This may as well be the last week of the year for macro observers.

The “Big 3” central banks all meet and the November CPI report in the US is the penultimate top-tier release out of the world’s largest economy (I’d classify the retail sales update on Thursday as second-tier given it’ll live in the shadow of the previous day’s Fed meeting, while personal income and spending data will hit into what, barring some dramatic turn, will be a complete void on December 22, the final trading session before a long Christmas weekend).

The Fed, the ECB and the BoE will all keep policy rates unchanged. Jerome Powell will be pressed on the timeline for insurance cuts (those interested can peruse my full FOMC preview here), while Christine Lagarde will perhaps endeavor to discourage the most aggressive of ECB rate cut speculation, which sees cuts commencing from March or April.

Inflation has receded rapidly in the eurozone. So rapidly, in fact, that even Isabel Schnabel (not exactly a stalwart dove) felt compelled to acknowledge the progress. “When the facts change, I change my mind. What do you do, sir?” Schnabel told Reuters, channeling Keynes in a December 5 interview. “The most recent inflation number has made a further rate increase rather unlikely.”

Adding to the case for caution, the European economy is teetering on the brink of recession (Germany is beset). In light of the October statement language, no one seriously believed the Governing Council was likely to hike again anyway, notwithstanding Lagarde’s “The fact that we are holding doesn’t mean we will never hike again,” remark.

Still, some European policymakers aren’t ready to declare victory. While agreeing with Schnabel that the trajectory of inflation “support[s] the idea that additional tightening won’t be needed,” Slovakia’s Peter Kazimir called the notion of ECB cuts in Q1 “science fiction” last week. That’s the kind of thing you don’t want to say as a policymaker, because it sets the stage for jokes aplenty in the event you’re wrong. In Kazimir’s defense, there are only two policy meetings in Q1, so he’s probably safe.

It’s hard to know what to say about the beleaguered Bank of England. The outcome of November’s meeting was another “confused hold,” and although there was some decent news on the inflation front recently, the outlook for the UK economy remains quite shaky, where that means policymakers are still walking a tightrope between very high inflation and a protracted period of underwhelming growth.

November’s hold was the second consecutive after 14 straight increases.

The BoE has little choice but to insist on holding terminal for as long as possible in light of inflation realities, but that may become economically and politically untenable midway through 2024, which is precisely what market pricing reflects.

As for the US CPI report, consensus expects a 0.3% MoM print on the core gauge for November and another flat reading on the headline.

On a YoY basis, core price growth is seen sticking at 4%, double target.

Recall that October’s US CPI report (delivered on November 14) served to turbocharge last month’s stock and bond rally. Certainly, there’s scope for any disappointment (which in this context would mean a hotter-than-expected read) to reverse some of the euphoria, particularly when considered with the robust November NFP headline and accompanying AHE overshoot, but it’d take an anomalous upside surprise to materially change the narrative (note the emphasis).

It’s absolutely possible that evidence to suggest inflation remains “sticky” in the US could compel traders to trim rate cut bets for 2024 even further (i.e., on top of the backpedaling seen in the aftermath of the jobs report). But I think ~100bps of expected cuts will be the baseline assumption for markets regardless of near-term oscillations in STIRS and irrespective of what the new dot plot shows.

Also on the docket in the US this week: NFIB, PPI, retail sales (which’ll be watched closely but, as mentioned above, will likely play second fiddle in a week dominated by CPI and the FOMC) and flash reads on S&P Global’s PMIs for December.