It’s never too late to believe in Santa. Investors on Monday were shrugging off the bad news of past week – especially the one that suggested that the Federal Reserve (Fed) would cut its rates only two times in 2025 due to a too resilient US economy. Yesterday’s data that showed that the US durable goods orders fell more than expected in November, the new home sales rebounded slightly less than expected and the consumer confidence unexpectedly dropped in December. This bag of bad news helped tempering the latest hawkish shift in Fed expectations. As such, the buyers are out and buying. The S&P500 rebounded 0.73%, Nasdaq 100 rallied more than 1% and even the European Stoxx 600 eked out a small gain, as Novo Nordisk in Denmark jumped more than 5.5% as investors rushed in to buy a dip on bet that the weight loss drugs are here to stay.

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Other than that, the technology stocks kicked off the week in a great shape. Nvidia rallied nearly 3.70%, Apple advanced toward fresh highs, while the Magnificent 7 stocks – together – gained around 1.50%. The small caps however were left behind, with the Russell 2000 index sliding 0.22%. The concentration is back on the menu this year-end – perhaps as the higher yields drive capital toward the big cap companies that are less pressured by higher borrowing costs than their small and mid-cap peers.

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Even though the equity markets looked joyful on Monday, the US 2-year papers remained offered and the US dollar erased earlier losses to finish the session higher against most majors. The EURUSD couldn’t hold on to gains above the 1.04 and slipped below this level on expectation that the morose European growth and political shenanigans demand a decent help from the European Central Bank (ECB) next year. In France, Macron placed French politics’ heavy weights in his newly formed government, but even the hefty names will hardly convince its divided government to agree on a budget deal that aims to narrow the French budget deficit. Across the Channel, Cable remained under pressure as softer-than-expected Q3 growth reinforced the ‘pain before gain’ narrative and boosted appetite for a more supportive Bank of England (BoE) policy while waiting for government spending to show up in the numbers. The EURGBP however remained offered near the 50-DMA and remains set for a further slide toward the 82 cents mark on the diverging ECB and BoE outlooks, where ECB expectations are sensibly softer than the BoE’s. In Japan, the USDJPY is back testing the 157 offers and could easily extend gains toward the 160 mark.

Meagre news and data flow should keep the focus on a more hawkish Fed. The pullbacks in the US dollar are probably good opportunities to buy the dips against most majors. As per equities, the rally extends but the questions regarding the ballooning valuations of Big Tech stocks become louder, too. Two stellar years of more than 20% gains for the S&P500 definitely calls for correction. But no one is willing to leave the festive table, just yet.