In addition to isolated economic data, US monetary policy in particular is likely to be a topic of discussion following the publication of new labor market data and inflation figures last week. It should be noted that due to the upcoming holidays around Christmas, trading on Wall Street will be shortened or, in some cases, non-existent. In addition, many investors may have already gone on vacation and closed their books for 2025.
After data on the labor market and inflation: Beth Hammack dampens US interest rate cut fantasies
Following the government shutdown in the US, the labor market reports for the past two months were published last Tuesday. While 105,000 non-farm jobs were cut in October, an increase of 64,000 jobs was reported in November, with the unemployment rate at 4.6%, its highest level for four years.
In addition to a further weakening labor market, falling inflation is also likely to have further fueled interest rate cut fantasies. According to the Bureau of Labor Statistics in Washington, consumer prices (including the drivers energy and food) were 2.7% in November (compared to the same month last year) and therefore significantly below expectations (3.1%). However, no inflation data was published for October.
However, according to a report in the Wall Street Journal on Sunday, the US central banker Beth Hammack spoke out against possible interest rate cut fantasies. She said that high inflation was causing more concern about potential weakness in the job market.
At the last three central bank meetings, the monetary authorities have lowered interest rates by a total of 75 basis points. The interest rate band itself currently stands at 3.50 to 3.75 percent.
The Fed will next meet as scheduled on January 28, 2026 to decide on the key interest rate.
Wall Street remains open on December 23 and 26
The stock exchange doors will remain open in the USA on December 23. On Wednesday (Christmas Eve), trading will be shortened from 09:30 to 13:00 ET or 15:30 to 19:00 CET. While there will be no trading on Christmas Day (December 25), trading will be open on December 26 (Christmas Day).
Focus on US economic data on Tuesday - „Window dressing“ as a potential driver
From the perspective of the economic data calendar, there could be some impetus on Tuesday, one day before Christmas Eve, with new data on new orders for durable goods and the second estimate of the GDP growth rate (14:30).
Window dressing, when fund managers try to „spruce up“ their portfolios with well-performing stocks, could provide temporary impetus. However, investors should be prepared for comparatively low volatility shortly before or during the Christmas period. Market participants are likely to avoid larger positions anyway in view of the poor data situation.
Dow Jones Industrial Average Index
