Traders often scratch their heads when monthly inflation data arrive. One moment markets leap on the latest Consumer Price Index (CPI), the next analysts remind us that the Fed really watches the Personal Consumption Expenditures (PCE) index. Why do we have these two gauges, and why do markets treat them so differently?
Picture the scene: early afternoon on the first Friday of the month. Suddenly, charts across the board start whipsawing – currency pairs go up and down, indices go up and down, and even gold can’t make up its mind. Welcome to Non-Farm Payrolls (NFP) Friday. Once a month, this US jobs report hits the wires and global markets often pause and brace for impact.
As the year winds down and the holiday season approaches, financial markets enter a unique environment. Liquidity thins, spreads shift, volatility becomes unpredictable, and trader behaviour changes as institutional desks slow down for the break.
Every December, markets enter a peculiar phase. Liquidity thins, trading desks quieten, sentiment shifts, and yet, historically, a surprising pattern often emerges.
