatility. This article was written by IL Contributors at investinglive.com.

If not for the AI boom and massive government deficits, I suspect the broader US economy would look more like the housing industry.The massive hangover from ultra-low rates during covid continued this year, despite early hope for optimism. The home builders' ETF ($XHB) tells the story. It was rocked early in the year along with the Liberation Day trade, then attempted a reversal from April only to stumble again in the fourth quarter, finishing the year fractionally lower.The chart itself flatters the performance of overall home builders, as high-end builders did better due to divergence in the US economy. The latest index of home builder sentiment from the NHB was at 39, which is near rock bottom levels.At various points in the year hopes for lower rates helped home-builder sentiment but we're now in some kind of trough of disillusionment. There are a couple of rate cuts fully priced in for next year but there is fear that any cuts won't work their way to the long end of the curve, and may even steepen it. US home buyers generally use 30-year fixed mortgages so the Fed has little power to control that with overnight rates, and even in Trump's most-dovish dreams, the potential for further QE to drive down long-term yields is remote. That means there are few levers to pull to offer a strong boost to housing.Yesterday, there was some stronger economic data on the housing front. Pending home sales rose 3.3% compared to 1.0% expected. There is pent-up demand building and at some point that could be released. Ironically, it could come when consumers start to sense higher rates coming.Today we get another housing indicator on the economic calendar with the CaseShiller house price index and the price numbers from the FHA (the US regulator). Those are expected up 1.2% y/y and 1.7% y/y, respectively.Other data on the US economic calendar today includes the Dallas Fed services sector survey, which always has some interesting commentary, and the FOMC minutes from the Dec 9-10 meeting. The later could be a market mover if it highlights a timeline for further rate cuts (or not). It was one of the more-contentious decisions of the past decade.Aside from the data, look for the ebb and flow to dominate markets today as it's the last full trading day of the year. S&P 500 futures are currently flat. This article was written by Adam Button at investinglive.com.

It is reported that China is to mandate chipmakers to use at least 50% of domestically made equipment for adding new capacity, as Beijing looks to keep up the push in building a self-sufficient semiconductor supply chain.The sources noted however that the rule is not one that will be publicly documented. But should chipmakers seek state approval to build or expand their plants, they are said to have been told to show proof in their procurement tenders that at least half their equipment are Chinese-made.The push here is quite a significant one by Beijing, who seem to be happy to double down and hunker down by stripping itself of any reliance on foreign technology. That especially after the US has continued to tighten technology export restrictions since 2023, having banned sales of advanced AI chips and semiconductor equipment to China.But with this new mandate, it even sees China look to alienate supply of foreign equipment from the likes of Japan, South Korea, and Europe in favour of domestic suppliers.That being said, the sources said that local authorities will grant flexibility depending on supply constraints. In particular, areas where domestically developed equipment is not yet fully available. However, applications which typically fail to meet the 50% threshold should be rejected.One of the sources mentioned that:"Authorities prefer if it is much higher than 50%. Eventually they are aiming for the plants to use 100% domestic equipment."As Beijing continues down this path, the big winner seems to be China's largest chip equipment group, Naura Technology. That's one big name to keep an eye out for next year alongside its smaller rival, Advanced Micro-Fabrication Equipment (AMEC).Chinese firms will be looking to turn to these two names, especially in the area of chip etching during microfabrication - which is a crucial step in the manufacturing process. This article was written by Justin Low at investinglive.com.

