Saxo Group: This week's data may lead to a repricing of US interest rates.
TL;DR
Saxo Bank's strategist warns that this week's US employment and inflation data could quickly repricing interest rates. Mixed or weak data may sustain the soft landing narrative, but strong data could raise yields and hurt risk assets like growth stocks.
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PANews reported on December 16th that, according to Jinshi, Charu Chanana, Chief Investment Strategist at Saxo Bank, stated that the market views this week as a small "reset" of the US macroeconomic narrative. Employment and inflation data will be released within a very narrow window, potentially leading to a rapid repricing of interest rates. The Federal Reserve cut rates last week and projects another cut in 2026, but the market expects at least two more cuts next year. "If the data is mixed or slightly weaker than expected, the soft landing narrative will remain intact, but this may not be enough to trigger a massive risk-on rally. The real risk is a hawkish surprise. If inflation or employment data is strong, yields will rise, and risk assets, especially long-term growth stocks, will be the first to feel it."