This week, Asian markets are set to zero in on Japan’s inflation data, with Bank of Japan Governor Kazuo Ueda signaling that the December policy meeting remains pivotal. Expectations for any adjustment to the central bank’s ultra-loose monetary stance will hinge on the inflation trajectory, keeping traders on edge. Across the Tasman, the Reserve Bank of New Zealand is widely expected to deliver a rate cut on Wednesday, underscoring the divergence in monetary policy trends across the region.
In Europe, a slew of inflation and growth figures will take center stage as traders attempt to gauge the policy outlook for the European Central Bank and other regional central banks. Meanwhile, US markets are awaiting key releases, including the Federal Reserve’s November meeting minutes, consumer confidence readings, and personal consumption expenditure (PCE) data. These indicators will be critical in shaping expectations for the Fed’s rate-cutting trajectory in 2024.
On the political front, traders have embraced President-elect Donald Trump’s nomination of Scott Bessent as Treasury Secretary. The choice has been interpreted as a stabilizing factor for the US economy, calming fears over potential volatility from protectionist policies. The market has pared back bets on prolonged elevated interest rates, with Trump’s plans to lower taxes and raise tariffs seen as a potential catalyst for growth without significantly stoking inflation.
While Bessent’s nomination has eased concerns about heightened trade tensions and inflationary pressures, the path forward remains uncertain. Investors will keep a close eye on how the incoming administration balances its pro-growth agenda with global trade dynamics, particularly as the dollar’s strength and evolving monetary policy add layers of complexity to the outlook.
This week’s data and developments will provide vital clues for global markets as they navigate the shifting economic landscape into the year-end.