Good News! …Well, Maybe.

David Halseth
Dec 21, 2025
2 min read

For the week ended 12/20/25.

In a report somewhat distorted by the recent government shutdown, we learned that year-over-year inflation slipped from September’s 3.0% to 2.7% in November. October, apparently, has been lost to the dustbin of history. Still, the number came in below the 3.1% consensus forecast from the economic sages polled by the Wall Street Journal – and that alone was enough to get a few investors reaching for the bubbly.

Before we pop the champagne, overindulge in holiday treats, and then rush off to urgent care with chest pains that turn out to be nothing more than a heroic gas bubble, let’s slow down and read the fine print.

Thanks to the shutdown, there were meaningful gaps in the underlying data. Employees at the Bureau of Labor Statistics simply couldn’t fully compile, scrub, and translate the avalanche of information that feeds into CPI. Housing costs – roughly one-third of the index – are the most glaring example. They were effectively penciled in at a 0% increase. Stew on that for a moment.

Bottom line: the month-over-month change from September to November relied on more assumptions than usual. That said, directionally lower inflation is still better than the alternative. Let’s call it a tentative win and move on.

Markets, for their part, responded with a collective shrug. Outside of cryptocurrencies (more on that pain later), asset prices barely budged. Bonds were the week’s “big” winner, up about 30 basis points, followed by domestic equities with a modest 10-basis-point gain. Foreign stocks and bonds were flat to slightly lower, and most other asset classes clustered around the same ho-hum range.

Stepping back, 2025 is shaping up to look downright festive. Foreign stocks are up a hefty 33% year-to-date, while domestic equities are ahead by a respectable 17.7%. And yes, I’ve been unapologetically critical of fixed income since 2021, but credit where it’s due: multiple Federal Open Market Committee rate cuts have finally done their thing, with bonds up roughly 7.1% so far this year. Headlines aside, investors across most asset classes should be smiling… except, of course, for crypto speculators. Ouch.

Looking ahead to this holiday-shortened week, the economic calendar delivers two items that actually matter: the long-awaited Q3 GDP report and the latest read on consumer confidence. Never forget – consumers remain the engine of the U.S. economy, even when they’re grumpy.

With that, may you enjoy a wonderful holiday season. I’ll see you in 2026. Merry Christmas and Happy New Year.