U.S. employment, CPI, and index rebalancing all happening simultaneously; liquidity will be the focus this week

On December 15, this week’s market risks are high, with a series of delayed economic data releases and a full market index rebalance potentially triggering market volatility. This week, the US will release the November employment report and key inflation readings, which could support or challenge the Federal Reserve’s interest rate outlook for the coming year. Last week, Federal Reserve officials conducted their third consecutive rate cut and hinted that, as rates approach neutral levels, they might be open to cutting once more next year. This week, the US will also release the November Consumer Price Index (CPI) report. According to economists surveyed by WSJ, the index is expected to rise 3.1% year-over-year. Farzin Azarm, Managing Director of US Stock Trading at Mizuho Securities, said that the most important market event this week is what he described as “one of the biggest liquidation events of the year.” Specifically, the quarterly index rebalancing of the S&P 500 and Nasdaq 100 will take place on Friday, during which index providers will adjust the components and weights of their benchmark indices to ensure they continue to represent the markets they track. The US stock market closed sharply lower last Friday. According to FactSet data, the S&P 500 fell 0.6% last week, the Nasdaq Composite dropped 1.6%, while the Dow Jones Industrial Average rose 1.1%.