Highlights of This Week: The Release of US CPI and PPI Data, and the Kicking - off of the Q4 Earnings Season for US Stocks

After the release of strong non-farm payroll data, the possibility of a rate cut by the Federal Reserve at its next meeting was ruled out, triggering a market sell-off.

In the coming week, US inflation data will be the focus of market attention, which may lead investors to further reduce their expectations of a rate cut by the Federal Reserve.

After several consecutive years of outstanding performance, the US stock market has stumbled at the beginning of 2025.

Rising inflation is regarded as one of the major risks faced by the stock market, and the Federal Reserve has withdrawn its expected rate-cut plan.

After the remarkable non-farm employment report was released on Friday, the market postponed the time of the next rate cut to June.

Analysts said that the US CPI report to be released next Wednesday will have a significant impact on the market. If inflation accelerates again, it is highly likely to trigger a new round of selling.

Economists expect that the month-on-month growth rate of the US CPI in December last year will remain at 0.3%, and the year-on-year growth rate will rise to 2.9%.

The core CPI inflation, excluding volatile factors such as energy and food, will increase by 3.3% yea -on-year, and the month - on - month growth rate will slow down to 0.2%.

Matt Orton, the chief market strategist of Raymond James Investment Company, believes that given the uncertainties in US fiscal and trade policies, inflation is developing in an unfavorable direction, which may pose some challenges to the market.

Overheating CPI data may also further push up US Treasury yields, with widespread impacts. Recently, US Treasury yields have been rising continuously, and it is expected that the 10 - year US Treasury yield may rise to 5%.

Market observers believe that the steepening of the US Treasury yield curve has caused trouble for the stock market.

Jordan Rizzuto, the chief investment officer and managing partner of GammaRoad Capital Partners, said, "In an environment where the stock market and the bond market are correlated, concerns about a further increase in bond yields pose a major threat to the stock market."

The earnings season for US stocks in Q4 will kick off next week.

Bank stocks such as JPMorgan Chase, Citigroup, Goldman Sachs, and Bank of America will release their earnings reports first, and Taiwan Semiconductor Manufacturing Company (TSMC) will also announce its earnings.

Donald Trump, the elected President of the United States, will take office on January 20.

Investors need to pay close attention to his policy statements, as these changes will have a profound impact on the global economy and financial markets.

At the same time, the yield on UK government bonds rose to its highest level since 1998 this week, and the pound-dollar exchange rate continued to decline.

Currently, investors are worried about the increasing borrowing scale of the UK government and the overall sluggish economic performance.

Therefore, the UK data to be released next week, especially inflation data, and the auction of UK government bonds will be closely watched.

Michiel Tukker, an interest rate strategist at ING, said in a report that high inflation, government spending, rising US bond yields, and high issuance of UK government bonds are likely to continue to push up UK government bond yields.

Overview of important events next week:

Monday: Switzerland's consumer confidence index in December, China's trade balance in December, Tokyo Stock Exchange closed for one day.

Tuesday: US 1-year inflation expectation of the New York Fed in December, Japan's trade balance in November, US NFIB small business confidence index in December, US PPI monthly rate in December, US PPI annual rate in December, Kansas City Fed President Schmid gives a speech.

Wednesday: US API crude oil inventory for the week ending January 10, UK CPI monthly rate in December, Germany's full-year GDP growth rate in 2024, euro-zone industrial production monthly rate in November, US unadjusted CPI annual rate in December, US seasonally adjusted CPI monthly rate in December, US seasonally adjusted core CPI monthly rate in December, US New York Fed manufacturing index in January, US EIA crude oil inventory for the week ending January 10, New York Fed President Williams delivers an opening speech at an event, IEA releases monthly oil market report, Richmond Fed President Barkin gives a speech, OPEC releases monthly oil market report.

Thursday: Australia's seasonally adjusted unemployment rate in December, China's share of the yuan in global payments via SWIFT in December, Germany's final CPI monthly rate in December, UK three - month GDP monthly rate in November, US initial jobless claims for the week ending January 11, US retail sales monthly rate in December, New York Fed President Williams gives a speech, the Federal Reserve releases the Beige Book of Economic Conditions, Chicago Fed President Goolsbee gives a speech.

Friday: China's full-year GDP growth rate in 2024, euro - zone final CPI annual rate in December, US annualized total housing starts in December, US industrial production monthly rate in December.