Investing.com — U.S. inflation data will shape expectations for Federal Reserve interest rate moves and test record stock market rally, European Central Bank meeting, and whether Bitcoin could be poised to go mainstream after breaching $100,000 ? Here’s your look at what’s happening in the markets for next week.
- US CPI
The US will release data for November on Wednesday, giving Federal Reserve officials a final look at price pressures ahead of the year’s final policy meeting next week.
The Fed has cut interest rates by 75 basis points since September, and markets are currently expecting another 25 basis point cut on December 17-18.
that the Fed will cut rates again was bolstered by Friday’s stronger-than-expected jobs report, but any indication that progress in returning inflation to the Fed’s 2% target has stalled is likely to cause markets to revise expectations.
Concerns about a possible resurgence of inflation have also returned to the forefront due to President-elect Donald Trump’s plans to raise tariffs on imports. Tariffs are expected to be inflationary.
- Stock market test
The index rose to record highs at the close on Friday as expectations for further Fed rate cuts during a period of strong economic growth continued to support investor sentiment.
That scenario has historically produced strong gains in stocks, and was supported by Friday’s jobs data.
Wednesday’s inflation report will test the strength of the recovery in US stocks for the rest of the year. If the data comes in warmer than expected, the Fed could moderate expectations about the future path of rate cuts.
Analysts already expect a more gradual pace of rate cuts next year as policymakers assess Trump’s fiscal policy after he takes office on January 20.
- ECB rate cut
Thursday marks the final policy meeting of the year with economists overwhelmingly expecting another 25 bps rate cut – which would be the fourth such cut this year.
Eurozone inflation rose in November, but still appears to be moving towards the ECB’s 2% target.
The ECB is also due to release updated growth and inflation forecasts, which are likely to be revised downwards for next year.
Since the last ECB meeting in October, tariff risks for Europe have increased following Trump’s election victory; France and Germany struggle with political turmoil; business activity slowed down sharply, and it also weakened.
ECB President Christine Lagarde said a trade war would be a “net negative for everyone,” not just countries targeted by US tariffs.
- Bitcoin record
the world’s largest digital currency, broke the $100,000 mark for the first time on Thursday after Trump announced crypto veteran Paul Atkins as his pick to head the Securities and Exchange Commission.
Trump also announced plans to make former PayPal CEO and crypto evangelist David Sacks the “White House AI & Crypto Czar,” raising doubts about who exactly will lead policy.
While both have called for regulators to adopt a more lenient approach, neither appears to have taken a position on whether crypto tokens should be considered securities, commodities or utilities — a key question that will shape the industry’s regulatory framework.
While figures like $200,000 are already being mentioned for 2025, Bitcoin’s history is littered with record-breaking gains and equally stunning reversals.
- Oil prices
Oil prices fell more than 1% on Friday, cementing weekly losses amid expectations of a supply glut next year on the back of weak demand despite OPEC+’s decision to delay output increases and extend output cuts until the end of 2026.
lost over 2.5% in the week, while falling by 1.2%.
OPEC+ agreed on Thursday to delay the start of a planned production increase by three months until April 2024 and extend its existing output cuts until the end of 2026. But energy traders said the move failed to ease concerns about weak demand, particularly in China, the world’s second-largest oil consumer.
Oil prices have been in a range in recent weeks, with geopolitical tensions in the Middle East partially offset by concerns about global economic growth and China’s slow recovery.
