Economic Indicators - December CPI is expected to remain unchanged from November at +2.7% y/y, while December core CPI is anticipated to rise to +2.7% y/y from +2.6% y/y in November [1] - October new home sales are projected to decline by -10.6% m/m to 715,000 [1] - November PPI final demand is expected to increase by +2.7% y/y, with core PPI also expected to climb by +2.7% y/y [1] - November retail sales are anticipated to increase by +0.5% m/m and +0.4% m/m excluding autos [1] - December existing home sales are expected to rise by +2.2% m/m to 4.22 million [1] - Weekly initial unemployment claims are expected to increase by +7,000 to 215,000 [1] - January Empire manufacturing survey is expected to rise by +4.9 to 1.0 [1] - December manufacturing production is expected to fall by -0.1% m/m [1] - January NAHB housing market index is expected to increase by +1 to 40 [1] Federal Reserve and Market Reactions - Fed Chair Powell stated that the Federal Reserve received grand jury subpoenas from the Justice Department, which could lead to a criminal indictment related to his congressional testimony [2] - Concerns about Fed independence have increased due to the Trump administration's criticism, leading to a "Sell America" sentiment in US asset markets [3] - The 10-year T-note yield rose by +2 bp to 4.19% amid these concerns [3] - March 10-year T-notes are down by -4 ticks, with the yield up by +2.6 bp to 4.191% [6] - The 10-year breakeven inflation rate rose to a 1.75-month high of 2.30% [6] Stock Market Movements - The S&P 500 Index is down -0.23%, the Dow Jones is down -0.58%, and the Nasdaq 100 is down -0.27% [4] - Credit card companies and bank stocks are declining after President Trump announced that lenders must cap interest rates at 10% for one year, with Synchrony Financial down more than -7% [10] - Mining stocks are rising as gold and silver prices reached new all-time highs, with Hecla Mining up more than +8% [11] - Shake Shack reported preliminary Q4 revenue of $400.5 million, below its forecast, leading to a decline of more than -2% in its stock [12] - ANI Pharmaceuticals is up more than +8% after forecasting 2026 net revenue of $1.055 billion to $1.1185 billion, exceeding consensus expectations [14]

Economic Indicators - The Dec ADP employment change is expected to increase by +48,000, while the Dec ISM services index is projected to slip -0.3 to 52.3 [1] - Nov JOLTS job openings are anticipated to climb by +9,000 to 7.679 million, and Oct factory orders are expected to decline by -1.1% m/m [1] - Q3 nonfarm productivity is expected to rise by +4.7%, with unit labor costs increasing by +0.3% [1] - Initial weekly unemployment claims are projected to increase by 12,000 to 211,000 [1] - Dec nonfarm payrolls are expected to increase by +59,000, with the unemployment rate slipping by -0.1 to 4.5% [1] - Dec average hourly earnings are expected to rise by 0.3% m/m and 3.6% y/y [1] - Oct housing starts are expected to increase by 1.4% m/m to 1.325 million, and building permits are expected to rise by 1.1% m/m to 1.350 million [1] - The University of Michigan's Jan consumer sentiment index is expected to climb by 0.6 points to 53.5 [1] Stock Market Performance - The S&P 500 Index is up +0.32%, the Dow Jones Industrials Index is up +0.16%, and the Nasdaq 100 Index is up +0.63% [5] - March E-mini S&P futures are up +0.33%, and March E-mini Nasdaq futures are up +0.66% [5] - Chipmakers and data storage companies are leading the market, with Sandisk up more than +12% and Microchip Technology up more than +7% [10] - Mining stocks are also performing well, with copper prices reaching a new all-time high [4][11] Bond Market - The 10-year T-note yield is up by +2 bp to 4.18%, influenced by rising inflation expectations [3][7] - The 10-year breakeven inflation rate has risen to a 1-month high [3][7] - European government bond yields are moving lower, with the 10-year German bund yield down -2.7 bp to 2.843% [8] Company-Specific Developments - Aeva Technologies is up more than +32% after its 4D LiDAR technology was selected for Nvidia's autonomous vehicle platform [13] - OneStream is up more than +25% following news of advanced acquisition talks [13] - Zeta Global Holdings is up more than +6% after entering a strategic collaboration with OpenAI [14] - Vistra Corp. is up more than +3% after agreeing to acquire 10 natural gas-fired power plants for roughly $4 billion [14] - Core Scientific is up more than +2% after an upgrade to buy from neutral [15]

Core Viewpoint - The Bank of Japan should aim to anchor long-term inflation expectations around 2% to maintain market trust and manage rising interest rates [1][3]. Group 1: Inflation and Economic Outlook - Inflation in Japan is expected to moderate as cost-push factors dissipate, potentially leading to positive real wages by 2026 [2]. - If economic conditions improve, Japan's output gap may close, indicating a more optimistic economic outlook [2]. Group 2: Interest Rates and Fiscal Policy - Rising Japanese government bond yields reflect market expectations of continued interest rate hikes by the Bank of Japan, driven by persistent high food costs keeping inflation above the 2% target [4]. - The Bank of Japan raised its short-term policy rate to a 30-year high of 0.75% in December, marking a significant shift towards reducing stimulus [6]. Group 3: Debt Management - Wakatabe emphasized the importance of focusing on lowering Japan's debt-to-GDP ratio rather than ignoring the existing primary balance target [5]. - The panel, which Wakatabe is part of, will oversee the development of a new long-term fiscal blueprint expected by June [6].

