Markets in Consolidation Mode With Volatility at Yearly Lows

U.S. equity futures remain in consolidation mode ahead of the Christmas holiday, with markets preparing for a shortened trading session and a relatively neutral macro backdrop.

Shortened session ahead of Christmas

On Christmas Eve, the main trading session on U.S. exchanges will close three hours earlier than usual. With reduced liquidity and limited news flow, market participants expect trading conditions to remain calm, barring any unexpected data surprises.

Focus on jobless claims

The key macro release today is the weekly report on initial jobless claims. Market consensus expects initial claims to come in at 224,000, unchanged from the prior week, while continuing claims are projected at 1.9 million.

Such readings would confirm a stable labour market, reinforcing the view that current conditions are unlikely to alter expectations for the Federal Reserve’s next policy steps. As a result, a muted market reaction is widely anticipated.

Treasury auction in focus

Investors are also watching the U.S. Treasury’s auction of 7-year notes. The quality of demand will be closely analysed, as it may influence the short-term trajectory of the yield curve.

The base-case scenario assumes solid demand and a limited move in yields, reducing the risk of a near-term increase in equity discount rates.

Market levels and volatility

Risk balance remains broadly neutral in an environment of low volatility. The VIX continues to trade near yearly lows, reflecting steady risk appetite and a lack of immediate stress signals.

From a technical perspective, the S&P 500 is expected to trade within a range of 6,880 to 6,940, as markets digest recent gains and await clearer directional catalysts.

With liquidity thinning ahead of the holidays, price action is likely to be driven more by positioning than by fundamentals — a typical seasonal pattern that tends to favour consolidation over conviction.

Technical analysis by: Lucas Grant, Senior Technical Analyst at Finmire.