This recent wave of signals is pretty interesting.

On the evening of December 5, high-level officials from China and the US had a video chat about trade and economics, and the atmosphere was quite positive—both sides talked about "lengthening the cooperation list and shortening the problem list." This kind of statement, at least in the short term, gave the market a shot of confidence.

The real bombshell came from the US side. The core PCE data for September finally arrived (delayed by the government shutdown), and when it was released: annual rate at 2.8%, even a bit lower than expected. The monthly increase was also quite moderate.

Now, the market is getting excited. What's the probability of a rate cut in December? It's climbing above 87%. Even White House economic advisor Hassett came out saying there will be a cut next week, and institutions like Bank of America are hyping it up too.

All eyes are on next week's (December 9-10) Fed meeting. The problem is, key data is still missing, so how Powell manages market expectations versus the actual situation is going to be tricky.

Simply put: there's a bit of easing in US-China relations, the US inflation data is giving an extra boost, and the market is already gearing up for a rate cut.

This week is bound to be anything but calm.