US stock futures rose on Thursday, eyeing a recovery from Wall Street's tech-fueled sell-off, as investors digested the easing inflation pressures from the latest reading on consumer prices that could help set expectations for the path of interest rates. S&P 500 futures (ES=F) moved up roughly 0.6%, while those on the Nasdaq 100 (NQ=F) gained 1%, looking to rebound after Oracle (ORCL)-propelled AI trade worries spurred another bruising session for tech. Meanwhile, Dow Jones Industrial Average futures (YM= ...

🚨 REMINDER: Japan’s central bank may raise interest rates on Friday to 0.75 percent, the highest level since 1995. ...

New Zealand’s economy rebounded more than economists forecast in the third quarter, with falling interest rates helping drive output after a second-quarter contraction https://t.co/7WVbjnArzB ...

Economic Indicators - Weekly initial unemployment claims in the US are expected to decrease by 11,000 to 225,000 [1] - November CPI is projected to rise by 3.1% year-over-year, while core CPI is expected to increase by 3.0% year-over-year [1] - Existing home sales for November are anticipated to rise by 1.2% month-over-month to 4.15 million [1] - The University of Michigan's consumer sentiment index for December is expected to be revised upward by 0.2 to 53.5 [1] Mortgage Applications - US MBA weekly mortgage applications fell by 3.8% for the week ending December 12, with the purchase mortgage sub-index down by 2.8% and refinancing down by 3.6% [2] - The average 30-year fixed mortgage rate increased by 5 basis points to 6.38% from 6.33% [2] Stock Market Performance - The S&P 500 Index closed down by 1.16%, the Dow Jones down by 0.47%, and the Nasdaq 100 down by 1.93% [6] - AI-infrastructure stocks and chip makers experienced significant sell-offs, with GE Vernova down over 10% and Constellation Energy down over 6% [13] - Cryptocurrency-exposed stocks also fell, with Bitcoin dropping over 2% [14] Energy Sector - Energy producers saw gains as WTI crude oil rose by more than 1%, with Devon Energy up over 5% and ConocoPhillips up over 4% [16] - Mining stocks increased due to heightened tensions in Venezuela, boosting demand for precious metals [4] International Markets - The Euro Stoxx 50 fell to a 2-week low, down by 0.63%, while China's Shanghai Composite rose by 1.19% [7] - Japan's Nikkei Stock 225 recovered, closing up by 0.26% [7] Bond Market - March 10-year T-notes fell by 0.5 of a tick, with the yield rising by 0.6 basis points to 4.151% [8] - T-notes found support from solid demand in a $13 billion auction of 20-year T-bonds, which had a bid-to-cover ratio of 2.67 [9] - The yield curve has steepened since the last FOMC meeting, indicating bearish sentiment for T-note prices [10] Earnings Reports - Companies reporting earnings include Accenture PLC, Birkenstock Holding Plc, CarMax Inc, Cintas Corp, Darden Restaurants Inc, FactSet Research Systems Inc, FedEx Corp, HEICO Corp, and NIKE Inc [21]

Core Viewpoint - The Federal Reserve's future actions regarding interest rates and the potential appointment of a new chair are critical considerations for investors in 2026 [1] Group 1: Interest Rate Outlook - There is an expectation of a firming in 2026 due to factors such as regulatory relief, tax benefits, and the continuation of the AI boom [2] - The current job market weakness is attributed to structural issues and the recent shutdown, which is now over, leading to concerns about being at a neutral interest rate while inflation remains above target [4][8] - The Fed's current neutral rate is estimated to be in the range of 3.5% to 3.75%, with inflation running above the target of 2.75% [8] Group 2: Labor Market and Inflation - The unemployment rate of 4.6% may be skewed due to a recent increase in labor supply following the shutdown, which might not be sustainable [6][7] - There is a belief that the labor market's current weakness is more structural than cyclical, with tariffs disproportionately affecting small businesses [5][11] - The anticipation of AI's impact on productivity is seen as a structural issue that could influence future economic conditions [6][12] Group 3: Fed's Internal Dynamics - The divide within the Fed has become more pronounced as they approach neutral rates, with differing opinions on whether to cut rates further or maintain the current stance [10] - The tension within the Fed is attributed to the need for evidence of improving inflation before making further decisions [9][10]

Economic Outlook - The economic outlook for 2026 suggests that the US economy may gather strength after a soft patch in the labor market, with a forecasted growth of 1.8% by Q4 2026 [16][21]. - Factors influencing the economic trajectory include stubborn inflation, rising unemployment, and the impact of AI on productivity and spending [9][20]. Stock Market Trends - The stock market is experiencing mixed performance, with energy stocks rebounding alongside rising oil prices, while tech stocks, including Nvidia and Oracle, are under pressure [5][6][8]. - Historical data indicates that periods of rising unemployment can coincide with stock market gains, particularly when the 10-year yield is falling [51][52]. Company-Specific Developments - Oracle's stock is facing challenges due to reported difficulties in funding negotiations for a data center project in Michigan, leading to a 4.4% decline in shares [6][115]. - Amazon is reportedly in talks to invest $10 billion in OpenAI, which could impact Nvidia and other tech stocks negatively [8]. Oil Market Dynamics - Crude oil prices have rebounded after hitting their lowest levels since 2021, influenced by geopolitical factors such as President Trump's blockade of sanctioned oil tankers from Venezuela [38][40]. - The International Energy Agency (IEA) projects a significant oversupply in the oil market, which could lead to further price declines if production levels remain unchanged [44]. Berkshire Hathaway Transition - Berkshire Hathaway is entering a significant transition period as Greg Ael prepares to take over as CEO from Warren Buffett, with expectations of a more hands-on management style [81][82]. - Investors are advised to monitor Ael's actions regarding the company's cash reserves, potential dividends, and share buybacks as indicators of his leadership effectiveness [85][90].

