The Week Ahead: December 21 – 26, 2015

Updated U.S. GDP and Japan inflation data are among the macro numbers being released during what is for many a shortened workweek.

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As markets brace for a week of light trading in the lead-up to a major holiday weekend in much of the world, liquidity remains a major risk factor on the minds of investors. A lack of liquidity in fixed-income markets has exacerbated a sell-off in high-yield in recent weeks. Meanwhile, oil markets are suffering from a surplus of liquidity, as a global supply glut has driven prices to fresh multiyear lows. Japan inflation data, due Thursday will provide a key test of the central bank’s moves to pump liquidity into the financial sector. The week rounds out with Christmas celebrations as unique as their individual cultures.

Monday, December 21: Bristol, U.K. hosts its annual Burning the Clocks festival. Created in 1994, the event is intended as a noncommercial approach to the winter holiday season that’s inclusive of all traditions, religious and secular. On Monday evening, townspeople will gather for a procession of elaborate homemade paper lamps through the town to a giant bonfire that will consume the lamps. A fireworks exhibition will cap off the evening.

Tuesday, December 22: The U.S. Bureau of Economic Analysis will release final revised GDP data. In November, the second revised GDP figures improved sharply from initial estimates, climbing to an annualized 2.1 percent from 1.5 percent. The improvement was driven in part by stronger business spending than had been previously thought, though inventory levels remain elevated.

Wednesday, December 23: Energy Information Administration weekly supply levels surprised analysts with an increase of 4.8 million barrels, reaching the highest levels seen for the period since before World War II. Prices for West Texas Crude futures for January delivery tested $35 repeatedly last week, the lowest level since 2009, as a supply glut in the U.S. and OPEC’s intransigence on supply cuts support the bearish case for energy commodities.

Thursday, December 24: The Statistics Bureau of Japan releases November consumer price index levels. A combination of stimulus measures introduced by Prime Minister Shinzo Abe and a massive easing program by the Bank of Japan so far has failed to spur sufficient demand to drive prices higher. With oil prices continuing to trend lower it seems likely that BoJ policymakers will have to wait some time before they hit their 2 percent inflation target.

Friday, December 25: Many of the world’s financial markets will be closed in observance of Christmas.

Saturday, December 26: The sounds of horns and goombay drums will reverberate through the streets of Nassau, Bahamas as the colorful Junkanoo celebration kicks off on Boxing Day with a parade following Bay Street through downtown. The festival culminates in a citywide party on New Year’s Day.