1. U.S. CPI Data

  • What to Expect: November consumer price inflation (CPI) data will be released Wednesday, providing the Federal Reserve its last look at inflation ahead of the December 17-18 policy meeting.
  • Market Impact:
    • Current Bets: Markets anticipate a 25-bps rate cut, following the 75 bps already cut since September.
    • Risk: A higher-than-expected CPI print could lead to adjustments in rate-cut expectations and test the stock market rally.
    • Key Concerns: Inflationary risks may resurface with President-elect Donald Trump’s planned tariffs, which could pressure prices upward.

2. Stock Market Resilience

  • Record Highs: Both the S&P 500 and Nasdaq Composite hit all-time highs, fueled by robust economic growth and expected Fed rate cuts.
  • Test Ahead:
    • The CPI report will challenge the rally. A hotter inflation reading could temper Fed rate cut expectations and impact year-end equity gains.
    • 2025 Outlook: Analysts expect the pace of rate cuts to slow next year as the Fed evaluates fiscal policies under the Trump administration.

3. European Central Bank Meeting

  • Policy Decisions:
    • Economists forecast a 25-bps rate cut, marking the ECB’s fourth reduction this year.
    • Revised growth and inflation forecasts are expected to reflect a weaker Eurozone outlook.
  • Challenges:
    • Political instability in France and Germany and escalating U.S. tariff risks add uncertainty.
    • ECB President Christine Lagarde has warned of the negative impact of trade wars.

4. Bitcoin’s $100,000 Milestone

  • Historic Surge: Bitcoin briefly surpassed $100,000 last week, buoyed by Trump’s pro-crypto appointees, Paul Atkins and David Sacks, signaling potential regulatory leniency.
  • What’s Next:
    • Optimism persists, with projections of $200,000 by 2025.
    • Risks remain, as Bitcoin’s history shows a pattern of sharp rallies followed by dramatic reversals.

5. Oil Prices Under Pressure

  • Recent Declines: Oil prices fell over 1% last week, with Brent crude dropping 2.5% and WTI futures slipping 1.2%.
  • OPEC+ Adjustments:
    • Output increases delayed to April 2024, and production cuts extended through 2026.
    • Traders remain skeptical about demand, particularly with China’s slow recovery.
  • Geopolitical Risks: Tensions in the Middle East provide some support but are offset by global growth concerns.

Key Takeaways for the Week Ahead

  • Inflation Data: Wednesday’s CPI report is pivotal, as it could sway Fed rate decisions and stock market sentiment.
  • Bitcoin’s Path: While momentum remains strong, investors should brace for potential volatility.
  • Oil Markets: Expect continued rangebound trading as weak demand dynamics clash with geopolitical risks.
  • ECB Outlook: Watch for signals on how Europe’s central bank plans to navigate tariff pressures and economic challenges.