Well, a brand new year will mark the changing of the guard so to speak in terms of voting members at the Fed. And we will get to that in a couple of days' time, so it is important to understand the dynamics of the situation especially since we're entering a rather delicate timeline for the central bank.The Fed managed to sneak in one final rate cut for the year earlier this month. However, markets are taking on the view that the next move will need a lot more convincing. As things stand, the next full 25 bps rate cut is only priced in for June 2026 with there being ~60 bps of rate cuts priced in for the year ahead.As we move closer to neutral, the push to cut rates will lessen but that is something that Trump doesn't really want. So, the political pressure will be there even as inflation pressures might not ease as much in the first half of the year. But once Powell is gone and we get into the second half of 2026, it might be a different story on the inflation narrative.And if the labour market continues to soften, that will at least give the Fed some added flexibility to stick to the plot of cutting rates. Otherwise, stagflation risks are going to be a consideration instead. So, policymakers will be hoping that the backdrop doesn't develop as such.In any case, the main cast of voting members will remain unchanged next year but the most important thing to note is that Fed chair Powell's term will be ending on May 2026.Jerome Powell (Fed chair)Philip Jefferson (Fed vice chair)Michelle Bowman (Fed vice chair for supervision)Michael Barr (Fed governor)Christopher Waller (Fed governor)Lisa Cook (Fed governor)Stephen Miran (Fed governor)John Williams (NY Fed president)With Powell out of the equation, we'll likely get a Trump puppet in place though the race is now between the two Kevins. Hassett is one that is more aligned with Trump's views whereas Warsh is slightly more favoured by Wall Street to take over. But in any case, expect this to reflect a more dovish shift in terms of voting stance as compared to Powell - who is often a more neutral player.Then, there's also the curious case of Miran who is expected to leave when his term expires at the end of January. So, he will at least be voting once again for the 28 January policy decision. He is a Trump puppet and has been pushing for a 50 bps rate cut since joining the fray, so don't expect that to change next month.His replacement will likely be a permanent appointee by Trump, so don't expect any less dovishness on this one to say the least. But until one is appointed, Miran will stay on in that position. So, it's an indifferent motion really.Everyone else on the list above tends to lean more neutral to dovish as of late, so that sort of stance is expected to continue as we get into the new year.As for the rotating members, we are seeing a change up with the fresh names coming in being:Beth Hammack (Cleveland Fed)Anna Paulson (Philadelphia Fed)Lorie Logan (Dallas Fed)Neel Kashkari (Minneapolis Fed)And the ones rotating out will be:Susan Collins (Boston Fed)Austan Goolsbee (Chicago Fed)Alberto Musalem (St Louis Fed)Jeffrey Schmid (Kansas City Fed)I commented previously on the change as such:"Hammack and Logan should be like-for-like replacements to Goolsbee and Schmid on the central bank dove versus hawk scale. And if anything, they might even be more hawkish. So, it will be a tough task to want to change their minds in pushing for stronger conviction on rate cuts."So, that sort of keeps things as they are to what we saw in the December meeting. That at least to start the year.But with Powell set to depart and the possible "inflation mirage" forming in the second half of 2026, it might be a case that we will see the Fed slowly turn more dovish as a whole in due time; all else being equal. A push for an earlier rate cut, perhaps in April, remains on the table as well. So, it's not to say that we will have to wait out Powell before seeing that happen.Come what may, Trump might not get his wish of wanting rates to come down quicker. However, he will at least get a more dovish tilt out of the central bank unless we see a material shift in the economic trend for next year. This article was written by Justin Low at investinglive.com.

Prior +3.0%HICP +3.0% vs +3.0% y/y expectedPrior +3.2%Spanish headline inflation comes in slightly below the readings in November but more or less within estimates at least. The most important metric though is core annual inflation and that is still seen at 2.6%, similar to the previous month. As such, that continues to reflect stickier price pressures in the Spanish economy in general. But at least overall economic activity is among the better performers in the euro area, unlike *coughs* Germany *coughs*. This article was written by Justin Low at investinglive.com.

