Month: December 2025

Good Morning Ladies and Gentlemen

”Scratch an altruist, and watch a hypocrite bleed.”

Michael Ghiselin

Lower U.S. Base Rates

The US Federal Reserve has reduced its key interest rate to a range of 3.50% to 3.75%. This decision comes in response to indications of weakness in the labour market. Following the 43-day government shutdown in October and November, essential official data regarding the labour market and inflation have not been available. Consequently, central bankers have had to rely more heavily than usual on estimates from private institutions and their own surveys.

Persistent Inflation and a Surprise

Federal Reserve Chairman Jerome Powell attributed the overshoot in inflation to tariffs. A notable surprise from the recent meeting was the announcement of plans to purchase short-term government bonds totalling USD 40 billion over the coming months. These purchases may extend over several months and represent a form of “mini QE” that injects additional liquidity into the market and is likely to enhance investors’ risk appetite.

What About the Yield Curve?

The yield curve is likely to steepen if short-term interest rates decline, provided that inflation remains stable. One thing is evident: the Federal Reserve can exert direct influence on the short end of the yield curve, while managing the long end is far more challenging. For mortgage borrowers and consumers relying on credit, the long end is crucial. Consequently, I do not anticipate a significant easing of interest rates, even if short-term rates may decline further following Wednesday’s reduction. Additionally, the U.S. president’s comments about the central bank and its governors are contributing to uncertainty among bond investors, which does not bode well for long-term interest rates.

And the Winner is?

Well, Ladies and Gentlemen, the banking sector will not complain. Because the banking sector primarily functions by capitalising on the difference between short-term borrowing rates and long-term lending rates. This structural dynamic benefits financial institutions, allowing them to profit by borrowing at lower rates while extending credit over longer maturities. Such practices not only enhance liquidity but also contribute to overall financial stability, provided interest rates do not rise significantly and swiftly.

What About Investors?

The market reaction exhibited a distinctly bullish sentiment. Traders are increasingly anticipating economic growth and a favourable environment for generating profits. The Federal Reserve’s unexpected provision of additional liquidity has typically engendered positive responses among investors, contributing to a climate of optimism.

Swiss National Bank

Key interest rates in Switzerland remain unchanged at 0.0%, as determined by the Swiss National Bank (SNB) during its monetary policy assessment on Thursday morning. This decision aligns with market expectations. In September, following six consecutive interest rate cuts, the SNB opted against further monetary easing and has maintained its key interest rate at 0% ever since. SNB President Martin Schlegel recently emphasised that the threshold for an interest rate cut below zero is high due to potential undesirable side effects.

Ladies and Gentlemen

Feel free to send your messages to smk@incrementum.li. Many thanks, indeed!

I wish you an excellent start to the day and weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”Thinking is hard, so most people judge.”

C.G. Jung

The incident that occurred last week at the Chicago Mercantile Exchange (CME Group) presents a significant case study in data centre operational resilience. The facility that underpins the CME, a leading global derivatives exchange, has reported enhancements to its backup cooling systems following an overheating event. This incident resulted in a substantial 10-hour outage that adversely affected global financial markets on Friday. This occurrence underscores the critical importance of infrastructure reliability and effective cooling solutions in data management systems, particularly in environments with high transaction volumes. Something to keep in mind and examine closely as more AI-backed business solutions are introduced.

What a December Start!

Wow, what an eventful and volatile start to December! Global stocks and bonds began the month under pressure, amid a renewed selloff in cryptocurrencies and hawkish statements from the Bank of Japan, which weighed on sentiment. S&P 500 futures decreased by 0.5%. Meanwhile, Bitcoin plummeted by more than 5%, dropping below USD 86,000, only to rebound the day after to USD 90’000. Key commodity prices also experienced significant movements. Copper surged to a record high on the London Metal Exchange amid concerns that the global market may be facing a supply crunch. Silver reached a new high amid ongoing supply constraints. Additionally, crude oil prices rose, with Brent crude trading above USD 63, following the suspension of loading at a key pipeline connecting Kazakh fields to Russia’s Black Sea coast after an attack over the weekend. OPEC+ has also reaffirmed its three-month plan to halt output increases. The economy also provided little support, as U.S. industry continued to contract in November. The closely monitored ISM Purchasing Managers’ Index dipped again, reaching 48.2 points. This figure remains below the 50-point growth threshold for the ninth consecutive month.

European Inflation and Interest Rates

Recent data indicate a modest increase in inflation rates within the European Union. In the eurozone, inflation increased slightly more in the fourth quarter than the European Central Bank had anticipated in September. This information came from preliminary data released by the European statistics office, Eurostat, on Tuesday. The annual rate of consumer price inflation rose from 2.1% to 2.16%. Meanwhile, core inflation, which excludes energy and food, increased from 2.37% to 2.41%. In the short term, there are indications of easing. However, the implementation of tariffs, along with the cessation of benefits from reduced fossil fuel costs, could result in modest inflationary pressures in the latter half of 2026. For the time being, no change to European interest rates is expected.

U.S. Inflation and Interest Rates

Inflation is indeed a significant concern in the U.S. According to the most recent detailed Consumer Price Index (CPI) data for the twelve months from September 2024 to September 2025, prices for various goods and services have risen considerably. Specifically, meat prices increased by 14.7%, car maintenance and repairs by 7.7%, home insurance by 7.5%, tobacco products by 6.9%, and sugar and sweets by 6.7%. Additionally, hospital services rose by 5.8%, water and trash collection by 4.8%, health insurance by 4.2%, and rent by 3.4%. Many of these price hikes significantly exceed the Federal Reserve’s inflation target of 2%. Although current inflation rates remain below short-term interest rates, the Federal Reserve is lagging in its monetary policy response. Consequently, a degree of easing is expected at the Federal Open Market Committee (FOMC) meeting next week.

Souped-Up Ideologies Are Harmful

One last thought for the weekend. A prominent structural risk within democratic systems is their heightened susceptibility to blackmail. This vulnerability stems from the system’s inherent inclination to maintain social peace, often through a readiness to compromise, even in less-than-ideal circumstances. The eagerness to resolve conflicts through consensus-driven approaches can leave democratic institutions exposed to pressure from both internal and external threats. In tense situations, when internal disputes, fueled by ideology or mere envy, hinder the ability to reach an agreement, there is a significant risk of complete paralysis. Such stagnation not only undermines decision-making processes but also threatens the stability of a country’s entire political organisation.

Ladies and Gentlemen

Feel free to send your messages to smk@incrementum.li. Many thanks, indeed!

I wish you an excellent start to the day and weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li