Strong 3Q 2025 US GDP Growth Dents 2026 Fed Rate Cut Expectations; Commodities Hit All-Time Highs

On December 23, 2025, the U.S. Bureau of Economic Analysis (BEA) released its delayed third-quarter GDP report, showing the economy grew at an annualized rate of 4.3%—the fastest pace in two years—driven by robust consumer spending (3.5% YoY) and government outlays [1][0]. This stronger-than-expected growth (vs. a 3.2% Wall Street forecast) combined with lingering inflation concerns, led markets to reduce expectations for Federal Reserve rate cuts in 2026 [5][7][0].

: Short-term Treasury yields rose immediately, with the 2-year yield climbing 3 basis points to 3.53% as traders priced in a less dovish monetary policy outlook [5]. The 10-year Treasury yield initially spiked but closed flat at 4.1690% after markets fully digested the data [4][5].

: U.S. stocks wavered initially but recovered in late trading, with the S&P 500 closing 0.5% higher at a record 6909.79—led by technology stocks—indicating that the strong growth signal outweighed rate cut concerns for equity investors [3].

: Gold (front-month) settled at $4,482.80/oz (+0.9%), silver at $70.485/oz (+3.8%), and copper (LME) topped $12,000/ton for the first time (peaking at $12,159.50) [2][3][4]. Copper’s surge was driven by supply constraints (mine outages, tariff-related trade disruptions), while gold/silver benefited from geopolitical tensions and long-term rate cut hopes [2][3][4].

• YTD Commodity Gains
  : Copper has posted a 35% YTD gain (2025)—its largest since 2009—driven by persistent supply-side issues [2]. Gold has rallied 70% YTD—its strongest performance since 1979—reflecting both geopolitical uncertainty and macroeconomic factors [4].
• Equities Resilience
  : The tech-led S&P 500 record close despite reduced rate cut expectations suggests market confidence in the underlying economic growth trajectory [3][0].
• Yield Curve Dynamics
  : The 2-year yield’s increase reflects near-term rate expectations, while the flat 10-year yield indicates a balance between long-term growth and inflation concerns [5][0].

• Risks
  :
  • Monetary Policy
    : Reduced Fed rate cuts could weigh on growth-sensitive sectors (e.g., real estate, technology) if yields remain elevated [5][7].
  • Commodity Correction
    : Record gold, silver, and copper prices are vulnerable to profit-taking, especially if rate cut hopes fade further [2][4].
  • Geopolitical Uncertainty
    : Gold/silver’s rally is partially driven by geopolitical tensions; a de-escalation could trigger sharp price declines [4].
  • GDP Sustainability
    : The 4.3% growth rate is backward-looking; monitoring 4Q 2025 consumer spending and business investment data will be critical to assess economic momentum [1].
• Opportunities
  :
  • Strong GDP growth may support cyclical sectors tied to economic expansion.
  • Copper’s supply constraints could sustain high prices if fundamental issues (mine outages, tariffs) persist [2][3].

• GDP
  : 3Q 2025 U.S. GDP grew at a 4.3% annualized rate [1].
• Yields
  : 2-year Treasury yield rose 3 bps to 3.53% [5].
• Equities
  : S&P 500 closed at a record 6909.79 (+0.5%) [3].
• Commodities
  : Gold ($4,482.80/oz), silver ($70.485/oz), copper ($12,159.50/ton) hit all-time highs [2][3][4].
• Rate Cuts
  : Markets now expect ~50 bps of Fed rate cuts in 2026 (down from earlier projections) [6].