Being well-prepared in advance is crucial.

The December CPI data from the US has special significance — it is the first complete monthly inflation report since the government shutdown. Due to the missing data caused by the October shutdown and the technical bias in the November data, the December report will more accurately reflect the trend of prices. The market expects the overall CPI to increase by 0.3% month-on-month, and the core CPI to also rise by 0.3%.

Why is this so important? It directly relates to the Federal Reserve's policy direction in January.

**Scenario of Higher Data**

If the CPI exceeds 2.7%, inflation stickiness will continue to trouble the Fed. The market's expectation of holding interest rates steady in January has already reached 95%. A higher-than-expected number will further lock in this expectation and may even delay the subsequent rate cuts. Based on market reactions, the dollar will strengthen, bond yields will rise, and stocks will be hammered. JPMorgan has estimated that if the core CPI month-over-month exceeds 0.45%, the S&P 500 could fall by 1.25%-2.5%. The reason is simple — tariff policy costs have not yet fully transmitted into consumer prices, and inflation pressure could rise again in the coming months.

**Scenario of Lower Data**

Conversely, if the CPI is below 2.7%, the market's imagination of rate cuts will open up. For example, in November, the CPI was below expectations, which directly increased the market's expectation of a rate cut in January from 26.6% to 28.8%. Lower data will lead to a weaker dollar, lower bond yields, and a rebound in the stock market. If the numbers look good (core CPI month-over-month below 0.30%), the S&P 500 could rise by 1.25%-1.75%. But remember, the November data was distorted due to the shutdown, and December's data is the true reflection of inflation.

This upcoming data release is like a key card — it will determine the rhythm of the market moving forward.