Dear Quay Financials,
The views expressed are Ed le Feuvre's personal market observations and do not constitute investment advice, a financial promotion or a recommendation to buy or sell any security. Read the full disclaimer.
The final week of the year is supposed to be quiet. Screens left on, phones half-checked, markets gently marking time while everyone waits for January to tell them what really matters. Yet even in Week 52, with liquidity thin and conviction thinner, prices kept talking. Not loudly, but persistently.
I’m writing this from a crowded airport lounge, Christmas travel plans delayed, watching the boards refresh between announcements. It is a fitting backdrop for year-end markets: plenty of motion, very little progress, and an underlying sense that everyone is simply trying to arrive somewhere intact.
This was not a week for new narratives to form. It was a week for marking books, smoothing optics and carrying positions across an artificial finish line. The calm looked seasonal rather than conclusive.
Let’s turn to the week.
Recap: Where We Left Off (Week 51)
Week 51 closed with markets balanced between relief and fragility. Disinflation remained just supportive enough to keep rate-cut expectations alive, while growth stayed firm enough to prevent a broader risk unwind. The rally held, but it continued to narrow, driven more by flows and liquidity than fresh conviction.
Large-cap technology led again, small caps lagged, and AI regained its footing after a brief wobble without returning to full euphoria. Japan supplied the late-week macro signal as the Bank of Japan’s subtle shift in tone reminded investors that ultra-low rates become asymmetric once they finally move. What did materialise in Week 52 was the thin-liquidity behaviour flagged last week. What did not materialise was a fresh macro narrative strong enough to reset positioning before year-end.
This Week: Thin Liquidity, Loud Signals, and the Year-End Mark Game; When Leverage Does Not Take a Holiday
Weekly Market Table
| Asset | Close | Weekly move | Prior week move | Notes |
|---|---|---|---|---|
| S&P 500 | 6,929.94 | +1.4% | +0.5% | Quiet day; solid week |
| Nasdaq Composite | 23,593.10 | +1.2% | +1.2% | AI bid held up |
| Russell 2000 | 2,534.35 | +0.2% | -0.4% | Small-caps lagged |
| FTSE 100* | 9,870.68 | -0.3% | +1.1% | Closed 25–26 Dec |
| STOXX 600* | 588.61 | +0.5% | +1.1% | Record-adjacent |
| Nikkei 225 | 50,704 | +0.6% | -0.6% | Japan open on 26th |
| Hang Seng* | 25,818.93 | +1.9% | +0.2% | Closed 25–26 Dec |
| Gold (COMEX, Dec) | $4,529.10 | +0.4% | +1.0% | New highs |
| WTI (front month) | $58.35 | +2.7% | +3.2% | Rebound attempt |
| Bitcoin (CME, Dec) | $86,923.48 | -8.8% | -4.6% | Volatility back |
| US 10Y Treasury | 4.13% | -2 bps | -1 bps | Curve mildly steeper |
| US 2Y Treasury | 3.48% | -4 bps | -2 bps | Cuts still priced |
| DXY (US$ index) | 97.89 | -0.7% | +0.4% | Dollar softened |
*For markets closed on Friday 26 December, the close shown is the latest available (typically Wednesday 24 December).
US & Global Equities
- US large caps: The S&P 500 gained 1.4% and the Nasdaq Composite 1.2%. The week looked solid on the index level, but the source note remains the more useful description: year-end liquidity was thin, AI support held up, and the absence of sellers mattered as much as fresh buying.
- Small caps: The Russell 2000 rose only 0.2%, after falling 0.4% the prior week. The divergence remained consistent with tighter credit, refinancing risk and margin pressure weighing more heavily on smaller companies than on cash-rich large caps.
- Europe: The FTSE 100 slipped 0.3% while the STOXX 600 added 0.5%. Holiday closures make the comparison imperfect, but defensive balance sheets and yield continued to offer support without creating a broad growth narrative.
- Asia: The Nikkei 225 rose 0.6% and the Hang Seng 1.9%. Japan remained a careful momentum trade, while Hong Kong’s stronger weekly move came in a holiday-distorted global session rather than a clean change in macro conviction.
Gold, Digital Assets and Other Assets
- Gold: COMEX gold closed at $4,529.10, up 0.4% for the week and at new highs. The behaviour still looks structural rather than emotional, consistent with diversification demand and unease over the policy mix rather than a single fear event.
- Bitcoin: CME December Bitcoin fell 8.8% to $86,923.48 after a 4.6% decline the prior week. The holiday move reinforced the source note’s central point: leverage does not take a holiday, and thin liquidity can turn an ordinary adjustment into a much larger price move.
- Oil: WTI rebounded 2.7% to $58.35, but the move remained an attempt at a base rather than evidence of restored pricing power. Supply and demand continued to matter more than geopolitical headlines.
