Central banks are back on center stage this week, with the Fed and the other major central banks on the calendar for rate decisions.
The Fed is widely expected to leave rates unchanged (Wed), defying President Donald Trump's calls for lower rates. And with ample justification. While events concerning Greenland and tariffs dominated the news last week, data showed the US grew at an upwardly revised 4.4% (saar) pace in Q3-2025 (from an earlier 4.3%). Core PCE inflation, meanwhile, picked up slightly to 2.8% y/y in November. Hardly numbers that call for another Fed rate cut.
The European Central Bank, the Bank of England, and the monetary authorities of Canada, Brazil, and Sweden are also expected to leave rates unchanged. Overall, Bloomberg reports that as many as 18 central banks globally are holding policy meetings over the next five days.
Yet political surprises could continue to come at the markets from all sides. Trump spent the weekend threatening 100% tariffs on Canada if it "makes a deal with China." There’s also no telling whether Trump might lash out anew at the EU over Greenland.
Friday is the deadline for Congress to avert another government shutdown. The last one, in October and November, wreaked havoc with official US economic data and pulled key bourses like the Nasdaq back from its peak. There's chatter that Senate Democrats might oppose funding for immigration enforcement (a key provision of the spending bill) following the death of another Minneapolis resident at the hands of federal ICE agents.
In the meantime, here are the economic data releases most likely to improve investors' understanding of how the economy is faring:
(1) PPI. Producer price index inflation (Dec) is likely to rise around 0.2% m/m in December, matching last month's increase. Recent PPI readings suggest that companies have been reluctant to pass along higher import duties and other costs. We will be watching the y/y percent change in the PPI final demand for personal consumption. It has been stuck around 3.0% in recent months (chart).
(2) Consumer confidence. Given the smorgasbord of economic risks and geopolitical imponderables, there's little doubt that consumer spending's resilience will be tested in 2026. The question is whether January's Consumer Confidence Index (Tue) will continue to dip—it fell 3.8 points in December to 89.1—or will stabilize. More importantly, in our opinion, will be the job availability data that are included in the same survey by the Conference Board (chart). Our hunch is that the labor market might show more signs of improving.
(3) Unemployment claims. We continue to pay close attention to the number of weekly jobless claims (Thu), which, at 200,000, remain remarkably low (chart). The level is indicative of a labor market in which mass layoffs are low, even if finding a job has become more difficult, and that’s reason to think the January jobs report might surprise to the upside.
(4) Manufacturing surveys. We'll get a bevy of Fed surveys offering snapshots of regional activity this week. The week begins with the Dallas Fed business survey for January and the Chicago Fed's national activity update for October (Mon). Next comes the Richmond Fed business survey for January (Tue). At week's end, we'll get the Chicago Purchasing Managers' Index for January (Fri). On balance, we don't find these surveys to be very useful. They've been too pessimistic.
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