In today’s briefing:
- The Fed’s Upcoming Productivity Bet
- A Healing Bull
- Oil futures: Crude holds gains as peace talks stall, rate cut optimism
- Middle East (December 5th 2025)
The Fed’s Upcoming Productivity Bet
- A Trump-dominated Fed is on the verge of a rate cutting cycle based on a probable Greenspan-style bet on AI-driven productivity.
- If AI does significantly boost productivity, the economy could be in for a period of non-inflationary growth and prosperity
- The risk is a policy error, rising inflation and a falling USD. Much depends on the usefulness of AI across different applications and industries.
A Healing Bull
- While the charts are signaling bull-bear indecision on the surface, technical signals favour a short-term bullish resolution for a rally into year-end and beyond.
- However, the Fed rate decision could be the source of market volatility next week.
- This is consistent with the seasonality pattern of a choppy first half of December, followed by a rally into year-end starting in mid-December.
Oil futures: Crude holds gains as peace talks stall, rate cut optimism
- Crude oil futures were steady on the week but up from Monday’s lows after US-Russia talks failed to find a breakthrough, while growing optimism on a US rate cut also helped to bolster sentiment.
- Front-month Feb26 ICE Brent futures were trading at $63.71/b (2041 GMT) versus Thursday’s settle of $63.26/b, while Jan26 NYMEX WTI was at $60.07/b against a previous close of $59.67/b.
- Benchmarks recovered from early-week lows, rebounding around 2% after negotiations between the US and Russia in Moscow broke off without a deal to end the Russia-Ukraine conflict.
Middle East (December 5th 2025)
GCC’s non-oil PMI’s looking good, Saudi budget will continue to be expansionary.
Multinationals in Riyadh push office rents higher.
Saudi banks’ resources getting pricier.
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