Navigating Holiday Week Volatility: Key Macro Data and Positioning Moves to Watch

As the calendar year draws to a close, investors face a critical juncture: managing holiday-week volatility while preparing for a potential post-holiday market rebound. The interplay of inflation, economic growth, labor market dynamics, and seasonal trading patterns creates a complex landscape for portfolio positioning. Here's how to navigate it.

Core PCE: Inflationary Pressures and Fed Policy Implications

The core PCE price index, the Federal Reserve's preferred inflation gauge, is expected to show a 3.0% year-on-year increase in November 2025, matching September's gain and reflecting persistent inflationary pressures. This figure, while slightly lower than the 3.1% nowcast from October, underscores the lingering impact of President Trump's tariffs, which have pushed companies in goods-producing sectors to pass costs onto consumers. With the Bureau of Labor Statistics (BLS) unable to release October CPI data due to the government shutdown, the November core PCE report becomes the first official read on inflation post-shutdown.

For investors, this data point is pivotal. A 3.0% reading would suggest the Fed's recent rate cuts-aimed at cooling inflation-are not yet achieving their intended effect. However, the delayed release of October producer price index (PPI) data now scheduled for January 14, 2026 creates a gap in policymakers' understanding of inflationary trends. This uncertainty could delay further rate cuts, keeping bond yields and equity valuations under pressure until more granular data emerges.

Q3 GDP Revisions: A Mixed Picture of Economic Momentum

The official Q3 2025 GDP data, set to be released on December 23, 2025, will replace the canceled October and November estimates due to the government shutdown. Private-sector forecasts suggest growth of 2.5% at an annual rate, driven by resilient consumer spending and a modest uptick in exports. However, this figure masks structural weaknesses, including a slowdown in durables spending and inventory uncertainties.

The December 23 release will serve as the first official look at Q3 GDP, with a final estimate due on January 22, 2026. If the initial estimate confirms the 2.5% growth forecast, it would signal a durable but fragile economic expansion. Conversely, a weaker reading could reignite fears of a slowdown, particularly in sectors reliant on federal contracts, which have seen employment declines. Investors should watch for revisions to business investment and consumer spending components, as these will shape expectations for Q4 and early 2026.

Jobless Claims: A Healthy Labor Market with Lingering Risks

The latest jobless claims data for the week ending December 13, 2025, fell to 224,000, a drop of 13,000 from the previous week. This decline, while within a historically healthy range, contrasts with broader labor market trends: federal employment continues to shrink, and hiring activity in sectors like manufacturing and retail remains subdued.

The Federal Reserve's recent rate cuts have provided some relief, but companies like UPS, General Motors, and Amazon have announced job cuts, signaling caution in the private sector. For investors, the key takeaway is that while the labor market is not deteriorating rapidly, its long-term health remains contingent on the resolution of tariff-related uncertainties and the normalization of interest rates. Defensive sectors-such as healthcare and utilities-may offer safer havens in a potential post-holiday correction.

Holiday Trading Dynamics: Liquidity Constraints and Positioning Strategies

The 2025 holiday season has been marked by a two-tier economy: affluent consumers continue to spend on luxury goods, while lower-income households prioritize value-driven purchases. This divergence is reflected in retail sales data, with off-price retailers outperforming traditional chains. For investors, this dynamic highlights the importance of sector rotation. Exposure to discretionary spending (e.g., luxury goods, travel) may remain resilient, while value-oriented sectors (e.g., discount retail, consumer staples) could benefit from sustained demand.

Liquidity constraints, however, complicate year-end positioning. Trading volumes dropped sharply after the MSCI semi-annual rebalance on November 25, and holiday-week volatility is expected to persist. Investors should avoid aggressive portfolio adjustments during this period and instead focus on tax-loss harvesting and rebalancing. The post-holiday rebound, historically driven by renewed institutional activity, could offer a more favorable entry point for strategic long-term positions.

Strategic Positioning for a Post-Holiday Rebound

The combination of these factors suggests a cautious but opportunistic approach to portfolio management. Here's how to position for a potential post-holiday rebound:
1. Hedge Against Inflation: Given the sticky core PCE data, consider extending duration in TIPS or adding exposure to commodities (e.g., gold, energy) to offset inflation risks.
2. Balance Growth and Value: A mix of high-quality growth stocks (e.g., tech, healthcare) and value-oriented sectors (e.g., industrials, consumer staples) can mitigate sector-specific risks while capitalizing on divergent consumer behavior.
3. Leverage Seasonality: Historically, the "Santa rally" has been fueled by tax-loss harvesting and year-end optimism. Positioning in mid-cap equities and small-cap value stocks ahead of January could align with this trend.
4. Monitor Liquidity: Avoid overexposure to illiquid assets during the holiday week. Instead, use the period to lock in gains and adjust leverage ratios in anticipation of improved liquidity in early January.

Conclusion

The holiday week of 2025 presents both challenges and opportunities. While inflationary pressures and labor market uncertainties persist, the post-holiday period offers a window for strategic repositioning. By closely monitoring core PCE, Q3 GDP, and jobless claims data-and adjusting portfolios to account for liquidity constraints and seasonal trends-investors can navigate volatility with confidence and capitalize on the potential for a January rebound.