The Monthly Market Wrap provides an insightful analysis of treasury yields, fixed income performance, mega-cap stocks, and key economic indicators in December 2025. It also delves into housing market data and the performance of commodities.
Key Stock Market Index Performance
Markets were split in December as international markets finished 2025 the strongest. Emerging markets led the way, up 3% for the month, as the S&P 500 ended virtually flat. The Russell 2000 posted the worst December of all indices, down 0.6%.
Sector performance was also split for the month, as financials led, advancing 3.1%. Communication services, materials and technology were all positive in December. Utilities took the most significant hit, ending down 5.1%, followed by real estate, which was down 2.1%.
Economic Data
The government resumed most economic data releases, providing more visibility into the broader economy.
Employment
The unemployment rate increased by 0.1 percentage points to 4.6%, and 64,000 jobs were added to the U.S. economy, according to the nonfarm payrolls report. This came in above the Dow Jones estimate of 45,000, marking a second consecutive month of exceeding expectations, following five straight months of missing the estimate.
Inflation vs. Fed Funds Rate
The inflation rate decreased to 2.68% in November, as did core inflation to 2.69%. These are the first readings since September, as October’s data was cancelled.
The CME FedWatch tool indicates just a 16% chance for a fourth consecutive rate cut when the FOMC meets next on January 28th. Despite lacking the full scope of key economic indicators, rates were cut by an additional 25 basis points in December, totaling 75 basis points for the year.
Housing Prices and Mortgage Rates
Existing home sales increased by 0.49% MoM in November, and the median sales price of existing homes decreased to $409,200. Mortgage rates were largely unchanged in December, ending the month at 5.44% for the 15-year and 6.15% for the 30-year.
While new single-family home sales remain unreported, the NAHB Housing Market Index can be used to measure homebuilder confidence, providing an early indication of construction sentiment and future building activity.
Fixed Income
Treasury yield movement was split in December, as the short end of the curve decreased and the long end increased, with the 2-year remaining unchanged. The largest decline occurred in the 1-month, down 31 basis points to 3.74%. The 30-year had the most significant jump, up 17 basis points to 4.84%.
Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.