NFPs, CPI, BOE and BOJ Rate Changes For the Last Full Week of Trade in 2025

We are heading into the final full week of trade for the year before the holiday drain fully kicks in. Despite the seasonal sentiment in the market, the docket is populated with serious event risk. 

Talking Points:

• We are on the cusp of a seasonal liquidity inversion, but there is a heavy run of event risk immediately ahead
• A dense economic docket carries important event risk, but it is important to discern what has long-term implication and what can stir immediate volatility
• Top listings for this week include the Fed’s ‘dual mandate’ data (NFPs and CPI) as well as rate moves from the BOE and BOJ

The 51st Week of the Year – The Last Run Of Major Event Risk and Twilight of Liquidity

We are heading into the final, full trading week of the year. Liquidity will drop exponentially over the subsequent two weeks owing to the Christmas and New Years holidays bisecting those periods respectively. Anticipation for that utter drain will exact a significant influence over the tradition conditions immediately ahead of us. For example the probability of mounting meaningful new trends will be significantly curbed in most investors’ minds. As such, adding fuel into a meaningful extension of the already-buoyant bull trend for benchmark assets like US indices should e considered an outlier possibility. Alternatively, feeding a swing in sentiment into a bearish reversal is more likely to register as a modest pullback in the larger trend or a sharp and short lived tumble – depending on the severity of the news that provokes such a scenario.

Historical Average S&P 500 Change and Volume by Calendar Week  

Source: John Kicklighter, Standard & Poor’s

 

Though market conditions may be distorted, there is a notably dense run of scheduled event risk ahead. And, thought its market-moving potential may be skewed by the environment, we shouldn’t take the a truncated response to mean that what crosses the wires isn’t important to the fundamental backdrop and big picture trends. The implications of the delayed release of the Fed’s dual mandate components (US labor and inflation statistics), the signposting of economic activity from December PMIs and expected changes from a few major central banks can all contribute to the broader map of capital flow moving forward. That said, the closer we come to the weekend, the sharper the restriction on short-term reaction. That may not only pose a disappointment for those seeking opportunities from shorter-term swings in price action, it can also make difficult an accurate assessment of the foundational importance of the updates for future trends.

Calendar of Top Global Macro Event Risk 

Source: John Kicklighter

 

S&P Loses Traction at Record High, Dollar Moves into Range and Silver Stands Out

With difficult market conditions and high-profile event risk ahead, it’s worth choosing what markets to monitor for signaling and opportunity – as well as setting practical context on what to expect from them. Near the top of my list of markets to watch is the S&P 500. The benchmark US equity index has pushed record highs this past week, but it is not translating into a productive breakout.

We may yet see another push to test the technical upper bound on the market, but the projection of follow through is going to be heavily stunted by expectation of capped participation. A mere complacent bid will be much less effective at providing traction, so genuine conviction will be even more a requirement. Can we expect such an outcome when the top themes seem to have lost traction? Alternatively for the S&P 500, the established range of the past three months makes a correction a ‘path of least resistance’.

Chart of the S&P 500 with 100-Day SMA and 10-Day Historical Range (Daily)
 
Source: TradingView; Standard & Poor’s

 

Key Updates on the Fed’s Dual Mandates (NFPs and CPI)…After the FOMC

We may be coming onto the end of the year, but that doesn’t mean we have a straight shot into the seasonal drain. There is a heavy run of event risk this week, with plenty facing controversial outcomes and connection to important systemic thematic trends. After weeks of uncertainty around the release of key delayed US economic reports owing to the longest federal government shutdown on record, we are finally due updates on the Fed’ s ‘dual mandate’ series: nonfarm payrolls (‘full employment’) and the consumer price index (‘stable price growth’). There is reasonable debate around which of these two is more important. Indeed, if either presents a significant surprise, it could generate serious changes to the fundamental backdrop through rate forecasts recently updated in the Fed’s SEP or around growth potential. 

However, between the two, I will personally put greater emphasis on the NFPs for two reasons: employment has been trending towards a clear black-and-white inversion and it is unusually the earlier release (Tuesday versus Thursday). These are both readings for November as the October statistics have been cancelled owing to the lack of data collection during the shutdown, so they are timely to our current fundamental trends. 

Chart of US Change in Nonfarm Payrolls and ADP Private Payrolls (Monthly)

Source: US BLS; ADP; John Kicklighter 

 

Will the Bank of England Follow its Predictable Pattern of Cuts?

Whittling down the fundamental docket to just three top events for the week is not easy given the context that so many listings seem to have relative to deeper macro currents. However, where most of these updates can tweak the bigger picture trends we are monitoring, there is a higher threshold for spurring a larger short-term reaction from target markets; and that is how I will filter down. With that in mind, the Bank of England (BOE) rate decision on Thursday climbs up my ‘to watch’ rankings. 

Unlike the European Central Bank (ECB) that will deliver its own update a short time later, the BOE is expected to cut its benchmark rate another -25bps to 3.75 percent after a two meeting pause. Looking back over the past 20 months, there is a distinct pattern of two meetings hold followed by a quarter-percent rate cut over five reductions starting at 5.25 percent. Such an overt pattern can tame market volatility as it can be more readily priced in, but it also emphasizes focus on signaling to the extent of this pattern – and certainly to any ‘surprises’, like should they hold.

Chart of the FTSE 100 Overlaid with the Bank of England’s Benchmark Rate (Daily)

Source: TradingView; Bank of England; John Kicklighter

 

The Bank of Japan Policy Runs Against the Current

In contrast to the rate cut from the Federal Reserve this past week and the expectations for the BOE this week, the Bank of Japan (BOJ) is expected to hike its own baseline by 25bps following an 11 month break from its last increase (on January 24th). Without context, it would be remarkable that the Japanese monetary authority is tightening the policy reigns when most of its major peers are in the midst of or at the end of their own easing efforts. However, the BOJ has been the outlier for over three decades with an essentially zero interest rate regime while the rest of the developed world fluctuated. 

This very unique trajectory brings with it potentially systemic shifts in the flow of global capital where Japanese investors would disproportionally seek higher return through foreign investment with capital flows in and out of the financial system dictated by global sentiment trends (rather than cycling towards relative yield or haven assets within one’s own country). Beyond this question of marginal impact of a slow increase in yield, there is also the uncertainty of political pressure with the new Prime Minister’s fiscal and economic perspective weighing on the central bank’s assessment. The Japanese markets and the Yen stand to be one of the more interesting macro segments looking ahead into 2026.

Chart of Relative Monetary Policy of Major Central Banks 

Source: John Kicklighter

 

-- Written by John Kicklighter, Global Head of Content

 

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