ab 23 December 2025 Global Research US Economic Data Strong Q3 GDP pulls up 2025 growth Source: BEA, Haver, UBS Economics Americas Abigail Watt Economist abigail.watt@ubs.com +1-212-882 6929 Strong GDP to lift annual growth rates The BEA estimates real GDP expanded 4.3% (saar) in Q3, ahead of estimates and which mathematically lifts our 2025 Q4/Q4 and annual average growth rates. As a result we revised up our 2025 Q4/Q4 real GDP projection by ¼ pp to 2.0%. In Q3, real personal consumption expenditures rose ...

Japan Outlook Report Foreign Exchange - Global Japanese macroeconomic outlook and market strategies for 2026 1. Japan's economy: We look for ongoing recovery as core inflation falls below 2% We believe Japan's economy will remain on a recovery path in 2026, with consumer spending supported by PM Takaichi's economic package and strong capex to compensate for labor shortages. We expect core CPI inflation (all items less fresh food) to fall below 2% y-y in 2026 Q1 and remain there for a year. We base this outl ...

Core Insights - The Federal Reserve's interest rate decisions significantly influence economic activity and corporate profitability, with a friendlier Fed generally benefiting investors [1][4]. Interest Rate Decisions - The Federal Reserve meets approximately every eight weeks to set interest rates, indirectly affecting borrowing costs for businesses and consumers [2]. - The Fed Funds Rate, which is the rate banks charge each other for overnight reserves, impacts Treasury yields, lending rates, and overall interest expenses [4]. Rate Changes and Economic Impact - In 2025, the Federal Reserve cut rates by 0.75%, but the outlook for further reductions in 2026 remains uncertain [5]. - The Fed's dual mandate aims to balance low unemployment and low inflation, but these goals often conflict, especially in 2025 as inflation rose while unemployment also increased [9]. Inflation Trends - Inflation was recorded at 2.3% in April 2025, rising to 3% by September before decreasing to 2.7% in October, influenced by incomplete data collection due to a government shutdown [10].

The traditional Santa Claus Rally period encompasses the final five trading days of 2025 (December 26, 29, 30, 31, and January 2) and represents one of the most closely watched seasonal patterns in market history. Since 1969, the S&P 500 ($SPX) (SPY) has averaged gains of 1.3% during this seven-day period, with positive returns occurring roughly 78% of the time. The phenomenon is attributed to various factors including year-end portfolio adjustments, tax-loss harvesting completion, pension fund rebalancing, ...

Economic Context - Consumers are shifting their spending focus from discretionary items to essential needs due to economic concerns, with many accepting elevated prices as the new normal [1][2] - Nearly half of U.S. consumers identified inflation as a top concern, although worries about rising prices have decreased by seven percentage points compared to the previous year [2] Consumer Behavior - 50% of consumers plan to delay purchases in discretionary categories such as electronics, accessories, and dining out [3] - Lower-income consumers are particularly affected by high prices on essentials and are worried about tariff-related price increases [3] Company Actions - Yankee Candle, owned by Newell Brands, is implementing a global productivity plan that includes reducing its workforce by over 900 employees, approximately 10% of its professional and clerical staff [5][6] - The company will close about 20 underperforming stores in the U.S. and Canada, which represent roughly 1% of brand sales, with closures expected to take effect in January 2026 [7] Financial Impact - Newell Brands anticipates pre-tax restructuring charges of approximately $75 million to $90 million, primarily for severance costs, with most charges recognized by the end of 2026 [7] - The productivity plan is expected to generate annualized pre-tax cost savings of approximately $110 million to $130 million once fully implemented [7] Company Performance - Newell's third-quarter results indicated challenges, with the company holding $4.8 billion in outstanding debt [12] - Yankee Candle's net sales were reported at $1.8 billion, a decline of 7.2% compared to the prior year, with core sales down 7.4% [11] - Gross margin decreased to 34.1% from 34.9% in the prior year, while operating margin improved to 6.6% from negative 6.2% [11]

The holders of U.S. debt have shifted drastically over the past decade, tilting more toward profit-driven private investors and away from foreign governments that are less sensitive to prices. That threatens to turn the U.S. financial system more fragile in times of market stress, according to Geng Ngarmboonanant, a managing director at JPMorgan and former deputy chief of staff to Treasury Secretary Janet Yellen. Foreign governments accounted for more than 40% of Treasury holdings in the early 2010s, up ...

