This week, the heated debate in the US financial market over the extent of the Federal Reserve's future interest rate cuts is expected to intensify with the release of a series of key economic data. For many market participants, this may also be the last data "super week" of 2025

　　As the delayed monthly US non farm payroll and inflation data is about to be released in the coming week, these reports will undoubtedly fill the data gap caused by the US government shutdown, and more key employment data will be released in early January. These indicators will help answer the core question at the beginning of 2026: after three consecutive interest rate cuts, is the Federal Reserve approaching the end of its easing cycle, or does it need to take more aggressive interest rate cuts?

　　This is crucial for bond traders. They are currently betting that the Federal Reserve will cut interest rates twice next year to support the job market and outlook - despite current high inflation in the United States. The estimated number of interest rate cuts is one more than suggested by the Federal Reserve's point chart last week.

　　If these interest rate market bets are correct, they may pave the way for another round of strong trend of US bonds and even US stocks. This year, US treasury bond bonds are moving towards the best year since 2020.

　　George Catrambone, the head of fixed income at Deutsche Asset Management in the Americas, said that the most important single data point for interest rate trends next year may be the employment data released on Tuesday. This is the only indicator I am concerned about, and the direction of the labor market will determine the direction of interest rates

　　Catrambone is one of the analysts who expect the Federal Reserve to have to significantly lower interest rates. In view of the weakness of US labor indicators before the release of non farm data this week, he expected the Federal Reserve to cut interest rates far more than expected - he had bought US treasury bond bonds last week when the US bond yield soared to a multi month high.

　　Some Wall Street traders are currently establishing related option positions - these positions will be profitable if the market shifts towards expectations of a Fed rate cut in the first quarter of next year.

　　It is worth mentioning that market pricing has not fully digested the expectation of the Federal Reserve cutting interest rates again before the middle of next year, and the expected window for the second rate cut is in October next year.

　　Backlogged data becomes crucial

　　This has led to a continued increase in industry attention towards the upcoming release of some US macro data for November and October.

　　Following the Federal Reserve's interest rate meeting last week, the US November employment report to be released on Tuesday is expected to further impact the outlook for borrowing costs in 2026. According to media surveys, the number of non farm employees is expected to increase by 50000 in November. Previously delayed data showed that the number of US jobs increased by 119000 in September, exceeding expectations, but the unemployment rate rose to 4.4%, the highest level since 2021.

　　The report will also include a reissue of non farm payrolls for October, which was delayed due to the federal government shutdown. However, the US Bureau of Labor Statistics has previously stated that the unemployment rate data for October will be vacant due to the inability to conduct a household survey for that month.

　　Macro strategist Ed Harrison said, "If the rise in US Treasury bonds is to continue, the employment report on December 16th will be the next data hurdle. The market generally expects the non farm payroll to increase by 50000 in November. If the actual data is lower than expected, it may push the bond market to continue its upward trend and advance the first fully priced interest rate cut from June next year to April next year

　　Kevin Flanagan, head of fixed income strategy at WisdomTree, believes that "the threshold for the Federal Reserve to cut interest rates at its next meeting in January has been raised. People need to see clear evidence of economic cooling in the employment report

　　Flanagan stated that if the non farm payroll data for November remains within the (higher) range of September, it could trigger a wave of US bond selling, pushing the 10-year US Treasury yield to 4.25%. He also believes that the Federal Reserve's interest rate cut cycle is coming to an end, citing his research that 3.5% is the so-called neutral rate - neither stimulating nor suppressing the economy.

　　This viewpoint to some extent echoes the statement made by Federal Reserve Chairman Powell last week. He claimed at the time that the policy rate had now entered the range of "neutral" rates estimated by Federal Reserve officials. Some people believe that this indicates that the Federal Reserve has limited room for further easing. According to swap market data, traders expect the Federal Reserve to end this easing cycle by cutting interest rates to around 3.2%.

　　In addition to non farm payroll data, the longest government shutdown in history experienced earlier in the fourth quarter also affected another closely watched economic indicator: CPI. At present, the industry expects that the November CPI report released on Thursday will show a year-on-year increase of 3% for both the overall CPI and the core CPI excluding food and energy prices, and a month on month increase of 0.3%. Currently, inflation in the United States continues to exceed the official target of 2% set by the Federal Reserve.

　　The US Department of Commerce will also release retail sales data for October this Tuesday. Economists predict that after excluding car and gasoline expenses, core retail sales will increase by 0.2% month on month, indicating that consumer demand remains strong at the beginning of the fourth quarter.

　　Of course, in addition to the intensive release of a series of economic data, another major event is currently brewing: as President Trump pressures for a significant interest rate cut, some investors' focus has shifted to Powell's successor after his term expires in May. The selection process for Trump is currently in its final stage.

　　Janet Rilling, head of the fixed income team at Allspring Global Investment, pointed out that "regardless of whether the economy is overheated or not, the appointment of a new chairman means that the Federal Reserve will adopt a more dovish stance." She added, "The job market may become a cover for policy adjustments. Although we do not expect the unemployment rate to rise significantly, if the employment situation is slightly weak, it will become an excuse for further interest rate cuts in the future