- Yesterday's session on Wall Street was dictated by the bulls. Slightly lower-than-expected CPI inflation buoyed Wall Street; the S&P 500 rose 1.8%, the Nasdaq 100 2.3% and the DJIA by more than 1.6%. Today, U.S. index futures are extending their upward streak, buoyed by the financial results of semiconductor giant TSMC, which beat forecasts in terms of both net income and revenue and forecasts
- The most important macro readings of the day today will be U.S. retail sales (for December) and unemployment claims - both at 1:30 PM GMT The market expects sales to have risen 0.6% m/m in December, compared to 0.7% in November
- In its survey of economic and business sentiment, the so-called Beige Book, the Fed conveyed, among other things, that: 'Prices rose slightly, wage growth accelerated. Employment also increased, or showed no significant change. Prices overall rose slightly; growth rates ranged from flat to moderate. Economic activity increased slightly or moderately in the twelve Federal Reserve districts in late November and December. More sources surveyed were optimistic about the outlook for 2025 than pessimistic, although in several districts sources expressed concern that changes in immigration and tariff policies could negatively affect the economy.''
- The Fed's Goolsbee conveyed that the neutral interest rate is lower than the current level of monetary policy in the US. He noted that improvements in supply chains have helped lower inflation, and remains confident about the long-term trend of inflation falling to the 2% target.
- He called yesterday's CPI report essentially 'mixed,' but mentioned that over the past six months, PCE inflation has settled around the 2% target. He also indicated that the improvement in business sentiment has gone hand in hand with a concomitant increase in 'uncertainty,' but he remains optimistic about a 'soft landing' for the economy in 2025 and still sees inflation improving
- Williams of the Fed conveyed that inflation will fall to the 2% target over a horizon of several years. He assessed that the level of U.S. fiscal debt remains a risk to the economy and a neutral interest rate. He conveyed that uncertainty about the new administration's actions may reduce optimism in part, but remains optimistic about productivity growth as a new source of economic growth
- Yields on 10-year U.S. treasuries fell slightly today, down 2 basis points to 4.65%. However, they have already fallen nearly 17 basis points since local peaks on January 10. The Eurodollar is losing slightly today, while the dollar halted yesterday's sell-off. Bitcoin's price approached $100,000, and the vast majority of cryptocurrencies have partially erased recent losses.
- Asian index futures gained only slightly. The Nikkei index failed to gain significantly, despite euphoric sentiment in the U.S. session; China's benchmark Hang Seng gained 1%, but CHN.cash and HK.cash contracts are gaining around 0.5%
- AUDUSD loses nearly 0.3% after strong data from the Australian labor market. The unemployment rate came in at 4%, in line with forecasts, compared to 3.9% in November. However, employment replacement was over 56,000 jobs vs. 15,000 forecast and 35,000 previously. The participation rate rose to 67.1% vs. 67% forecasts
- Natural gas loses more than 2%; and oil retreats by 0.2%. Agricultural commodities retreat; cotton and soybeans futures lose 0.6% and 0.9%, respectively
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