Don’t fight the Fed: 2026 will be a goldilocks year!? - Our Weekly Cross-Asset Views

This was a rather bumpy week, again mostly driven by bond markets (again). Early week was dominated by a bearish bond market led by the EUR curve (following hawkish remarks from I. Schnabel) until the FOMC triggered a sharp bull steepening in the US curve. Oracle’s miss, its accelerating capex and negative free cash flows also rekindled fears regarding the capital intensity momentum of the AI story and penalized the tech sector. On the political front, France has a Social Security budget for 2026 while slow motion is still the name of the game on the Ukraine-Russia peace talks.Week-to-date equity indices are up for the 3rd consecutive week but again modestly (MSCI World +0.6%) and ample sector dispersion, SPX reaches a new high above 6’900, US High Yield spreads widen at low level (+7bps @280bps), short-term implied vols are steady across the board while govies show some dispersion (EUR curve bull flattens, 10y UST and Gilt up 1bps). Commodities and FX were somewhat outliers this week with some noticeable moves (EURUSD +0.8% above 1.17; MXNUSD +0.9%), precious metals up (BCOMPR +4,2%) with a dovish Fed, Oil down 3.4%. Our Risk Perception index is down 7 pts to 15, the lowest since May 2024!2025 is not over yet (this is not your boss talking…) with a busy week ahead with the BOJ meeting and US November job data on the forefront next Friday…BoE, ECB, Riksbank and CPIs (US, Japan, UK).