Core Insights - The bond markets in 2026 face uncertainty regarding whether long-term rates will remain high despite potential Federal Reserve rate cuts, which could impact homebuyers and businesses negatively [1][3][9] Interest Rate Trends - Analysts predict a steepening of interest rate charts, with long-term rates staying elevated while short-term rates decline, driven by inflation expectations [2][9] - The Fed has cut short-term rates by 175 basis points since September 2024, yet the yield on the 10-year U.S. Treasury has increased from approximately 3.70% to around 4.15% [5][9] Market Reactions - The bond market's response to Fed rate cuts has been termed the "easing paradox," where long-term rates do not comply with short-term rate reductions [5][6] - There is skepticism regarding the Fed's influence over the markets, as some investors view its actions as overly proactive given the current economic conditions [6] Future Projections - The 10-year yield is projected to potentially reach 4.5% by mid-2026 before settling around 4.25%, influenced by tariff impacts and inflation dynamics [7][8] - Three scenarios for future interest rates are outlined, with one predicting a drop to 3% under recession-like conditions, while another suggests cuts without justification could lead to market skepticism and rising inflation risks [10][12]

Group 1 - The dollar index (DXY00) reached a 1-week high, increasing by +0.19% due to yen weakness and positive comments from New York Fed President John Williams [1] - The dollar is facing pressure from the Federal Reserve's liquidity boost, with a monthly purchase of $40 billion in T-bills starting last Friday [2] - Concerns about President Trump's potential appointment of a dovish Fed Chair are negatively impacting the dollar, with Kevin Hassett being the likely candidate [2] Group 2 - US existing home sales in November increased by +0.5% month-over-month to a 9-month high of 4.13 million, although it fell short of the expected 4.15 million [3] - The University of Michigan's US December consumer sentiment index was unexpectedly revised down by -0.4 to 52.9, contrary to expectations of an upward revision [3] - The 1-year inflation expectations for December were revised upward to 4.2% from 4.1%, indicating rising inflation concerns [3] Group 3 - New York Fed President John Williams expressed optimism about economic data, projecting US GDP growth of 1.5% to 1.75% for this year, with no immediate need for further monetary policy action [4] - The market is pricing in a 22% chance of a 25 basis point cut in the fed funds target range at the upcoming FOMC meeting on January 27-28 [4]

Group 1 - Fresh US economic data indicates easing inflation pressures, but consumers are still under strain, suggesting improving macro conditions with potential near-term volatility for Bitcoin and the broader crypto market [1] - US consumer sentiment increased to 52.9 in December, which is nearly 30% lower than a year ago, while short-term inflation expectations dropped to 4.2% and long-term expectations eased to 3.2% [2][3] - Falling inflation expectations suggest households believe price pressures are easing, supporting the Federal Reserve's goal of cooling inflation without maintaining restrictive policies for too long [3][4] Group 2 - Lower inflation expectations reduce the necessity for high interest rates, leading markets to price in earlier or deeper rate cuts, which is significant for risk assets like crypto [5] - Historically, Bitcoin has responded more to liquidity conditions than to consumer confidence or economic growth, indicating a potential positive outlook for the crypto market as financial conditions loosen [5][6] - Lower interest rates typically reduce returns on cash and bonds, leading to a gradual loosening of financial conditions [6]

Consumer Sentiment - Consumer sentiment has drifted lower since October 2024, stabilizing slightly above the 50 level, with core sentiment estimates at 53.5% but coming in at 52.9%, lower than the previous 53.3% [2][3] - Expectations for consumer sentiment were around 55, but the actual print was 54.6%, indicating a slight decline in both sentiment and future expectations [3] Existing Home Sales - Existing home sales were over 6.5 million units in 2021 but have since stabilized slightly above 4 million, with the current month’s sales at 4.13 million, slightly below the estimate of 4.15 million [5] - Month-over-month readings showed a 0.5% increase, which is lower than the previous 1.5% [6] - Long-term trends indicate that current levels of existing home sales are among the lowest seen in the past 40-45 years, reflecting ongoing weakness in residential investment [7] Geopolitical Developments - The EU has approved a loan package of approximately €90 billion (about $105 billion) to Ukraine, which is not utilizing frozen Russian assets due to ongoing legal disputes [8][10] - This funding aims to address Ukraine's financial needs without escalating tensions with Russia, highlighting the importance of maintaining diplomatic negotiations [9][10] Central Bank Actions - The Bank of Japan (BOJ) raised its policy rate by 25 basis points to 0.75%, the highest since 1995, but the yen weakened, attributed to less hawkish commentary from the BOJ [11][12] - The interest rate differential between Japan and the United States remains significant, with U.S. rates around 36-37 basis points higher, contributing to the yen's volatility [14][15] - Traders are monitoring potential interventions by Japanese authorities to support the yen, especially as trading volumes may thin due to upcoming holidays [17]

U.S. Michigan consumer sentiment edged up in December to 52.9, slightly above November but still nearly 30% lower than a year ago, reflecting ongoing cost-of-living pressures. Short-term inflation expectations fell for a fourth straight month to 4.2%, while long-term expectations eased to 3.2%, suggesting moderating inflation concerns despite weak overall confidence. ...

I mean, I don't I don't think we have to be in a bubble for the market to say we're going to take a break for a while from the expensive tech stock. I mean, and that has happened multiple times. So, I try to sort of sidestep, you know, the the argument of maybe the riskreward is better elsewhere is not answered by Yeah, but it's not a bad bubble, okay.Because you can still be outside of a bubble or in the bubble in the making or two years away uh and still have the riskreward not look great. We weren't in a ...

British households’ inflation expectations edged down from their highest in two years, a slight easing that may soothe concerns at the Bank of England as officials decide whether to cut interest rates further https://t.co/hyzj4PQgtz ...