Some of the factors that I am watching in the short to medium term that could change current market trends are European debt offerings, and the discussion of raising the US debt ceiling:
Spain has 2020–2024 dated bonds coming to market on Thursday which could result in the recent strength in the Euro continuing or perhaps a chance at a disappointment (though I think that will be a small chance).
The debate on raising the debt ceiling in the US will begin to take center stage in the markets as the ceiling approaches. The longer the debates go on in Washington the greater the downward pressure could become on the dollar and long term treasury prices.
With Japan announcing that it will be participating in the European bailout fund (about 20% of the next issuance) it will be interesting to watch the intent of the Japanese government, the participation in the bailout could be a way to create a backdoor QE program. I believe Japan’s desire to create a sovereign wealth fund was to help stem their strengthening currency; this could be a more conservative, test and feel approach to achieving that same goal. It would be interesting to watch the EUR/JPY over the next few days, as well as long term as this could play out to be a backstop to the uncertainty, and by effect, the decline in the EUR to the JPY.
When going into a new year it is always a good time to reflect on the longer term trends of the year past and the viability of the trend continuing into the next year and to create a strategy to take advantage of those perceived trends. The strategy will most likely be altered throughout the year, and could even turn out the opposite of what you originally thought, but a plan none the less will work as a guide to easier identify the trends regardless of if they support or disprove your strategy. It is this awareness that will allow you to look for, and seize, opportunities that would otherwise come as a surprise or too late.