The Pivot from Sagittarian Hype to Capricorn Iron
Saturn’s Grip and Venus’s Gamble
Markets navigated a week of mixed signals and subdued holiday trading volume, as investors digested central bank decisions, macroeconomic data, and ongoing geopolitical risks. Notably, central banks outside the U.S. made significant policy adjustments that could reverberate globally into 2026.
The Swiss National Bank surprised markets by cutting its policy rate by 50 basis points to 0.5%, citing subdued inflationary pressure and a cooling economic outlook. This move, taken ahead of the European Central Bank’s next policy meeting, reflects the diverging paths among global monetary authorities. In response, the Swiss franc weakened, with the dollar gaining 0.5% to trade at 0.8890 francs.
Elsewhere, Germany’s flash manufacturing PMI ticked higher to 43.2, its best reading in four months. However, the services sector contracted further, with the PMI falling to a nine-month low of 49.4. The divergence in European economic sectors continues to complicate policymaking in the euro area.
Stateside, market sentiment remains focused on the Fed’s 2026 rate trajectory. Chair Jerome Powell’s earlier comments—affirming that the labor market is no longer a significant source of inflation pressure—continue to underpin bets that rate cuts are likely to begin by mid-2026. That said, the recent hawkish hold has kept yields elevated and equity markets cautious.
Investment Returns
Equities delivered modest gains on the week, stabilizing after a volatile November. The S&P 500 rose approximately 0.8%, while the Nasdaq Composite added 1.2%, buoyed by strength in mega-cap tech and a short covering rally in semiconductors. The Dow Jones Industrial Average climbed 0.6%, still hovering near all-time highs.
Bond yields moved slightly lower across the curve. The 10-year Treasury yield slipped back below 4.1%, as dovish expectations from Europe weighed on global rate outlooks. The U.S. dollar index was flat for the week, as losses versus the franc were offset by gains against the yen and euro.
Commodities held steady. WTI crude hovered near $73 per barrel, showing little reaction to Middle East headlines or OPEC’s vague production signals. Gold inched higher, closing near $2,040/oz as real yields softened slightly. Bitcoin continued consolidating just above $41,000, lacking strong momentum as crypto markets digest recent ETF filings and regulatory headlines.
U.S. Economic Update
The domestic economic picture remains stable, though cracks are forming in certain segments. The labor market is loosening, but not collapsing. Initial jobless claims ticked up slightly, while continuing claims have reached their highest level since late 2021. However, wage inflation appears to be decelerating—consistent with Powell’s latest remarks that wage pressures are “no longer overheating.”
Consumer spending remains resilient going into the holidays, but credit card delinquencies are rising, and student loan repayments are starting to show up in discretionary spending data. Retail sales for November, while positive, were below expectations at +0.2% m/m, indicating softer demand as inflation bites into purchasing power.
Manufacturing activity remains lackluster, but the final S&P U.S. manufacturing PMI for December came in at 52.2, a solid improvement from the flash reading of 51.5. This expansionary reading suggests the sector may have found a floor, helped by falling input costs and supply chain normalization.
Inflation, while cooling, remains above the Fed’s target. November’s core PCE deflator is due next week and will be pivotal for markets looking for validation of a March or May rate cut.
Ex-U.S. Developments
While the Fed has shifted to a more dovish stance, central banks abroad are recalibrating faster. The Swiss rate cut and dovish ECB commentary highlight the growing divergence. Japan, meanwhile, remains in a holding pattern as the Bank of Japan defers any normalization, given weak domestic inflation and wage stagnation.
China remains a wildcard. Economic activity is uneven, with industrial output rising but real estate continuing to deteriorate. Beijing is expected to roll out new fiscal stimulus in early Q1 2026, likely targeting infrastructure and green tech sectors. Markets remain skeptical about the effectiveness of these efforts given the structural issues in private consumption and demographic decline.
Emerging markets saw mild capital inflows as rate pressures eased. The MSCI EM Index posted a modest 1.4% gain, led by Brazil and India, both benefiting from softening global yields and improving domestic growth stories.
Fund Industry Overview
Flows into U.S. equity ETFs were marginally positive for the week, focused primarily on large-cap growth and technology. However, mutual funds saw another week of outflows—especially from balanced and international equity funds—as retail investors continue to shift toward passive and thematic strategies.
Bond fund flows were mixed. While investment-grade corporate bond ETFs saw inflows amid falling yields, high-yield and municipal bond funds recorded redemptions, reflecting year-end tax loss harvesting and risk aversion.
Alternative assets saw increased interest, particularly in macro hedge funds and commodity trading advisors (CTAs), as volatility across rates and FX markets drew in tactical capital. Crypto funds had a relatively quiet week, but enthusiasm remains high ahead of the anticipated launch of spot Bitcoin ETFs in early 2026.
Current Market Archetypes: Astrology & Financial Vibes
This week’s planetary alignments bring a potent shift in mood as the Sun approaches its final degree in Sagittarius, ready to ingress into Capricorn. This transition historically correlates with a cooling-off phase in market sentiment—a pivot from risk-seeking optimism (Sagittarius) to pragmatic caution (Capricorn).
Mercury retrograde in Sagittarius (12°) continues to cloud communication and policy clarity. Investors may notice a rise in “market noise” and conflicting data points, especially with the Moon’s conjunction to Mars in early Capricorn—a signature for emotionally reactive decisions and sharp intraday volatility. This week’s moves in short-dated options and leveraged ETFs reflect that Mars-driven tactical trading behavior.
Venus in late Sagittarius (25°) points to enthusiasm and appetite for risk, particularly in speculative growth and tech—consistent with the Nasdaq’s outperformance. But it also signals overvaluation risks, especially in sectors where future earnings are discounted far out. As Venus moves into Capricorn next week, a tone of valuation discipline could return, likely curbing the rally unless earnings deliver in January.
Jupiter in retrograde Cancer (22°) forms a wide opposition to Saturn in Pisces (25°). This ongoing tension reflects the broader market struggle between liquidity-seeking and regulatory pressure. Market participants may feel torn between optimism about Fed cuts and concern about longer-term structural headwinds—mirroring the economic crosscurrents seen in data.
Meanwhile, Neptune and Saturn both nearing the final degrees of Pisces indicate the end of a long economic cycle—mirroring the waning of global QE, and the rise of structural disinflation. Pluto in early Aquarius continues to hint at transformational change in tech, AI, and digital finance—suggesting the next big sector rotation is quietly brewing beneath the surface.
Looking Ahead
As we head into the final trading week of the year, volumes will thin and markets may drift on low liquidity. However, next week’s U.S. core PCE data could act as a final catalyst for 2025 and shape the early 2026 rate cut narrative. Investors will also be watching year-end positioning, particularly in rates, tech, and energy sectors.
From an archetypal lens, the Capricorn ingress and tightening Mars-Moon conjunction suggest a sharp, focused tone. This favors companies with solid fundamentals and discourages further speculative chases. Caution may prove rewarding in the short term, especially with retrograde Mercury continuing to play tricks on macro narratives.
Stay defensive, stay rational, and watch for the pivot—not just from the Fed, but from the market’s internal rhythm.