Market Information Friday 5 December 2025

The European Union is contemplating lending Ukraine billions, as U.S. support declines and Ukraine faces a potential funding crisis. They plan to utilize approximately €210 billion of frozen Russian assets held in Europe but face opposition, mainly from Belgium, due to fears of Russian retaliation. Alternatives include borrowing against the EU’s budget, which could worsen the EU’s debts. The EU intends to fund Ukraine with a “reparations” loan using Russian assets managed by Euroclear. This plan presents risks, including potential legal challenges from Russia, and requires broad EU support. Belgium remains resistant due to legal concerns, complicating final agreements. Recent tensions, like drone sightings in Belgium, suggest geopolitical stakes with Russia, which has warned of retaliatory actions if assets are confiscated.

China’s major state-owned banks have been buying dollars in the onshore spot market to mitigate the yuan’s rapid appreciation, which reached a 14-month high. This effort is intended to smooth, rather than reverse, the yuan’s gains by tightening dollar liquidity, thus increasing the cost of long yuan positions. Consequently, back-end dollar/yuan swap points have dropped. The actions of these banks are likely meant to moderate the yuan’s increase to avoid sudden buying by exporters and maintain stability, potentially supporting the global use of the currency. The yuan has gained approximately 3.3% against the dollar year-to-date, setting it up for its largest annual gain since 2020.

The number of new unemployment claims in the U.S. has dropped to its lowest level in over three years, with claims falling by 27,000 to 191,000 for the week ending November 29. Despite a decline in job cuts by 53% in November, the labor market remains stagnant with cautious hiring due to factors like reduced immigration and the integration of artificial intelligence, which affects demand for entry-level jobs. The unemployment rate increased to 4.4% in September. As the Federal Reserve prepares to meet, there is debate over whether further interest rate cuts are necessary, while some policymakers remain skeptical of such measures.

The 6M Euribor decreased with 1 basis point to 2.11% compared to previous business day. The 10Y Swap increased with 2 basis points to 2.80% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.