Wall Street risk appetite rebounds, Fed rate cut expectations change—A comprehensive review of next week's economic data and policy developments

【BlockBeats】Entering the first full trading week of 2026, global assets are rising across the board, and Wall Street’s risk appetite has clearly recovered. This week, the S&P 500 index increased by 1.6%, while the Russell 2000 small-cap index surged even more, reaching a 4.6% gain. Even more remarkable is the passive fund—Vanguard S&P 500 ETF (VOO)—which absorbed $10 billion in just a few days. Such rapid inflows are indeed rare for passive funds. This start-of-year momentum suggests a potentially good beginning for the year.

However, in the following week, some key data points need close attention. On Tuesday evening at 21:30, the US will release December’s unadjusted CPI year-over-year, seasonally adjusted CPI month-over-month, seasonally adjusted core CPI month-over-month, and unadjusted core CPI year-over-year. On Wednesday at 21:30, the US will announce November retail sales month-over-month, PPI year-over-year/month-over-month, and Q3 current account data. On Thursday at 21:30, there will be hard data including initial jobless claims for the week ending January 10, the New York Fed and Philadelphia Fed manufacturing indices for January, and November import price index month-over-month.

More importantly, attention should be paid to the Fed’s attitude shift. Next week, Fed officials will speak intensively, with a key signal being that before the official appointment of the next Chair, the Fed is unlikely to cut interest rates again. Strategists at the US Bank Global Research Department explicitly stated that last week’s data strengthened their judgment. This suggests that the rate cut window may be tightening.

Additionally, geopolitical factors should not be overlooked. US Secretary of State Blinken plans to meet with Danish and Greenland officials next week, which could trigger market volatility. Meanwhile, the situation in Iran—including anti-government protests in Tehran—may cause short-term turbulence affecting global risk sentiment. Overall, next week will serve as a testing ground for economic data, with policy and geopolitical uncertainties adding to the market’s challenges.