This week's market focus will be on US economic news. On Thursday, weekly initial unemployment claims are expected to fall -11,000 to 225,000. Also, Nov CPI is expected to be +3.1% y/y, and Nov core CPI is expected to be +3.0% y/y. On Friday, Nov existing home sales are expected to be up +1.2% m/m to 4.15 million. Also, the University of Michigan Dec consumer sentiment index is expected to be revised upward by +0.2 to 53.5 from the previously reported 53.3.US MBA weekly mortgage applications fell -3.8% in t ...

Summary of Key Points from the Conference Call Industry Focus - **Global Foreign Exchange (FX) and Rates Strategy**: The conference call primarily discusses strategies and expectations related to foreign exchange markets, particularly in Asia, and interest rates in various regions including Singapore, Hong Kong, and India. Core Insights and Arguments 1. **Market Expectations for BOJ**: Anticipation of a 25 basis point hike at the December BOJ meeting, with a focus on Governor Ueda's communication regarding future rate hikes into 2026 [1][9][10] 2. **Top FX Trades**: - Long EUR/INR with a target of 110 by end-March 2026, conviction level 5/5 [2][19] - Short SGD/JPY targeting 115.8, conviction level 4/5 [2][21] - Long NZD/USD targeting 0.6000, conviction level 4/5 [2][17] - Pay 5Y HK IRS targeting 3.20% by end-Q1 2026, conviction level 4/5 [2][28] - Pay 2Y SGD targeting 1.90% by end-February, conviction level 4/5 [2][4] 3. **Diverse Client Views on USD**: Mixed expectations from clients in Singapore and Hong Kong regarding the USD's strength over the next six months, with Singapore clients leaning towards a stronger USD and Hong Kong clients expecting weakness [5][6] 4. **Optimism on CNH and TWD**: Clients express optimism for CNH and TWD, with expectations for USD/CNH to break below 7.0 in early Q1 2026 due to favorable fixing regimes and improved capital inflows [6][22] 5. **Potential Triggers for Weaker USD**: Factors include elevated foreign positioning in US assets, risks of USD selling for hedging, and geopolitical developments [7][20] 6. **Upcoming Economic Indicators**: Focus on US November NFP and ECB meeting, with expectations of market reactions based on these reports [8][9] Additional Important Insights 1. **India's Economic Outlook**: Concerns over INR depreciation due to trade deal difficulties with the US and significant foreign portfolio outflows totaling USD 2.2 billion in December [19][20] 2. **Singapore's Economic Uncertainty**: Despite a positive external outlook, economic uncertainties persist, affecting labor demand and market expectations for MAS's FX policy [21][26] 3. **Hong Kong's Liquidity Conditions**: Looser liquidity conditions than expected, with potential recovery in loan growth impacting long-end HK-US spreads [28] 4. **China's RMB Outlook**: Expectations for gradual RMB appreciation, supported by improved BOP dynamics and a stable US-China relationship [24][23] Conclusion The conference call provides a comprehensive overview of the current state and expectations in the global FX and rates markets, highlighting key trades, client sentiments, and macroeconomic factors influencing currency movements and interest rates across various regions.

Labor Market Assessment - The labor market is currently soft, with recent job growth averaging around 50,000 to 60,000 jobs per month [3] - This level of job growth is considered too high and likely to be revised downwards based on unemployment insurance administrative data, potentially nearing zero job growth [3][4] - Uncertainty surrounding AI is causing companies to delay hiring decisions, impacting the labor market [7] Monetary Policy and Inflation - Preemptive rate cuts initiated in September were intended to soften the economic impact of tariff uncertainty [4] - The speaker is not particularly worried about inflation, believing it will come down in the next three to four months [5][6] - Inflation expectations are well-anchored around 2% based on market pricing and TIPS [6] - The speaker advocates for continued rate cuts, viewing inflation as under control and the labor market as needing support [11] - A moderate pace of rate cuts is preferred, as dramatic action suggests waiting too long [12] Future Outlook - 2026 could be a better year due to the resolution of tariff uncertainty and potential productivity gains from AI [4][5] - The effects of tariffs are considered a one-time price effect, not expected to cause persistent inflation [10]

Good morning. CFOs are ending 2025 more confident, even as they confront a mixed growth outlook and mounting pressure to deliver efficiency gains from AI. Deloitte’s Q4 2025 CFO Signals report, released this morning, finds the CFO Confidence Score at 6.6, higher than the Q3 reading of 5.7, and the highest score since late 2021. The score, the highest 10, measures CFO confidence in economic conditions and sentiment about the capital markets. CFOs raised their assessment of the North American economy this q ...