The global financial landscape is poised for a significant event on the horizon.

In line with the schedule, the Federal Reserve is set to announce its final interest rate decision for 2024 this week, where central banks from Japan, the United Kingdom, Russia, Thailand, the Philippines, Norway, and Sweden will also declare their respective rate decisionsCurrently, the federal funds futures market indicates nearly a 100% probability that the Federal Reserve will opt for a 25 basis point rate cut.

With this 25 basis point cut largely priced in, the primary focus for the market will be on the remarks of Federal Reserve Chair Jerome Powell

Analysts speculate that this week's pronouncement could lean toward a "hawkish" stance on the possible pause in rate cuts, a signal that could heighten the selling pressure on U.Sequities.

A noteworthy consideration is the ongoing dramatic sell-off in the U.STreasury marketJust last Friday, the yield on the 30-year Treasury bond surged to 4.60%, marking an increase of approximately 28 basis points from the previous week, the largest weekly jump of the yearWall Street analysts believe that U.STreasury yields reflect market expectations that the Federal Reserve will remain steady for the time being.

As we gear up for the global central bank week, the spotlight intensifies.

According to the agenda, the Federal Reserve will reveal its interest rate decisions this week, with other central banks, including those of Japan, the UK, Russia, Thailand, the Philippines, Norway, and Sweden, also expected to make announcements.

Specifically, the Federal Reserve is due to publish its decision early Thursday morning (December 19th) Beijing time, and outside expectations suggest a likely 25 basis point cut.

Data from CME's "FedWatch" indicates that the probability of the Federal Reserve maintaining the current rate through December is only 1.4%, while the likelihood of a 25 basis point cut accumulates to 98.6%. By January, the probability for maintaining the rate also drops to 1.1% with a 79.9% chance for a cumulative cut of 25 basis points while a decrease of 50 basis points carries a 19% probability.

This suggests that a third rate cut from the Federal Reserve this year is almost a certainty.

Since the 25 basis point cut is fully priced in, market participants are now looking forward to Chair Powell's statements.

Analysts from BNP Paribas anticipate a "hawkish" rate cut this week, with the Federal Reserve potentially suggesting an extended pause on further cuts, although the duration of this pause is still uncertain.

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economy exhibiting strong growth and progress against inflation stagnating, investors have tempered their expectations for the scale of future cuts by the Federal Reserve in the coming year.

Data from LSEG indicates that current U.Smoney markets are expecting only two additional rate cuts by the Fed in 2025.

Brad Bechtel, an analyst at Jefferies, stated in a report, "The rate cut in December is a foregone conclusion, but any subsequent moves will certainly slow down."

Moreover, Jefferies' analysts suggest that the new dot plot may result in an increase in policy rate guidance for 2025 by 25 to 50 basis pointsDuring the press conference, Powell may provide further hints regarding future pauses in rate cuts, softening market expectations for a January cut.

From a data release perspective, this Friday, the U.S

is set to announce its Personal Consumption Expenditures (PCE) price index for November, which is the Federal Reserve's preferred gauge for inflationRetail sales data for November will be reported on Tuesday, and the revised GDP annualized quarter-over-quarter figures for Q3 will be unveiled on Thursday.

In the realm of other central banks, the Bank of England will be revealing its rate decision on Thursday, and market consensus suggests it will maintain the policy rate at 4.75%, continuing its gradual easing policy.

Additionally, the Bank of Japan remains a focal point for global marketsExpectations for an interest rate hike from this central bank are building momentumEconomists at Nomura predict that the BoJ may raise rates by 25 basis points to 0.5% this week, although a delay until January or later remains a possibility.

Nomura stated that if the BoJ decides to forgo a rate increase this December due to uncertainty or fiscal policy concerns, the likelihood of taking action in January becomes significantly heightened.

On the market level, last week's U.S

equity market saw disparities with the Dow Jones continuously declining, recording a "seven consecutive loss" streak while the NASDAQ remained strong, once surpassing the 20,000 points mark, establishing a new historical high.

Wall Street strategists observe that despite the NASDAQ's record high, a troubling trend is emerging in the U.Sequity market where the impetus behind the market's rise is increasingly diminishingAs of last Friday's close, the count of stocks declining in the S&P 500 has exceeded those advancing for ten straight trading days, marking the longest streak recorded since 2004.

Additionally, should the Federal Reserve signal a "hawkish" stance this week, it could further dampen expectations for rate cuts in 2025, increasing the pressure for adjustments in the U.S

equity markets.

Currently, the U.STreasury market is under significant strain, facing fierce sell-offsNotably, the yield on the 30-year Treasury bond reached 4.60% last Friday, reflecting an approximate 28 basis point spike, which stands as the largest weekly increase this year.

Rick Rieder, BlackRock's chief investment officer for global fixed income, mentioned that Treasury yields seem to reflect a market pricing in a Fed maintaining its current stanceThe economy is performing well, and any inflation present appears to be on the rise.

In terms of news, a weak demand in last Thursday’s 30-year Treasury auction further pushed yields upwards, bringing them close to November's peak.

Moreover, the yield on the 10-year Treasury bond has also been on the rise, accumulating a 25 basis point increase last week, once peaking at 4.40%, which is the first occurrence of surpassing the 3-month Treasury yield since 2022.

This indicates that the yield curve distortions between the 3-month and 10-year Treasury securities have been alleviated

Analysts point out that with growing optimism around the U.Seconomic growth, long-term interest rates might ascend even further.

Currently, market consensus suggests that post a 25 basis point cut in December, the Fed is expected to lower rates twice in 2025. However, there are economists who hold opposing views.

Economists from Deutsche Bank and BNP Paribas assert that the Federal Reserve will take no further actions in 2025 and will adopt a more cautious stance on rate cuts moving forward.

Additionally, BNP Paribas anticipates that the Fed's actions this week will accompany "hawkish" rhetoric, suggesting that future reductions may be limited, with projections for the 10-year Treasury yield could rise to 4.65% by 2025.

Jason Pride, the director of investment strategy and research at Glenmede, expressed that ideally, the Federal Reserve would cut rates in December and halt in January.

He suggests that next year, the Fed will potentially reduce rates two to four times, but with significant uncertainties due to inflation stemming from tariffs and immigration policies under the forthcoming administration.