Super Risk Week Before Christmas! Macro Highlights from December 15-19: Employment, Inflation, Bank of Japan + Congress ACA Battles, Potentially Triggering the 2026 Government Shutdown Crisis!

This week (December 15-19) is arguably the most critical week before Christmas! November non-farm payrolls (delayed due to government shutdown), November CPI (missing October data), Bank of Japan monetary policy meeting, and Congress’s negotiations over the expiration of ACA subsidies. If ACA subsidies cannot be extended, insurance premiums for 24 million Americans will surge starting January 1, 2026, angering the Democrats, and the risk of a government shutdown on January 31 will soar! Treasury Secretary Bostick warned: if Democrats obstruct, 2026 will be a “harvest year,” and called for the abolition of the Senate’s “filibuster” to ensure government operation.

This Week’s Macro Event Impact Priority Ranking

Priority 1: November Non-Farm Payrolls (Beijing Time December 16, 21:30)

Due to the impact of the 2025 government shutdown, the combined employment data for October/November has been delayed. Market focus is on whether there are risk signals in the employment market.

Analysis: Powell’s December speech emphasized sticky inflation but a downturn in services, with pressure mainly from tariffs. Q1 2026 may be a period of inflation rebound, suppressing early rate cuts. If employment is weaker than expected, this outlook can reverse, promoting easing; conversely, stable employment + sticky inflation → high interest rates persist longer. Employment has the highest weight this week, directly affecting the rate path.

Priority 2: November CPI Inflation Data (Beijing Time December 18, 21:30)

October CPI was canceled due to the shutdown, and some November data is missing month-on-month, but the annual rate is available.

Analysis: Powell states inflation is controllable, with no new tariffs, and will naturally decline after Q1. If November shows strong stickiness (mainly driven by goods), markets remain cautious; if inflation rebounds, rate cuts in Q1 are nearly impossible. Early easing would boost confidence in loosening. Combining employment data, multiple scenarios: weak employment + aligned inflation → easing; stable employment + high inflation → prolonged high rates.

Priority 3: Bank of Japan Monetary Policy Meeting (December 18-19, Governor’s press conference around 14:30)

Market highly expects a 25BP rate hike to 0.75%, a 30-year high.

BOJ Key Focus

Analysis: The rate hike itself has marginal impact; the focus is on future path. If continued rate hikes and potential USD rate cuts are signaled, arbitrage may end or trigger short-term setbacks in risk assets. Long-term, Japan’s pace of rate hikes is slow, and liquidity normalization favors easing periods, supporting risk markets. Worst-case scenario is only temporary; avoid excessive pessimism.

Priority 4: Congress’s ACA Bill Negotiations and Government Shutdown Risk

Bostick’s speech last night: if Democrats do not cooperate to keep the government open, 2026 will be a “harvest year,” and he hopes the Senate will abolish the filibuster to ensure operation. Implies Republicans are unwilling to compromise on extending ACA subsidies.

ACA Negotiation Time Window and Risks

Analysis: If no substantial progress this week, the expiration of subsidies will anger Democratic voters, and subsequent FY2026 bills may be blocked. Republicans’ proposals not to extend enhanced subsidies shift focus to HSA and alternatives; Democrats push for a 3-year extension but fail. High shutdown risk, significant impact on economy and political stability. Bostick hints at no compromise; filibuster becomes a key weapon.

Why is this week so crucial before Christmas?

The Christmas holiday (starting Dec 24) leads to low market liquidity, and negative sentiment + risk aversion before the holiday can amplify pressure. Liquidity gradually recovers after Dec 28, returning to normal after Jan 1. This week’s employment and inflation data directly impact the 2026 rate outlook, compounded by ACA political negotiations and geopolitical factors (such as BOJ liquidity). Short-term market confidence is prone to volatility. Investors should stay alert; a big move may come before Christmas! Take it step by step, patience is key.