Core Insights - Peter Thiel connects rising home prices to inflation, emphasizing that rent is a significant cost for lower-middle-class individuals, more so than groceries or eggs [1] - A Reuters poll indicates that U.S. home prices are expected to rise by only 1.4% in 2026, suggesting a slowdown in growth compared to previous years [1] - The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index shows a 45% increase in home prices over the past five years, indicating that the average value of a single-family home has nearly doubled [2] Housing Market Dynamics - Thiel highlights that population growth in cities leads to disproportionate increases in house prices, which rise by 50% while salaries do not keep pace, resulting in wealth transfer from younger generations to older homeowners and landlords [3][6] - The inelastic nature of real estate, particularly in areas with strict zoning laws, exacerbates the housing crisis [3] - Federal Reserve Chairman Jerome Powell has echoed concerns about the ongoing housing shortage, stating that there is not enough housing supply to meet demand [7] Housing Shortage Statistics - The U.S. faced a housing shortage of 4.7 million properties in 2023, despite the addition of 1.4 million new homes [8] - Elevated mortgage rates are a significant barrier for many Americans trying to enter the housing market, with rates projected to average 6.28% in 2026 [9] Investment Opportunities - The article discusses various investment strategies in real estate, including fractional ownership and crowdfunding platforms, which allow individuals to invest in rental properties with lower capital requirements [13][18] - Commercial real estate, particularly grocery-anchored properties, is highlighted as a resilient investment option amid high vacancy rates in other sectors due to the pandemic [20][22] - First National Realty Partners (FNRP) offers opportunities for accredited investors to invest in essential goods properties, with a minimum investment of $50,000 [22][23]

Core Viewpoint - Mortgage rates have remained stable in a narrow range of 6.2% to 6.3%, with expectations that they will not change significantly in the near future [1][5]. Economic Context - The current economic situation features a weakening labor market alongside persistent inflation, complicating the outlook for mortgage rates [2][4]. - Government shutdowns have disrupted the release of key economic reports, limiting the ability to assess trends affecting mortgage rates [2][3]. Federal Reserve Actions - The Federal Reserve has been cutting benchmark interest rates, but inflation remains above the 2% target, leading to a divided outlook among committee members regarding future interest rate direction [4][5]. - Economists predict only minor fluctuations in mortgage rates due to the mixed economic and policy environment [5][6]. Market Expectations - The Mortgage Bankers Association forecasts mortgage rates to remain between 6% and 6.5% over the next few years, while other economists expect rates to average around 6.3% by 2026 [5]. - There is a consensus that substantial drops in mortgage rates are unlikely unless significant economic changes occur [6]. Market Dynamics - Mortgage rates typically begin to decline before the Federal Reserve cuts interest rates, as seen in the past summer when rates fell despite the Fed's rate cuts [7].

Social Security will continue to provide income for future retirees, but the amount you ultimately receive may look different than what appears on today’s statements. Current projections show that once the Social Security Trust Fund’s reserves run short in 2033, the program may only be able to cover about 77% of scheduled benefits unless Congress acts. Rising costs for retirees may also outpace the modest annual COLA increases. Simply put, if nothing changes, future retirees may only receive about three ...

Hall said, "Social Security has a cost-of-living adjustment [that] keeps up with inflation. Our investments will also adjust over time if we keep some growth in the mix. The real lever is spending. When prices bite, pull back on nonessentials. Maybe fewer big trips for a season. Maybe different choices than what you have always done. Keep core bills matched to steady income and let the portfolio work."We don’t marry a 3% or 4% rule [for the percentage of your retirement funds to withdraw each year ]. We set ...