Market Insights December 9, 2025

Oil: a support level that raises questions

Negative signals continue to mount for oil: global inventories are increasing, the likelihood of an imminent peace in Ukraine appears to be fading, and the long-awaited domestic recovery in China has yet to materialize. Yet Brent crude remains resilient, holding above $60 per barrel despite a decline of over 50% from its 2022 highs. Several factors explain this relative firmness: a shift in OPEC’s stance, now abandoning plans to raise output, and limited spare production capacity. Moreover, investor sentiment remains deeply negative, with very cautious positioning, an indication that much of the bad news is already priced in. Should global growth prospects improve, even modest positive signals could trigger a sharp price rebound. We advise remaining vigilant: in a market dominated by pessimism, even a glimmer of optimism could present opportunities.

Is the Fed supporting the year-end rally?

Internal debates within the Federal Reserve’s Board of Governors came to light a few weeks ago, when the US government shutdown temporarily halted the release of key economic indicators. Deprived of comprehensive data on activity trends, the labour market, and inflation dynamics, several FOMC members voiced differing views on the timing and scope of monetary easing. Some governors advocated for a pause to avoid loosening policy too quickly, while others stressed the urgency of supporting the economy amid early signs of a slowdown.

Since the end of the shutdown, the normal resumption of statistical releases, including a moderation in core inflation, a less tight labour market, and slightly weaker activity indicators, has helped clarify the economic outlook. These more interpretable data points reinforce the Fed’s accommodative stance and fully justify a new 25-basis-point rate cut this week.

In this context, the announcement of further monetary easing should create a supportive

environment for a year-end rally in equity markets, particularly on Wall Street. This is all the more likely given that the market consolidation seen in November helped to "clear out" the excessive optimism that had built up over recent months, a factor that had started to weigh on the upward momentum of US equities. As a result, major indices could end the year at new all-time highs, buoyed by the prospect of a durably supportive monetary policy and the gradual improvement in macroeconomic prospects for 2026.

Nevertheless, while this scenario clearly benefits equities, the impact on the bond market appears more uncertain. Indeed, the yield on 10-year US Treasury notes remains elevated and has struggled to fall back below the symbolic 4% threshold. Several factors account for this resilience: on the one hand, investors continue to harbour concerns about long-term inflation; on the other, rising public debt issuance and large federal deficits are maintaining an abundant supply of bonds, which in turn limits the downward pressure on yields. In other words, while the Fed’s accommodative policy supports equity market dynamics, it does not guarantee a significant decline in long-term rates.

This week’s figure: 0%

As of the end of November, Swiss inflation stands at 0% year-on-year. This context of price stability paves the way for persistently low interest rates, which should support Swiss financial assets. Moreover, the Swiss National Bank retains leeway to counter any unwarranted appreciation of the Swiss franc.