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It is the start of Q4’s earnings season, and the market will be focussed on US banks, who will report earnings this week. This includes JP Morgan, Citi, Goldman Sachs, and Wells Fargo. JP morgan will be the highlight. It reports Q4 earnings on Wednesday. The market is expecting a bumper earnings report, driven by a pickup in deal making activity and vibrant capital markets in the final months of last year. The market expects JPM to report a 1.9% YoY increase in revenues to $41.9bn, net income is expected to rise 20% YoY, to $11.6bn. Earnings per share is also expected to rise by more than 23% to $4.1. The US’s largest bank is expected to report stellar earnings growth for Q4 and for 2024 as a whole; but will it be enough to boost the broader banking sector?
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Open account Try demo Download mobile app Download mobile appOn another note, the bond market sell off may be about more than just inflation, but this week’s CPI reports from both the US and the UK have the power to roil financial markets. The US will report CPI on Wednesday afternoon, and headline CPI is expected to tick higher to 2.9% from 2.7%. The core rate is expected to remain steady at 3.3%. Combined with a strong NFP reading for December, higher inflation could knock expectations of rate cuts from the Fed.
In the UK, CPI data is also released on Wednesday. The December reading is expected to see a hefty monthly increase of 0.4%, however the annual headline figure is expected to remain steady at 3.6%. The core rate is expected to tick lower to 3.4% from 3.5% and service price inflation is also expected to moderate to 4.8% from 5%. Service price inflation has been a sticking point for UK price data; however, anecdotal reports suggest that the UK consumer is weakening/ scaling back and this could take the edge off inflation this month. Lower price pressures would be welcomed, but we don’t think this will be enough to reduce pressure on the UK bond market, especially if it adds to fears about UK economic growth.
How will the markets react?
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