Weekend Update #259
Thank you for your continued support and engagement. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
Equities ended the week in positive territory, led by gains in the tech sector, after whipsawing through key events. Following the Federal Reserve’s 25 basis point rate cut last week, market participants looked to the November jobs report and CPI readings to gauge the potential for further cuts in 2026. Government data showed the unemployment rate reached 4.6% in December, the highest since September 2021, while core CPI inflation increased at 2.6%, the lowest since March 2021. Both indicators moved in favorable directions to suggest the Federal Reserve still has room to lower interest rates in the year ahead. AI-linked companies entered the week under pressure from a Broadcom earnings report that led to its shares’ worst three-day selloff since 2020. Positive earnings from Micron to end the week helped paint a picture that the AI theme may be regaining its footing going into year-end. Thursday’s CPI report and a less hawkish than feared Friday Bank of Japan conference also enabled equities to rebound into the end of the week.
In economic data for the week, the nonfarm payrolls report showed the U.S. added 64,000 jobs in November, slightly higher than the 50,000 expected. However, delayed data from October showed the U.S. lost 105,000 jobs in October, with broad-based industry weakness but mainly driven by cuts within the federal government. The labor force participation rate encouragingly rose in November to 62.5%, but this exacerbated a rise in the U-3 unemployment metric to 4.6%, above the 4.5% expectation. November CPI came in cooler-than-expected on headline inflation, rising 2.7% YoY compared to the 3.1% estimate. Core CPI followed the same trend, rising 2.6% YoY compared to the 3.0% estimate. The report showed that housing costs, which make up 37% of the overall measure, cooled by the most since September 2021. Tariff-related goods inflation didn’t cause a concerning increase in inflation either, which bodes well for an FOMC concerned about delayed price impacts from trade negotiations. November retail sales data showed that, aside from relatively flat car purchases, spending in the month rose 0.5%, greater than the 0.4% estimate. Initial jobless claims rose to 224,000 in the week ended December 13, in line with expectations. Continuing claims for the week ended December 6 were 1.897 million, below the estimate of 1.830 million, showing some positive signs amid a weaker labor market. Consumer sentiment for December improved slightly in the month on improved expectations for personal finances and business activity in the coming year, but the index remains near all-time lows as Americans’ balance sheets are struggling to adapt to higher prices of goods and services.
In addition to the December FOMC action, equity participants also looked to the Bank of Japan’s interest rate decision on Friday to assess risks around the Japanese yen in FX trading. The BOJ delivered on a 25 basis point rate hike as expected, bringing the benchmark rate up to 0.75%, the highest since 1995. Despite the hike, markets sold off the yen in reaction to officials’ commentary, bringing the USD/Yen to 157.68, up 1.36%. Japanese government bonds also sold off, with the 10-year yield reaching 2.024%, the highest since 2006.
In company-specific news, TikTok announced it has signed joint venture agreements with Oracle, Silver Lake, MGX, and other buyers to establish ownership of the separate U.S. entity. ByteDance also reported that the company is on track for around $50 billion in profit in 2025, mainly driven by TikTok’s growth. The news boosted Oracle shares to end the week, as the stock has become a key indicator for investors on the strength of the AI narrative. Micron earnings sent shares up 18% on Thursday and Friday as the company significantly beat quarterly expectations and laid out a bullish $100 billion 2-year projection for the high-bandwidth memory market. Nike shares fell 10% after its earnings guidance disappointed expectations, citing weak revenue growth in China and tariffs weighing on margins. Following a surge in equity prices on Friday’s on a triple witching expiry, markets will attempt to build on the rebound into the lower liquidity days of the holiday season.
Friday’s Close (Weekly Performance)
S&P 500 6,834.50 (+0.10%)
Nasdaq 23,307.62 (+0.49%)
Dow Jones 48,134.89 (-0.67%)
Thank you Blue Room Senior Analyst JARED FENLEY.
Bank of Japan December 2025 Interest Rate Decision
Bank of Japan: Change in the Guideline for Money Market Operations
December 19, 2025
In accordance with the change in the guideline for money market operations, the Bank decided, by a unanimous vote, to change the interest rates applied to its measures.
1. Interest rate applied to the complementary deposit facility
The interest rate applied to the complementary deposit facility (the interest rate
applied to current account balances held by financial institutions at the Bank,
excluding required reserve balances) will be 0.75 percent.
2. Basic loan rate
The basic loan rate applicable under the complementary lending facility will be
1.0 percent.
On Friday, December 19, 2025, the Bank of Japan issued its decision to raise the benchmark interest rate by 25 basis points to 0.75% — the highest rate since 1995. The rate hike was widely expected by market participants. Notably, this was the first unanimous rate hike among Japan’s Monetary Policy Committee in this rate hiking cycle.
In the BOJ’s press conference, Governor Kazuo Ueda emphasized the bank’s view that inflation will continue normalizing to its 2% goal over the next year given the rate hike and that the committee is prepared to continue hiking at future meetings based on data evolution. Key to the market’s reaction on Friday, Governor Ueda refrained from putting hard bounds around forward guidance on the pace and future level of hikes.
After decades of ultra-loose monetary policy, Japan is simultaneously trying to stimulate economic growth while containing inflation and controlling depreciation of the Japanese yen. Governor Ueda emphasized that real interest rates remain negative, below the lower bound of an estimate of neutral, even following the hike. The December meeting comes after inflation has exceeded the BOJ’s 2% target for 44 consecutive months, now around 3%.
In reaction to the decision and BOJ commentary, Japan’s 10-year government bond yield rose to 2.024% — the highest level since 2006 and the largest 1-day gain since December 1st.
A contradictory response was seen in currency markets, with the USD/JPY posting its biggest daily increase since November 19th to 157.68.
The market currently expects one more Bank of Japan rate hike to come by September 2026, bringing the benchmark rate to 1.0%. While the BOJ has attempted to control depreciation of the yen through hawkish commentary around the potential for future rate hikes, the one-day selloff in the yen coinciding with the rate hike show that market participants do not view a strong probability of that occurring.
The fiscal policy backdrop in Japan described below is also key for understanding the context around the BOJ’s monetary policy decision and future reaction function. Both of which play a key role in global markets, highlighted by U.S. equites’ sensitivity to the yen carry trade unwind and Japan’s substantial role as the top U.S. Treasury holder.
10% OF ALL BLUE ROOM REVENUES GO DIRECTLY TO FUND OUR NON PROFIT TOGETHERISM.
WE CAN ACCOMPLISH ANYTHING TOGETHER.
These materials do not purport to be all-inclusive or to contain all the information that a prospective investor may desire in considering an investment. These materials are intended merely for preliminary discussion only and may not be relied upon for making any investment decision. Any discussion or information contained in this presentation does not serve as a receipt of, or as a substitute for, personalized investment advice from Blueroom or your advisor.
This publication does not constitute an offer to sell or a solicitation to buy any securities in any fund, market sector, strategy or any other product. Investing is speculative and involves substantial risks (including, the risk of loss of the investor’s entire investment). Past performance is not indicative of future results, and there can be no assurance that the future performance of any specific investment, investment strategy, or product will be profitable.
For more information about us and our general disclosures contact us directly.