PKB's Market Espresso
December 17, 2025

Fed RMP: Don’t Call It QE

The most significant aspect of the Fed’s latest policy meeting may have been overshadowed by the widely anticipated 25 bps rate cut — the introduction of the RMP

• In the last meeting Fed officials unveiled the Reserve Management Purchases, a program involving monthly purchases of $40 billion in short-term Treasuries starting this month — a notably large amount
• The launch of the RMP marks the first meaningful expansion of the Fed’s balance sheet since the conclusion of its quantitative easing program in 2022
• The new program differs from the Fed’s traditional QE, which is explicitly aimed at stimulating economic activity. In contrast, the latest asset purchase program is designed to maintain stability in financial markets and prevent disruptions in reserve supply, such as those seen in the repo market last September

Dutch pension system reform

Changes in Dutch pension fund regulations are fueling expectations of government bond sales, putting upward pressure on global yields

• The Dutch pension system, with assets totaling €1.6 trillion, is the largest in Europe and holds about 65% of all sovereign bonds owned by Eurozone pension funds — roughly €340 billion
• In January 2026, it will move from a defined benefit (DB) model to a collective defined contribution (DC) system
• Around €550bn in assets will transition to the new pension system nest year, funds will reduce their exposure to long-term bonds and swaps and increase their allocation to riskier assets
• This shift could trigger a structural decline in demand for longer maturities across euro fixed income, leading to greater long-end curve volatility, higher yields and steeper curves

End of turmOIL? Brent drops below 60$

Abundant supply and renewed Ukraine–Russia peace talks are pushing oil prices back toward pre-war levels

• As the war price shock fades, the International Energy Agency forecasts a record surplus of nearly 4 million barrels per day next year, while demand weakens, led by major importer China, with an 8% drop in gasoline consumption in favor of green fuels

Lower oil prices could:

• Benefit Donald Trump’s consensus, keeping gasoline cheap for voters and allowing the U.S. to rebuild strategic reserves, which have fallen below 60% under the Biden administration
• Harm Putin, which must sell oil at a discount to China and India, and challenge Middle East fossil-fuel exporters, like Saudi Arabia.
• Slow down the green transition

SpaceX 2026 IPO: Musk lifts off

Remember when you were told there’s always somebody better than you? Elon Musk seems to have missed that lesson

• An insider share sale valuing SpaceX at roughly $800 billion has pushed him even further ahead as the world’s richest man. almost three times wealthier than the runner-up, Larry Page, whose fortune stands at only $265 billion.
• The per-share price of $421 has made, once again, SpaceX the most valued private company in the market ahead of OpenAI ($500 billion). On Polymarket, bettors gave an 81% chance of the company going public in 2026 at a $1.5 trillion valuation

Would SpaceX’s success becomes Tesla’s greatest threat?

• Wedbush analyst Dan Ives believes a SpaceX IPO would not harm Tesla, thanks to long-term growth prospects driven by such as robotaxis and Full Self-Driving. Tesla shares recently reflected that optimism, touching an all-time intraday high.