LONDON (Reuters – The festive season will see markets slow down. Let’s just not declare it over yet.

While most central banks have concluded their year-end meetings, investors will be able to ponder a new set of questions. U.S. data should, however, shed some light on consumers’ performance in the face of rising prices and Omicron COVID, which is rapidly spreading.

Here are the markets for week one from Ira Iosebashvili (Singapore), and Sujata Ro and Dhara Ranasinghein London.

Take Five is taking a vacation on December 24, 31, and January 1, but plans to return in the New Year.

1. DONE and DUTTED

Markets can now cruise into the year-end after December’s flood of central bank meetings is over, right?

Not quite. One, the Bank of England has confused investors for the second consecutive week, with a surprise rate increase raising questions about its communication style.

Perhaps in Christmas spirit, perhaps the European Central Bank offered something for everyone. The hawks cheer the end of emergency stimulus, while the doves are happy to have an open-ended scheme that purchases assets from existing owners. The rising yields of peripheral bonds suggests some concern about easing support.

The Federal Reserve seems to have raised rate prospects and set the stage for an uncertain 2022. Central bankers are charting their exit routes at drastically different speeds.

Central bank balance sheets: https://fingfx.thomsonreuters.com/gfx/mkt/klvyknowjvg/theme1612.PNG

HOLIDAY CHEE VS HOLIDAY FEAR

‘Tis the season to be shopping, but just how cheerful are U.S. shoppers in the face of soaring prices and Omicron https://www.reuters.com/world/us/omicron-estimated-be-29-covid-19-variants-us-cdc-2021-12-14?

On Wednesday, the U.S. consumer confidence Index for December is due. Thursday’s November home sales, consumer spending, and durable goods orders are also expected to provide some clues.

U.S. consumer prices grew at their fastest pace in around four decades in November https://www.reuters.com/markets/us/us-consumer-prices-increase-further-november-2021-12-10. At the Fed, any indications that higher living costs or pandemic fatigue may be affecting spending (which accounts for nearly two thirds U.S. GDP) will not be welcomed.

After all, the central bank just doubled the pace at which it will cut bond purchases and signalled as many as three rate hikes for 2022 https://www.reuters.com/markets/us/fed-prepares-stiffen-inflation-response-post-transitory-world-2021-12-15.

United States consumer confidence: https://fingfx.thomsonreuters.com/gfx/mkt/mypmnawqzvr/USTHEME1612.PNG

BOJO TO GOGO 3?

He is now in his second year as British Prime Minister Boris Johnson.

A revolt https://www.reuters.com/world/uk/british-pm-johnson-faces-rebellion-parliament-over-covid-measures-2021-12-14 by 100 lawmakers, scandals, the loss of a parliamentary seat his party had dominated for 200 years https://www.reuters.com/world/britains-liberal-democrats-predict-big-upset-parliamentary-vote-2021-12-17, and a stuttering economy mean bookies are offering even money that he will be replaced in 2022. A majority of voters think he should resign, one poll found https://www.reuters.com/world/uk/support-uk-pm-johnson-party-sinking-amid-scandals-poll-2021-12-11.

Britain’s recovery from the pandemic had been halted by Brexit. An Omicron “tidal waves” (Johnson’s terms) is now a bigger problem. Private sector growth plunged in December to a 10-month low, PMIs https://www.reuters.com/markets/europe/omicron-hits-uk-businesses-hard-december-pmi-2021-12-16 showed, yet 5%-plus inflation may force the Bank of England into several rate hikes next year.

On Dec. 22, final Q3 GDP readings may confirm Britain’s economy falling behind G7 peers https://www.reuters.com/world/uk/uk-economy-grows-06-sept-after-weak-summer-ons-2021-11-11. Unsurprisingly, British stocks https://www.reuters.com/markets/europe/cheap-unloved-uk-plc-still-cant-shake-risk-discount-2021-12-14′ 35% price discount versus global peers has not stopped investors from voting with their feet.

UK economy: https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkygdzpx/Pasted%20image%201639651229258.png

4/CHILE CHOOSES

Chileans head to the polls https://www.reuters.com/world/americas/chile-is-set-its-most-polarized-election-decades-2021-11-18 on Sunday, ending a year full of political risk in Latin America, a region already haunted by income inequalities, volatile leaders, disappointing growth and a disproportionately high COVID-19 toll.

Chile’s second round election pitches ultra-conservative Jose Antonio Kast against leftist former student leader Gabriel Boric https://www.reuters.com/world/americas/chile-election-poll-shows-race-tightening-polarized-showdown-nears-2021-12-14 in a knife-edge run-off. This is the first presidential vote since protests rocked the top global producer two years ago.

The 2022 regional election cycle is continuing. Colombia is scheduled to hold congressional https://www.reuters.com/world/americas/colombia-presidential-hopeful-fajardo-seek-safeguards-after-ruling-against-him-2021-11-30 elections in March https://www.reuters.com/world/americas/colombia-ex-rebels-grow-disillusioned-with-farc-party-5-years-after-peace-2021-12-02 and a presidential ballot in May. Brazil’s general elections in October will dominate investor’s attention, due to the country’s strong economic position in the region. So far, former leftist leader Luiz Inacio Lula da Silva https://www.reuters.com/world/americas/leftist-lula-maintains-dominant-lead-brazilian-election-poll-shows-2021-12-14 has a comfortable lead in polls.

Standard Chartered (OTC:) Geopolitical Risk: https://fingfx.thomsonreuters.com/gfx/mkt/jnpweakeepw/Standard%20Chartered%20Geopolitical%20Risk.PNG

5/ MAKE SENSE OF CHINA

Investors are trying to work out just what China’s top leaders https://www.reuters.com/markets/currencies/china-says-it-will-focus-economic-stability-2022-2021-12-10 meant when they said recently that next year would be all about economic stability and prudent monetary policy.

The likes of JPMorgan (NYSE:) peg growth estimates around 5% https://www.reuters.com/world/china/jpmorgan-raises-china-q4-2022-gdp-forecast-2021-12-15, close to what government advisers recommend. It is possible that policy will be tailored in order to achieve the “common prosperity”, which was the objective of the Communist Party’s 20th National Congress.

The bond market is confused. The central bank has infused cash into banks https://www.reuters.com/markets/rates-bonds/china-cbank-injects-500-bln-yuan-via-medium-term-loans-rate-unchanged-statement-2021-12-15 while trying to rein in a strong yuan. But, this week’s expectations were not fulfilled.

Beijing’s goal of stability, deleveraging and financial reform could indicate that banks’ lending guidelines won’t be changing next week.