Due to the backlog of core U.S. inflation data caused by the government shutdown, a cluster of key indicators will be published that may reshape expectations for the Fed’s policy trajectory. Markets are also betting that the Bank of Japan will stage the most aggressive rate hike in thirty years, finally ending the “negative interest rate era.” At the same time, Elon Musk’s SpaceX has officially confirmed IPO plans at a valuation between USD 800 billion and USD 1.5 trillion. This potentially historic capital event is expected to ripple through the entire tech sector, especially Tesla (TSLA), another flagship company in Musk’s empire.

Key Data to Watch This Week

Because the record-breaking U.S. government shutdown disrupted data collection, the Bureau of Labor Statistics will now intensively release long-delayed key economic reports. Among them, the nonfarm payroll report on December 16 and the Consumer Price Index (CPI) on December 18 will be the most important references for assessing the true state of the U.S. economy and the Fed’s future policy path.

1. Nonfarm Payrolls

On Tuesday (December 16), the U.S. will release a nonfarm payroll report covering both October and November. The report has become unusually complex due to the shutdown, and any interpretation will need to strip out the impact of special factors.

According to forecasts by Bloomberg Economics, nonfarm payrolls might show a decline of 10,000 jobs in October. This is not a sign of economic deterioration, but is mainly because a large number of former federal employees chose to delay leaving their jobs after the shutdown ended, which is statistically recorded as a drop in employment. However, markets broadly expect a strong rebound in November, with consensus pointing to an increase of about 130,000 jobs. Other institutions also forecast moderate growth, such as RBC (Royal Bank of Canada), which expects an increase of 89,000.

Markets will focus on two key aspects. First, whether the strength of the November rebound can confirm that the underlying labor market remains solid. Second—and even more crucial—whether this report will include major downward revisions to historical data. Fed Chair Jerome Powell stated openly at the December meeting that he believes recent employment growth figures have been “overstated.” Some analysts note that, based on more comprehensive administrative data, job growth in prior months may have been overstated by tens of thousands on average. Therefore, this report and subsequent revisions may reveal a labor market weaker than the headline numbers suggest, reinforcing the Fed’s concerns over downside risks in employment.

2. November CPI

Shortly thereafter, on Thursday (December 18), the first CPI report in nearly two months will be released, covering only November (the October report was cancelled).

Forecasts indicate that both headline CPI and core CPI will rise 0.3% month-on-month. On a year-on-year basis, they are expected to climb to 3.1% and 3.2%, respectively. The main driver behind this uptick is widely believed to be tariff costs increasingly passing through into consumer prices. Media survey consensus also shows an expected year-on-year CPI increase of 3.1% in November.

This report carries significant weight because it will test whether inflation is indeed just a “one-off” tariff shock, as the Fed has argued. If the data meet or exceed expectations (0.3% m/m or higher), it will seriously weaken the rationale for the Fed to take a more dovish stance and could trigger a repricing of “sticky inflation” in markets.

However, some analysts offer a different perspective. RBC points out that, due to the absence of October data, it is difficult to accurately calculate month-to-month changes or the immediate impact of tariffs. At the same time, the consumer expenditure survey to be released this Friday may adjust the weighting of CPI components. If the weight of services increases, it could partly offset tariff-driven inflation pressure in goods in the months ahead.

Potential Rate Hike by the Bank of Japan on December 19

Toward the end of the week, the spotlight among global central banks shifts to Japan. Markets widely expect the Bank of Japan to raise rates at its December 19 policy meeting, lifting the policy rate from 0.5% to 0.75%. This would mark the highest level since September 1995.

The strength of these rate hike expectations mainly stems from persistent inflation pressures. The Tankan survey released on December 15 showed that both input and output price indices for large manufacturers are rising, indicating that companies are still passing costs on to consumers. The BOJ views this hike as necessary to address the risk of persistently rising prices and to adjust its ultra-loose monetary policy.

What investors care about even more is the forward guidance on the path ahead. If the BOJ’s tone is mild and stresses this is a one-off adjustment, the market impact will be limited. But if it hints at the start of a continuous tightening cycle, it could ignite broader risk-off sentiment.

A rate hike will directly support the yen and may push up Japanese government bond yields. This could trigger the unwinding of long-standing “yen carry trades” (borrowing low-yield yen to invest in higher-yielding assets) on a large scale, driving capital back into Japan from global markets, particularly some emerging markets. As the world’s largest creditor nation, Japan’s monetary normalization implies that a long-term, cheap funding source is tightening. At the margin, this could reduce global dollar liquidity and put sustained pressure on highly valued assets.

SpaceX Planning One of the Largest IPOs in History

Over the weekend, news broke that SpaceX CFO Bret Johnsen has officially confirmed the company is preparing for a possible initial public offering (IPO) in 2026. The latest internal share transactions value the company at USD 800 billion, doubling in just six months, and SpaceX may seek a listing valuation as high as USD 1.5 trillion. The deal is expected to raise more than USD 30 billion, potentially surpassing Saudi Aramco and becoming the largest IPO in history.

The shock of this potential IPO lies not only in its size, but also in how it could reshape Elon Musk’s vast business empire and profoundly impact Tesla:

In the short term, an ultra-high valuation listing of SpaceX would generate enormous wealth effects, reinforcing Musk’s financial strength as the central figure at Tesla. More importantly, it would give him a new funding channel beyond pledging Tesla stock, potentially easing long-standing market concerns over excessive pledging of Tesla shares and removing an important source of uncertainty.

Markets also see enormous upside optionality. Wall Street analysts have already begun speculating that Tesla might someday participate in or benefit from SpaceX’s listing in some form (for example, via an equity stake) — a scenario that is no longer seen as fantasy. If that happens, Tesla’s “EVs, AI, and robotics” could strongly integrate with SpaceX’s “space infrastructure, global communications (Starlink), and interplanetary exploration,” upgrading Tesla’s valuation framework from an auto/energy company to a core ecosystem platform leading the technological frontier of both Earth and space, completely opening up its long-term valuation potential.