Even though the holiday season is approaching, the coming week will still be very busy for market participants. There are several major events to watch, ranging from the first report on how the US economy performed in the third quarter to new updates regarding the ongoing political conflict between the United States and Venezuela.
Asia Pacific Markets
In Japan, factory production is expected to drop, which will undo some of the progress made over the last two months. However, retail sales are still growing because people are earning higher wages. Experts believe that the data for November will not yet show any major damage caused by the recent decrease in tourists visiting from China.
After the Bank of Japan rate hike, on December 24, the BoJ will release minutes for its October meeting, at which it kept rates on hold shortly after new Prime Minister Sanae Takaichi took office. On December 25, BOJ Governor Kazuo Ueda will speak to Japan’s business lobby, the Keidanren. He is expected to give clues on the path of interest rates during 2026.
Meanwhile, in China, most of the big economic reports for the year are already finished, so attention is turning to Saturday’s decision on interest rates. I expect this to be uneventful, with the key lending rates likely remaining exactly where they are at 3.0% for one-year loans and 3.5% for five-year loans.
US Markets – Will GDP Data Validate the Fed Outlook?
Although the upcoming third-quarter economic growth report might not shake up the financial markets due to delays caused by the government shutdown, it raises some interesting questions.
If the report shows the economy grew by more than 3% for the second time in a row, many will wonder why the Federal Reserve cut interest rates three times in 2025. It seems unusual to cut rates when inflation is still higher than the 2% target, unemployment is low, and the stock market is at an all-time high.
The Federal Reserve defends these cuts as a safety measure to manage future risks. They argue that interest rates are still high enough to control the economy, and since recent taxes on imports didn’t raise prices as much as feared, they are now more worried about protecting jobs.
Therefore, moving interest rates down toward 3% is seen as a smart move. The report is expected to show that investment in technology and spending by wealthy households are currently driving growth.
However, the economy is expected to slow down significantly to around 1% growth in the next quarter, largely due to the disruptions caused by the government shutdown.
