Weekly Outlook: US GDP tests the Federal Reserve's rate cut 'quality'! Who will be the top commodity choice in 2026?
US stocks closed strongly on Friday, reversing the downturn at the beginning of the week.
In the past year, the global political situation has become unstable, and a trade war has officially erupted. During this period, the US dollar depreciated by 9%, while gold prices achieved their best performance since 1979, and the value of European defense industrial companies surged by 65%.
Meanwhile, oil prices have fallen to near a 10-year low, while cocoa has experienced its worst year on record.
Central Bank Dynamics: Will a decision be made on the next Federal Reserve Chairman before the end of the year?
Federal Reserve:
There may be a reduction in the scale of rate cuts next year. However, this situation may change once Trump appoints a new candidate to replace Powell in May 2026.
Trump stated he is looking for a candidate willing to significantly cut interest rates.
He is uncertain whether he will announce a candidate before the end of this year, but stated that a decision will be made 'in the coming weeks.'
Trump's National Economic Council Director Hassett (Kevin Hassett) is a popular candidate.
The Supreme Court will rule next year on the president's power to impose comprehensive tariffs.
The Federal Reserve's interest rates are expected to decline, with continuous currency depreciation, supply-side dynamics, and diversified demand driving gold prices to a new high above $4400 in the first half of next year. Although silver prices may retreat to around the mid-$40s, 2026 will be a year led by platinum and palladium.
If you like 'silver squeeze,' then you will definitely enjoy 'silver flood.'
TD Securities has selected platinum and palladium as the preferred commodities for 2026.
The trend of continued stockpiling in 2026 is very evident.
Other central banks:
Tuesday 08:30, Reserve Bank of Australia releases minutes of the December monetary policy meeting;
Wednesday 02:30, Bank of Canada releases minutes of the monetary policy meeting;
Wednesday 07:50, Bank of Japan releases minutes of the October monetary policy meeting;
Thursday TBD, Bank of Japan Governor Ueda speaks at the Japan Economic Association.
The policy divergence among major central banks has become quite evident.
They expect the Reserve Bank of Australia to resume interest rate hikes in February.
Inflation pressures in Canada seem to have been brought under control.
The Bank of Canada's current policy rate of 2.25% is 'roughly at an appropriate level.'
Sweden's Nordea Bank expects the earliest window for the next rate hike to be around June/July 2026.
Important data: GDP data will test the Federal Reserve's interest rate cut outlook!
Monday 09:00, China’s one-year loan market quoted rate for the period ending December 22;
Monday 15:00, UK's Q3 GDP year-on-year final value, UK's Q3 current account;
Tuesday 17:00, Switzerland's December ZEW investor confidence index;
Tuesday 21:30, Canada’s October GDP monthly rate, U.S. Q3 real GDP annualized quarterly rate preliminary value, U.S. Q3 real personal consumption expenditures quarterly rate preliminary value, U.S. Q3 core PCE price index annualized quarterly rate preliminary value, U.S. October durable goods orders monthly rate;
Tuesday 22:15, U.S. November industrial production monthly rate;
Tuesday 23:00, U.S. December Conference Board Consumer Confidence Index, U.S. December Richmond Fed Manufacturing Index;
Wednesday 02:00, U.S. total oil rig count for the week ending December 26;
Wednesday 05:30, U.S. API crude oil inventory for the week ending December 19;
Wednesday 21:30, U.S. initial jobless claims for the week ending December 20;
Wednesday 23:30, U.S. EIA crude oil inventory for the week ending December 19, U.S. EIA Oklahoma Cushing crude oil inventory for the week ending December 19, U.S. EIA strategic petroleum reserve inventory for the week ending December 19;
Thursday 01:00, U.S. EIA natural gas inventory for the week ending December 19;
Friday 07:30, Japan's November unemployment rate.
If the report shows that the U.S. economy has grown more than 3% for two consecutive quarters, people will question why the Federal Reserve cut rates three times in 2025.
Reports are expected to show that technology investment and expenditures by wealthy families are the core drivers of current economic growth. However, due to government shutdowns, the economic growth rate for the next quarter is expected to slow significantly to around 1%.
U.S. stocks: Can the 'Christmas rally' overcome market skepticism?
Two major themes have triggered fluctuations in the U.S. stock market:
Despite investors potentially seeking profit-taking after a strong year, bringing selling pressure, the latest data may provide a pass for this year's 'Christmas rally.'
Market skepticism about AI spending is becoming more pronounced, putting pressure on major indices.
Market closure arrangements:
Wednesday (December 24) Christmas Eve:
China - Hong Kong Stock Exchange trades half a day, randomly closing between 12:08 and 12:10;
USA - NYSE closed early at 02:00 Beijing time on the 25th;
USA - ICE's Brent crude oil futures contracts trading ended early at 03:00 Beijing time on the 25th;
USA - CME's U.S. Treasury futures contracts trading ended early at 03:30 Beijing time on the 25th;
UK - London Stock Exchange closed early at 20:30 Beijing time;
Australia - Sydney Stock Exchange closed early at 11:10 Beijing time;
Germany - Deutsche Börse closed for one day;
France - Paris Stock Exchange trades half a day;
Italy - Milan Stock Exchange closed for one day;
Spain - Madrid Stock Exchange closed early at 21:00 Beijing time;
Canada - Toronto Stock Exchange closed early at 02:00 Beijing time on the 25th;
New Zealand - Stock exchange trades half a day.
Thursday (December 25) Christmas Day:
USA - NYSE closed for one day;
USA - CME Group's precious metals, WTI, foreign exchange, and stock index futures contracts are suspended for the entire day;
USA - ICE's Brent crude oil futures contracts suspended for the entire day;
South Korea - Seoul Stock Exchange closed for one day;
Australia - Sydney Stock Exchange closed for one day;
Germany - Deutsche Börse closed for one day;
France - Paris Stock Exchange closed for one day;
Italy - Milan Stock Exchange closed for one day.
