As expected.. and after ECB guys on Monday, Governor Waller’s prepared remarks were not as dovish as the current market pricing on rate cuts implied. He stated that the Fed can lower interest rates ‘methodically and carefully’ this year if inflation continues moderating. “Methodically and carefully” could be considered as quarterly rather than every meeting
China GDP 5.2% up slightly from 4.9% >>> markets didn't really trust this data and sent local shares and HSI down 3% again and China's population records second straight annual decline. Pace accelerates as dwindling workforce creates vexing policy challenges
UK inflation rose to 4% in Dec, expectations were all for a slightly softer data >> Gilt yields spike as markets push back on the expectations of 6 rate cuts in 2024
-Houthis to be reclassified as terrorist group - US, Pakistan says children killed in Iranian strike
Meta CEO Mark Zuckerberg to be deposed in Texas facial recognition case
Hyundai is offering Americans cash to buy its EVs. Buyers of three Hyundai models will get $7,500 in cash bonuses until Jan. 31 (if you can't sell them, discount them, good thing is, it will bring down prices!..)
CSI : Chinese Stocks fell to a new 5y low today of 3260 and have now declined about 45% since the high in mid Feb 2021
As discussed recently, this was from the BofA FMS in Dec and looks worryingly wrong : An All-Time High 91% of Fund Managers expect lower short-term interest rates during the next 12 months
Markets :
Bond markets still the lead, and most important 'ingredient' for risk - still >> MOVE index (interest volatility) is key as ever for 2024, note both bonds adn equity softer, together with higher USDollar >>> 5y5y has moved back up 20bps in Jan >> if the Ferd wanted to correct the strong disinflation trend from late last year, they are succeeding
SPX500 double top 4'800 - the 'shorts' can work against that level and equivalent
USDollar higher into 2nd Jan, on softer bonds/eq/light riskoff/corrective action from the move since Oct/Nov 2023
Beware reversal/corrective action in 2nd half of January! >>> both ECB and Waller (and higher UK inflation) pushing back on too early and too hasty cuts that are priced in for 2024
Nick Timiraos on X: "Fed governor Chris Waller: Rate cuts are coming into view but the process should be “carefully calibrated and not rushed.” As long as growth is fine, “I see no reason to move as quickly or cut as rapidly” as the Fed has in past cutting cycles. https://t.co/Noyjq02VeM" / X (twitter.com)
Sunak in further politic trouble, could this bring this general election a little quicker than expected ?
NASDAQ - corrective action to 16'250 area ? seems far away, but just to show the extent of the move since Nov dovish, disinflationary talks from CB and huge easing of financil conditions
DAX - plenty of room to correct to...15'750 area ?
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