With the holidays behind us, the first full week of trading in 2026 begins on Monday. Market volume and liquidity should begin to normalize, which could initially lead to increased intraday volatility as institutional investors continue rebalancing portfolios ahead of 1Q. The week ahead also brings a heavy slate of economic data, offering a mix of sentiment and hard data that should provide clearer insight into the health of both the economy and the consumer.

The week kicks off with ISM Manufacturing data, which will be closely watched following Friday’s mixed S&P Global Manufacturing PMI report. While new orders declined sharply, input costs also decelerated, a positive sign in the ongoing fight against inflation. The ISM release should offer a clearer view of underlying inflationary pressures and demand conditions.

On Wednesday, attention shifts to the ADP Non-Farm Employment report, which will help set expectations for the rest of the week’s labor data. Last month’s ADP print surprised to the downside with a loss of 32,000 jobs, and markets are now looking for a potential upward revision along with an estimated gain of roughly 47,000 jobs for December.

Thursday’s Initial Jobless Claims will follow, marking what should be the final report meaningfully impacted by seasonal distortions. Last week’s claims came in well below expectations, marking one of the lowest readings since January 2024.

The week concludes with the highly anticipated Non-Farm Payrolls report from the BLS. This will be the first “full” employment report following the government shutdown. Consensus expectations call for payroll growth of approximately 55,000 jobs, while the unemployment rate is projected to decline to 4.5% from 4.6%. Average Hourly Earnings, a key gauge of wage inflation, are expected to rise 0.3% month-over-month.

Despite an increasingly dense economic calendar and elevated geopolitical risk, implied volatility remains notably subdued. With multiple high-impact data releases ahead, any downside surprises, particularly in labor, could trigger a sharp repricing in volatility markets. As liquidity returns and macro clarity improves, the coming week may prove pivotal in shaping early-2026 market direction.

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