Oil traders note - Saudi airstrikes in Yemen expose escalating tensions with UAEChina defies easing calls as PBOC keeps rates steady and shifts focus to fiscal supportSilver steadies after sharpest sell-off in 5 years as metals head for best year since 1979PBOC sets USD/ CNY central rate at 7.0348 (vs. estimate at 7.0112)South Korea to unveil MSCI Developed Market inclusion roadmap early next yearTrump warns Iran of renewed strikes, keeps Middle East oil risk premium simmeringUS oil inventories surprise higher as geopolitics keeps crude supportedNvidia completes $5bn Intel investment as strategic partnership takes shapeApple China iPhone demand rebound bolsters US$300–$315 price target outlookFinancial markets across the region traded in subdued fashion as the countdown to 2026 continued and most professional participants remained in holiday mode. Major FX pairs were confined to narrow ranges, regional equities were quietly mixed, and Japanese government bond yields eased slightly. The data calendar was largely empty, keeping conviction low. In commodities, oil prices were steady to marginally higher, while silver clawed back some ground following its sharp recent correction.Geopolitics provided the main source of direction, though markets largely looked through the headlines. In Asia, China conducted a further 10 hours of live-fire drills around Taiwan on Tuesday, extending what Beijing has described as its largest-ever exercises around the island. The drills, spanning multiple zones in surrounding sea and airspace, were framed by China’s Eastern Theatre Command as a show of resolve against separatism. The manoeuvres follow a recent US announcement of a large arms package for Taiwan. Despite the scale of the exercises, broader market reaction remained muted.Elsewhere, Middle East risk continued to underpin energy markets. US President Donald Trump warned that Washington could support fresh strikes should Iran be found rebuilding weapons programs, while also urging Hamas to disarm. The comments revived regional risk considerations and reinforced a geopolitical premium in oil, even in the absence of immediate supply disruptions.Oil prices were also supported earlier by conflict-related headlines from Ukraine and Yemen. Saudi Arabia carried out airstrikes in southern Yemen targeting STC-linked positions and, for the first time, accused weapons supplies of arriving via UAE channels — a notable escalation that highlights a widening rift between Riyadh and Abu Dhabi. The episode adds a new layer of uncertainty to Middle East stability.Meanwhile, US inventory data showed crude stocks rising by 405,000 barrels last week against expectations for a draw, with gasoline inventories jumping nearly 3 million barrels. Ordinarily bearish, the figures were largely shrugged off as geopolitical concerns continued to dominate price action.Overall, thin liquidity and year-end positioning kept markets range-bound, with geopolitics shaping risk sentiment more than fundamentals for now. Asia-Pac stocks:Japan (Nikkei 225) -0.25%Hong Kong (Hang Seng) +0.45% Shanghai Composite -0.1%Australia (S&P/ASX 200) -0.1% This article was written by Eamonn Sheridan at investinglive.com.

TL;DR summary:Saudi Arabia carried out airstrikes in southern Yemen, indirectly confronting the UAE.Riyadh accused UAE-linked channels of supplying weapons to southern separatists.The episode exposes a widening Saudi–UAE rift with potential oil-market implications.Quiet but long-simmering tensions between Saudi Arabia and the United Arab Emirates (UAE) moved into the open after Saudi airstrikes in southern Yemen, marking the first time Riyadh has directly opposed its former ally in the Yemen conflict.Saudi Arabia said it carried out strikes targeting weapons depots linked to the Southern Transitional Council (STC), a UAE-backed southern separatist faction seeking to restore an independent South Yemen along pre-1990 borders. According to Saudi officials, the weapons were delivered via two ships from Fujairah port in UAE, a claim that sharply escalates the political significance of the operation.The strikes reportedly hit the port of Mukalla in Yemen’s eastern Hadramout province, an area that has become increasingly sensitive as rival regional powers jockey for influence along key Red Sea and Gulf of Aden trade routes. While Riyadh has long viewed the STC’s separatist ambitions as a strategic red line, the latest action suggests Saudi Arabia is now willing to confront the UAE’s role more directly, albeit through proxy dynamics on Yemeni soil.Saudi–UAE friction has been building for years beneath the surface. Once aligned in Yemen against the Houthi movement, the two powers have diverged sharply over end-game objectives. The UAE has cultivated strong ties with southern militias and port infrastructure, while Saudi Arabia prioritises territorial integrity along its southern border and fears that Yemeni fragmentation could destabilise the region.The implications extend well beyond Yemen. Any visible rupture between Riyadh and Abu Dhabi introduces a new layer of uncertainty for energy markets. Both countries sit at the heart of global oil supply chains, and rising intra-Gulf tensions risk inflating geopolitical risk premiums, particularly if disputes spill into maritime chokepoints or shipping logistics.For now, the confrontation remains indirect. But the strikes underscore how Yemen is once again emerging as a flashpoint, not just for regional proxy wars, but for fractures among Gulf allies themselves. This article was written by Eamonn Sheridan at investinglive.com.