- Dollar: The DXY fell 0.7% to 97.89. A softer dollar helped the broader risk backdrop at the margin, but it did not alter the larger year-end regime of selective risk-taking and thin participation.
Macro & Policy
- Rates: The US 10-year yield eased 2 basis points to 4.13%, while the 2-year fell 4 basis points to 3.48%. The curve steepened mildly and rate cuts remained priced, preserving the market’s soft-landing comfort trade without resolving the tension between sticky inflation and slower growth.
- Bond market: Treasuries remained the quiet dissenters. Equities were comfortable treating weaker data as policy fuel, while the long end continued to resist a simple lower-rates narrative. That disagreement is more informative than any single holiday-session index close.
Geopolitical Analysis
- Energy risk: The absence of a lasting geopolitical premium in oil remained the clearest signal. Markets were reacting to barrels, inventories and supply discipline rather than to every headline. Hope and fear both struggled to overpower physical market conditions.
- Signalling versus substance: Thin holiday markets can exaggerate reactions to political headlines. Week 52 offered little evidence that geopolitical signalling had materially changed capital flows, which kept the focus on rates, liquidity and year-end positioning.
What's Pertinent This Week (Week 52)?
‘Santa’ showed up, but the room was empty. The S&P 500 and Nasdaq posted respectable weekly gains, yet small caps barely moved and holiday volumes were thin. For capital allocation, the distinction matters: index strength generated by positioning is less persuasive than strength accompanied by broad participation.
Gold and bonds told a more cautious story. Gold reached new highs while Treasury yields eased only modestly. That combination suggests the market still wants policy easing without fully accepting that inflation and funding risks have disappeared. Diversification retained value precisely because the dominant equity narrative remained narrow.
Crypto exposed the cost of leverage in thin conditions. Bitcoin’s 8.8% weekly fall was the sharpest move in the table. The lesson for allocation was not ideological. Liquidity, position sizing and leverage mattered more than the holiday narrative, especially when market depth was poor.
What Will Week 1 Bring?
Early January: Manufacturing and Labour Data
The turn of the year brings volume back before it brings clarity. Manufacturing data will be tested for evidence that growth is cooling without stalling, while labour-market positioning will begin to adjust ahead of the next payrolls release. January forces December’s assumptions to confront real participation again.
Other catalysts:
Treasury yields, credit spreads, regional lending conditions, the yen and early Q4 earnings guidance all have the capacity to challenge current pricing. The common thread is whether the market can keep treating softer growth as welcome policy fuel without allowing funding stress to spread into risk assets.
Strategic positioning:
Optionality remains useful after a holiday rally built on thin liquidity. Cash and short-duration instruments preserve flexibility, while equity exposure benefits from attention to breadth, balance-sheet quality and financing sensitivity. The bond market and credit conditions deserve at least as much attention as the headline indices.
Ed's Closing Bell
Week 52 was never going to deliver answers. It was about mechanics, positioning and behaviour in the absence of conviction. Thin liquidity smoothed the surface, but it did not remove the underlying tension. If anything, it disguised it.
As the departure board keeps changing above me, the market feels much the same. Everyone is moving, everyone has a destination, and very few have much control over the timetable. January will bring data, guidance and policy scrutiny back into focus, along with the participation needed to test whether December’s calm was real.
The year therefore closes with calm on the surface and leverage beneath it. The first week of 2026 will tell us rather more about which of those two descriptions deserves to survive.
Final Words
As ever, these reflections are my own and are intended to provoke thought, not to provide investment advice. Markets have a reliable habit of humbling certainty, particularly when liquidity is thin and positioning is crowded.
Please conduct your own research and seek appropriate professional advice before making investment decisions.
From the airport lounge
In markets, the most dangerous moment is not when everyone disagrees, but when everyone is waiting.
Further Reading
- Federal Reserve Minutes and Policy Commentary
- US Earnings Previews for Q4
- Japan Policy Signals and FX Commentary
- Energy Supply Data
- Liquidity and Funding Indicators
Full Disclaimer
The views expressed in this blog are my own personal market observations and reflections. They do not constitute investment advice, a financial promotion, or a recommendation to buy or sell any security. This publication is not made in my capacity as a director of Quay Financials (Gibraltar) Limited, which is authorised and regulated by the Gibraltar Financial Services Commission. You should always conduct your own research and seek independent advice appropriate to your circumstances before making any investment decision.
Information has been obtained from sources believed to be reliable, but no representation or warranty is given as to its accuracy, completeness or timeliness. Market levels and weekly changes are compiled from public market data available at 29 December 2025 and may vary by venue, instrument and closing convention. The value of investments and the income derived from them may fall as well as rise, and investors may not recover the amount originally invested. Past performance is not a reliable indicator of future results. Readers should conduct their own research and obtain independent professional advice appropriate to their circumstances before making an investment decision.
