Outrageous Predictions
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London Quick Take – 19 Dec -BoJ raises rates to 30yr high, Wall St recovers on misleading inflation data
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
I had a look at some key investing themes for 2026 here
and
European stock markets have an off-for-Christmas feel this morning with little going on, following a positive 1% gain for the Stoxx 600 yesterday. The FTSE 100 is flat this morning after advancing about 0.7% on Thursday. Brent crude is below $60, gold is above $4,320 after popping and running into resistance at $4,375 yesterday, near its record high. Bitcoin is at $88k. Sterling can't seem to make a move past $1.34 stick and retail sales data this morning for the UK shows the economy struggling.
Wall Street finished the session higher on Thursday, snapping a four-day losing streak as inflation came in a lot cooler than expected. There is a lot going on with the data – at best it’s unreliable, if not totally misleading.
US inflation was 2.7% in December 2025, the lowest since July and below forecasts. It was however affected by the record-long government shutdown, which limited the Bureau of Labor Statistics' ability to collect prices and resulted in some categories showing unusually low inflation. Treasury yields fell at the front end, but this was in data-gathering terms a horror show of a report- the BLS seems to have put 0 for inflation in some categories.
The soft inflation print was, however, enough for a rally. The S&P 500 rose 0.8% to 6,774, the Nasdaq Composite gained 1.4% to 23k, and the Dow Jones Industrial Average added 0.1%. Micron provided some extra cover for an AI recovery, jumping 10.2% after a blowout forecast points to tight supply in high-bandwidth memory used in artificial intelligence servers, while Nvidia gained almost 2% as the chip group steadied. After the close Oracle popped 5.4% as TikTok signed a U.S. joint-venture deal. An Oracle-led group will buy TikTok via a US JV with ByteDance. Nike fell more than 10% after reporting earnings that showed weak sales in China persisting.
It’s been a very busy season for central banks. The Bank of Japan raised its benchmark interest rate to 0.75%, the highest in 30 years, and said more increases are in the pipeline if conditions allow, citing a rising likelihood its economic outlook being realised. Japanese government bond yields rose sharply on the decision, with the 10-year JGB benchmark pulling several basis points higher and clearing 2.02%, the highest level since 1999.
Yesterday, the Bank of England cut the Bank Rate by 25 basis points to 3.75%, but it was a close vote (5-4) and the Bank noted that it was going to remain a tough call for further cuts at the same time as sounding a lot more dovish on inflation. The ECB kept rates unchanged for the fourth meeting - the next move is surely a hike.
Wall Street finished the session higher on Thursday, snapping a four-day losing streak as inflation came in a lot cooler than expected. There is a lot going on with the data – at best it’s unreliable, if not totally misleading.
US inflation was 2.7% in December 2025, the lowest since July and below forecasts. It was however affected by the record-long government shutdown, which limited the Bureau of Labor Statistics' ability to collect prices and resulted in some categories showing unusually low inflation. Treasury yields fell at the front end, but this was in data-gathering terms a horror show of a report- the BLS seems to have put 0 for inflation in some categories.
The soft inflation print was, however, enough for a rally. The S&P 500 rose 0.8% to 6,774, the Nasdaq Composite gained 1.4% to 23k, and the Dow Jones Industrial Average added 0.1%. Micron provided some extra cover for an AI recovery, jumping 10.2% after a blowout forecast points to tight supply in high-bandwidth memory used in artificial intelligence servers, while Nvidia gained almost 2% as the chip group steadied. After the close Oracle popped 5.4% as TikTok signed a U.S. joint-venture deal. An Oracle-led group will buy TikTok via a US JV with ByteDance. Nike fell more than 10% after reporting earnings that showed weak sales in China persisting.
It’s been a very busy season for central banks. The Bank of Japan raised its benchmark interest rate to 0.75%, the highest in 30 years, and said more increases are in the pipeline if conditions allow, citing a rising likelihood its economic outlook being realised. Japanese government bond yields rose sharply on the decision, with the 10-year JGB benchmark pulling several basis points higher and clearing 2.02%, the highest level since 1999.
Yesterday, the Bank of England cut the Bank Rate by 25 basis points to 3.75%, but it was a close vote (5-4) and the Bank noted that it was going to remain a tough call for further cuts at the same time as sounding a lot more dovish on inflation. The ECB kept rates unchanged for the fourth meeting - the next move is surely a hike.
and
Read my look at some ideas for 2026 here.
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