The S&P Global Composite PMI for the United States fell to 52.7 in December, down from 53 the previous month. This suggests a reduced rate of growth in both the services and manufacturing sectors in the country.
Additional market updates include expectations for Australia’s CPI inflation to slow in November and silver prices surpassing $80. In other market movements, there is cautious optimism ahead of US employment data, and gold is regaining its previous highs.
Editors Picks Market Movements
The Editors’ Picks reveal that the EUR/USD pair continues to drop below 1.1700, while GBP/USD retreat from recent highs. In cryptocurrency, Bitcoin, Ethereum, and XRP’s uptrend has calmed amid increased ETF inflows.
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With the latest US Composite PMI data for December showing a dip to 52.7, we are seeing the first concrete sign of a slowdown in economic expansion. While still in growth territory, this cooling is a notable change from the stronger momentum we saw in the previous quarter. This shift requires us to adjust our strategies for the coming weeks, as the market digests whether this is a blip or the start of a trend.
Monitoring Economic Shifts
This slowdown comes after a period of surprising economic strength in 2025, where inflation finally cooled to a manageable 2.8% in the last quarter and the labor market remained robust. In fact, the most recent jobs report for December showed a respectable, albeit moderating, gain of 160,000 jobs. The current PMI reading suggests that the delayed effects of the Federal Reserve’s past rate hikes may now be taking hold.
The prospect of slowing growth increases the probability that the Federal Reserve’s next move will be a rate cut, not a hike. We should therefore consider positioning in interest rate futures that would profit from lower rates later in the year. Options on Treasury bond ETFs could also be a valuable tool to speculate on this shift in central bank policy expectations.
Given this emerging uncertainty, market volatility is likely to increase from its recent lows. During much of the second half of 2025, the VIX traded below its historical average of 19, hovering near 15, which made hedging relatively inexpensive. Now is the time to look at buying VIX call options or purchasing protective puts on broad market indices like the SPX to guard against a potential downturn.
We should also look at how this slowdown might impact different sectors. Consumer discretionary and industrial stocks are typically more sensitive to economic cooling, making put options on their respective sector ETFs an attractive hedge. Conversely, defensive sectors like utilities and healthcare may see increased interest, which could be played with call options.
The strong dollar, which has been pressuring pairs like EUR/USD and GBP/USD, could see its trend stall if the market begins to aggressively price in Fed rate cuts. This suggests looking at options strategies that bet on a reversal or consolidation in major currency pairs. The rally in precious metals like gold and silver above $4,500 and $80 respectively shows traders are already seeking safety, and using options can offer a capital-efficient way to participate in that trend.
