The long-awaited December U.S. Federal Reserve meeting is finally around the corner, but it isn’t the only key event on traders’ radar. A cluster of majorcentral banks— including those in Canada, Switzerland, Australia and Turkey — are also set to decide policy, while fresh economic data from China will give investors another chance to gauge the world’s second-largest economy.
Fed Showdown Looms Large
Speculation around whether the Fed will deliver a thirdrate cutnext week has swung wildly since October’s reduction. After a stretch of uncertainty, Wall Street has once again priced in a high likelihood of easing — almost as if the cut were guaranteed.
But policymakers themselves remain far from unified. Several members lean dovish, while others have pushed back, and President Donald Trump continues to pressure the central bank to cut more aggressively.
Fed Chair Jerome Powell underscored the internal divide by pointing to “strongly differing views about how to proceed,” a remark that cooled expectations and reminded investors that nothing is assured.
Complicating the picture is a lack of data clarity after the U.S. government shutdown delayed key releases. Novemberinflationnumbers, due in the coming week, may influence trader sentiment, though crucial October/November jobs data will only be published after the Fed meets.
While rate futures still lean toward a quarter-point cut, the odds have been fluctuating, at times dropping below 50%.
China’s Slowdown Persists
China’s property downturn and sluggish domestic demand continue to weigh on its economy as the year draws to a close. Investors are now looking for signs that Beijing will roll out further stimulus.
Upcoming trade data on Monday and inflation figures on Wednesday may reinforce concerns, especially as defaults remain a recurring theme. China Vanke — once the nation’s top home builder — is seeking a one-year extension on an onshore bond repayment, with bondholders set to vote on 10 December.
Elsewhere in the Asia-Pacific, the Reserve Bank of Australia meets Tuesday and is widely expected to hold rates steady as the economy remains comparatively resilient.
Switzerland Stays Frozen on Rates
The Swiss National Bank is almost certain to keep interest rates anchored at 0% on Thursday, with no change expected in 2026 either. Inflation has edged toward the lower end of the SNB’s comfort range, and though officials anticipate a gradual rise, they have indicated they can tolerate a temporary dip below zero.
The bigger challenge may be the Swiss franc itself. The currency has strengthened nearly 12% against the U.S. dollar this year — on track for its best performance since 2002. It has barely moved against the euro in 2025, but over five years, it has gained around 14%.
Since Europe accounts for roughly half of Switzerland’s exports, the franc’s persistent strength is squeezing exporters across industries, from luxury watchmakers to wealth managers.
Turkey Prepares Another Cut
Turkey’s central bank is widely expected to cut rates again on Thursday, though the size of the move remains a point of debate.
Headline inflation for November eased slightly to just over 31%, helped by softer food prices. But sticky services-sector inflation — especially rents — continues to pose challenges.
With the current policy rate at 39.5%, markets are keenly watching this final meeting of the year to gauge the pace of easing in 2026. JPMorgan sees a 100-basis-point cut as likely, though a larger 150-bps move isn’t off the table.
Meanwhile, Brazil’s central bank meets Wednesday and is expected to maintain its benchmark rate at a two-decade high of 15%. Still, a sharper-than-expected economic slowdown has prompted some traders to speculate that a cut could arrive as early as January.
Optimism Fuels 2026 Market Bets
Despite a jittery backdrop — from bitcoin’s sharp pullback in November to turbulence in Japanese bonds —investor sentimentheading into 2026 appears surprisingly bright.
Several major institutions are leaning into a “re-acceleration trade,” betting that global growth will stabilise and power a broad-based equity rally. Lombard Odier says this environment could support a “diversified” surge across global stock markets, while BNP Paribas has pencilled in above-consensus growth for the eurozone.
The euro has been strengthening, tech stocks remain buoyant even amid chatter of an AI-driven bubble, and U.S. equities continue to attract heavy flows.
Still, in markets where consensus trades often unravel, the sheer level of optimism may itself be a reason for caution.
Also read: Warren Buffett is buying, Michael Burry is shorting: The AI trade splitting Wall Street
(Disclaimer: This article has been sourced from Reuters)
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