Weekly Market Outlook: Markets Enter Holiday Season; BOJ and RBA Minutes Draw Attention

Insights – This week, global markets enter the Christmas holiday season, with U.S. and European markets closed for Christmas. However, the "Santa Claus Rally" in U.S. equities remains worth watching. Historically, the seven trading days following Christmas—five at the end of the year and two at the start of the next—often see bullish sentiment, with a high probability of gains.  

Key events include Tuesday’s U.S. November durable goods orders, which previously showed a recovery after two months of declines. On Friday, the Bank of Japan (BOJ) will release its December meeting minutes, potentially reflecting confidence in achieving its 2% inflation and wage growth targets. The Reserve Bank of Australia (RBA) will also release its December meeting minutes on Tuesday, offering further insights into its monetary policy stance.  

Last week, the Federal Reserve cut its federal funds rate by 25 basis points to 4.25%-4.50%, as expected. This marked the third consecutive cut in its easing cycle, but Fed Chair Jerome Powell signaled a cautious approach to future adjustments, dampening expectations for 2025 rate cuts.  

The Bank of England (BOE) held its main rate steady at 4.75%, committing to a gradual easing path. Meanwhile, the BOJ maintained ultra-low rates, with Governor Kazuo Ueda citing uncertainties around U.S. policy under the incoming administration. U.S. core PCE inflation for November recorded its smallest monthly increase in five months, signaling easing inflation pressures.

1. BOJ Governor Ueda’s Speech

BOJ Governor Kazuo Ueda’s speech on Wednesday could influence yen movements. The BOJ has kept rates unchanged for three meetings and is unlikely to hike before March. Investors will watch for any intervention signals, especially after Finance Minister Shunichi Suzuki pledged to address excessive yen volatility.  

Key data includes Japan’s unemployment rate, retail sales, and November industrial production (Friday). Tuesday’s BOJ October meeting minutes may offer more clues on rate hike discussions, while Friday’s summary of the December meeting could reveal additional insights.

2. UK Economy Slows, Raising BOE Rate-Cut Pressure  

The UK’s Q3 GDP final reading (Monday) is expected to confirm economic weakness. Recent data showed Q3 GDP grew just 0.1% QoQ, missing forecasts of 0.2%. The slowdown reflects fiscal uncertainty under the Labour government, global headwinds, and falling confidence. Challenges ahead will require coordinated policy responses.

3. U.S. Durable Goods Orders 

Tuesday’s U.S. November durable goods orders will be closely watched. October’s data showed a modest 0.2% MoM increase after two months of declines, below the 0.5% forecast. Durable goods orders rose $700 million to $286.6 billion, pushing YoY growth to 5.3%, the highest since November 2023.  

Analysts remain cautious, citing weak evidence of a manufacturing rebound and continued sluggish industrial activity.

Key Economic Data

Monday: U.S. December Consumer Confidence Index  

Tuesday: U.S. November Durable Goods Orders  

Friday: Japan November Unemployment Rate  

Key Economic Events:  

Tuesday: BOJ October Meeting Minutes  

Wednesday: BOJ Governor Ueda Speech  

Wednesday: China’s NPC Standing Committee Meeting (Dec. 21-25)