1) US inflation data: A new test for Fed policies
Markets are awaiting the release of US consumer price index data for November on Wednesday, as this data will provide crucial signals on the path of the Federal Reserve's monetary policy before its last meeting of the year on December 17-18.
The Federal Reserve has cut interest rates by 75 basis points since September, and expectations indicate the possibility of an additional 25 basis point cut.
The latest jobs report, which showed a stronger-than-expected performance, has reinforced bets for additional rate easing. However, any signs that progress towards the 2% inflation target is stalling could prompt markets to reassess their expectations.
Inflation concerns have returned to the forefront with President-elect Donald Trump's plans to raise tariffs on imports, which could add fresh inflationary pressures.
2) Stock Market Facing Inflation Test
US stock markets, especially the S&P 500 and Nasdaq, have seen record highs, supported by expectations of rate cuts and strong economic growth.
The upcoming inflation report will test these gains. If the data comes in higher than expected, the Fed may slow the pace of rate easing, which could weigh on markets.
Analysts expect interest rate cuts next year to be more gradual, as the new administration's economic policies are assessed after Trump takes office.
3) European Central Bank decision
The European Central Bank holds its last meeting of 2024 on Thursday, and is expected to cut interest rates by 25 basis points, for the fourth time this year.
Although inflation rose in November, it is still far from the central bank's target of 2%.
Updates to growth and inflation forecasts are expected, which are likely to show a downward revision due to increased tariff risks, political turmoil in Europe, and slowing economic activity.
4) Bitcoin: $100,000 Barrier and the Future of Cryptocurrencies
$BTC has made history by crossing the $100,000 barrier, buoyed by Trump’s announcement of crypto-friendly appointments to his economic team.
While Bitcoin is expected to continue its upward trajectory, its regulatory future remains uncertain. There are speculations that it could hit $200,000 by 2025, but the currency’s history is filled with wild swings.
5) Oil: Demand concerns weigh on prices
Oil prices fell more than 1% on Friday, weighed down by expectations of oversupply and weak global demand, especially from China.
Despite OPEC+'s decision to extend production cuts until the end of 2026, this has failed to calm market concerns about weak demand.
Amid geopolitical tensions and slowing economic growth, oil prices remain range-bound with ongoing concerns about the future of global demand.
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