One day before Christmas Eve, investors on the German stock market are unlikely to take any major risks. Some important economic data will still be published in the USA, which could also provide impetus for trading in Germany.
Regular trading will continue to take place today, Tuesday (December 23). From December 24 to 26, the stock exchange doors in Frankfurt am Main will be closed for the holiday.
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Hopes of a possible year-end rally fading - uncertainty about the Fed's monetary policy course weighs heavily
Hopes of a possible year-end rally are fading rapidly. Despite persistent fantasies of interest rate cuts in the US, investors are still holding back on very large investments. As long as investors remain in the fog when it comes to US interest rate cuts, risk appetite is likely to remain manageable.
„CME Group's “Fed Watch Tool": Around 20 percent of market participants expect an interest rate hike of a quarter of a percentage point on January 28, 2026
In view of a further weakening labor market and declining inflation data in the USA, only 19.9% of market participants expect a rate cut of a quarter of a percentage point at the next scheduled meeting on January 28, 2026, according to the CME Group's „Fed Watch Tool“. In contrast, 80.1% are in favor of a pause in interest rates.
Despite weakening job market and declining inflation data in the USA - speculation about interest rate cuts remains manageable
Important US economic figures were published last week. In October, there were 105,000 job losses outside the agricultural sector. Only 64,000 new jobs were created in November. The separately calculated unemployment rate climbed from 4.4 to 4.6 percent last month, the highest level in four years.
At 2.7%, US inflation was significantly lower than previously estimated (3.1%).
The Fed's most recent interest rate hike (25 basis points) on December 10, 2020 was justified by weak signals from the job market. Jerome Powell also signaled a possible pause in the easing course, pointing to clearer indications from the job market. At the same time, inflation remains „somewhat elevated“. „We are well positioned to wait and see how the economy develops,“ he said.
Economic data calendar remains extremely thin this week
From the perspective of the economic data calendar, there could be potential impetus this Tuesday afternoon from the release of US durable goods orders and GDP growth (second estimate), which are expected at 14:30.
Gold and silver benefit from geopolitical risks, among other things
Since the beginning of the year, the price of gold (troy ounce) has increased in value by over 70 percent. In the same period, the precious metal silver has gained over 140%. In addition to the prospect of falling interest rates in the USA, geopolitical uncertainties (conflict) are likely to have driven investors into precious metals.
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