December Rotation Signals a Risk Reset

What Happened

A global risk-reset hit markets as investors shifted capital out of crowded tech trades and into real assets. Oil surged on renewed supply tensions, the U.S. dollar posted its third consecutive decline, and long-end Treasury yields slipped as softer macro data kept the Fed-cut window alive. Equity markets diverged sharply: energy, industrials, and defensives gained while high-beta tech weakened.

What It Means

This is the clearest evidence yet of an early December rotation. A weakening dollar supercharges commodities and gives EM funding relief. Treasury firmness signals investors bracing for uneven macro data rather than crisis. Sector divergence shows money leaving overstretched AI/tech names and flowing into cash-generating, inflation-resilient assets.

Institutional desks are repositioning ahead of year-end — and those flows move markets more than headlines.

What I Think

This isn’t noise. It’s a structural tell. Energy is turning into the market’s stabilizing anchor, while tech momentum loses oxygen under rate uncertainty. If tomorrow’s labor print cools, the rotation accelerates; if it comes in hot, yields spike and hit risk assets immediately.

The market just sent a message: December won’t trade like November.

Market Terms

• Rotation — A shift of capital between sectors as risk appetite changes.
• Dollar Weakness — A decline in USD value that boosts commodities and EM assets.
• Term Premium — Extra compensation for holding long-dated bonds under uncertainty.
• Real Assets — Physical or commodity-linked assets that hedge inflation risk.