**Market Review** On December 21, the US dollar index showed a mixed trend, initially declining before rebounding. Early in the week, mixed non-farm payroll data and fluctuating inflation expectations pushed the dollar below the 98 mark, though it failed to sustain the drop and later recovered. A lower-than-expected CPI briefly triggered a sharp decline, but the index rebounded as Treasury yields stabilized, ending the week at 98.73, up 0.33%.

Spot gold maintained a wide-ranging high volatility pattern. Supported by a weaker dollar and falling Treasury yields, prices repeatedly tested levels above $4,350 and even $4,370 but failed to hold, with profit-taking capping gains. The trend exhibited a "rally-retracement-rebound" pattern, closing at $4,338.60/oz, up 0.89% for a second consecutive weekly gain.

In contrast, silver outperformed gold, repeatedly hitting record highs and surpassing $67, closing at $67.11/oz, up 8.3%—marking its fourth straight weekly gain and a year-to-date surge of over 130%.

Among major currencies, the yen weakened despite the Bank of Japan raising rates to a 30-year high. USD/JPY broke above 156 and 157, closing at 157.7, up for a second week. GBP/USD rose for a fourth week, while EUR/USD and AUD/USD dipped slightly.

Oil prices extended their downtrend, pressured by oversupply concerns and potential Russia-Ukraine peace talks, briefly hitting a four-year low. A statement from Trump on Venezuela eased supply fears temporarily, but prices remained range-bound amid sanctions uncertainty and demand outlooks.

US stocks saw heightened volatility and divergence. Early-week tech weakness dragged markets lower, though mid-week rebounds on risk appetite were short-lived. Thursday’s inflation-driven rally lifted major indices, but the week ended with mixed results: the Dow fell 0.67%, the S&P 500 rose 0.1%, and the Nasdaq gained 0.48%.

**Key Events** 1. **Strong Jobs, Rising Unemployment, Cooling Inflation: Fed at a Crossroads?** A batch of delayed US economic data reshaped Fed policy expectations, slightly increasing bets for a January rate cut. November’s non-farm payrolls beat forecasts, but unemployment rose to 4.6%—the highest since September 2021. October’s payrolls saw the steepest drop in five years, signaling labor market cooling.

CPI data undershot expectations, with headline and core inflation at 2.7% and 2.6% YoY, respectively—the lowest since March 2021. Fed funds futures now price a 28.8% chance of a January cut (up from 26.6%), with 62 bps of easing expected by end-2026. Economists cautioned CPI distortions due to government shutdowns, suggesting inflation moderation may be overstated.

Fed officials’ views diverged: - Governor Milan argued for aggressive cuts, citing sub-2.3% underlying inflation. - NY Fed’s Williams backed recent cuts, projecting 2.25% growth and sub-2.5% inflation. - Governor Waller favored gradual easing, noting rates remain 50–100 bps above neutral. - Chicago Fed’s Goolsby welcomed cooling inflation, hinting at 2024 rate cuts. - Atlanta Fed’s Bostic stressed inflation risks, expecting price pressures to persist into 2026.

**Fed Chair Race Heats Up** Former frontrunner Hassett’s odds slipped, with ex-Fed Governor Kevin Warsh gaining traction. Trump plans to announce a chair soon, insisting on a rate-cut advocate. Interviews, including one with Governor Waller on December 19, are ongoing, while Bowman is no longer in contention.