In December, US MBA mortgage applications experienced a decline, dropping to -5% from the previous -3.8%. This marks a notable change in the mortgage application trend over the month.
Gold saw a pullback from its record highs, trading below $4,500 as profit-taking emerged. The US Dollar’s decline due to dovish Federal Reserve expectations contributed to these movements in gold prices.
Bitcoin Price Trends
Bitcoin prices have dropped below $87,000 amid intensified ETF outflows and decreased whale participation. This marked the fourth consecutive day of withdrawals for US-listed spot ETFs, amounting to $188.64 million.
Economic projections for 2026-2027 in advanced countries suggest a promising year, bolstered by factors that supported growth in 2025. Meanwhile, Avalanche struggles around $12 following a nearly 2% decline and Grayscale’s updated filing for an ETF conversion with the US SEC.
In brokerage news, the focus is on identifying the best Forex and CFD brokers for 2025 across various regions. As always, market-related information entails risks and uncertainties, including total investment losses. Proper research is crucial before making any financial decisions.
With mortgage applications declining further, we see clear signs that the economy is cooling under the weight of interest rates. The market is increasingly certain that the Federal Reserve will act, with fed funds futures now pricing in a high probability of at least two rate cuts by mid-2026. This reinforces the case for a weaker U.S. Dollar and lower bond yields in the coming months.
Holiday Market Movements
Given the holiday-thinned liquidity, markets could see exaggerated moves on little news, so short-term caution is warranted. This quiet period is a good time to consider selling options premium on range-bound currency pairs like GBP/USD, which is holding steady around 1.3500. We can also look at buying some cheap protection, such as near-term VIX call options, in case the low volume leads to a sudden spike in volatility.
The pullback in gold from over $4,520 appears to be a consolidation before the next move higher, driven by those very Fed easing expectations. This mirrors the pattern we saw back in late 2023 when gold broke its old $2,100 resistance level on the initial dovish pivot from the Fed. For traders, this dip could be an attractive entry point using call options on gold or silver ETFs to position for the expected rate cuts.
While the long-term outlook for equities in 2026 remains positive, the weak housing data presents a near-term headwind. We expect this could put pressure on financial and consumer-discretionary sectors in the first weeks of the new year. A strategy of selling cash-secured puts on the S&P 500 at lower strike prices could allow us to either collect income or buy into the index at a better price if we see a temporary downturn.
