Economic Indicators & Central Banks:
- Data in the US included stronger than expected construction spending and weaker than forecast S&P Global manufacturing PMI.
- Fed funds futures have slipped to kick off 2024 as some of the aggressive rate cut bets are trimmed. However, the market is still pricing in close to 6 quarter point cuts. No action is expected for the first FOMC meeting on January 31.
Market Trends:
- Treasuries and Wall Street opened 2024 in the red and it basically went downhill from there. Treasury yields climbed 5- to 8- bps, led by the front end.
- A heavy corporate calendar exacerbated the losses from spillover from losses in European bonds, profit taking on the late 2023 rally, and from trimming of Fed rate cut bets.
- Stocks: The US100 dropped -1.63% paring some losses as the indexes finished off their lows. The US500 was -0.57% in the red, while the US30 was fractionally higher.
- Moderna shares surged 15.5% after investment bank Oppenheimer upgraded its stock.
- Apple lost 3.6%, its worst day in 5 months after Barclays downgraded its shares, Nvidia and Meta Platforms both fell more than 2%. Lack of new features and Iphone upgrades affected Apple stocks.
Financial Markets Performance:
- The USDIndexretested 102. The buck is on course for a 3rd straight daily rise, with technical factors as well as risk aversion likely to add support.
- EURUSD has dropped sharply to 1.0937 and GBPUSD dropped to 1.2610. USDJPY nudged up to 142.43 in thin trade, as Japanese markets remain closed.
- Gold declined to $2058 from the $2062.98 close on December 29. Global risks and the weaker US Dollar supported gold prices into year-end and an all-time closing high of $2077.49 on December 27.
- Bitcoin extended above 45K supported by statements that Blackrock & JPMorgan anticipate an imminent spot Bitcoin ETF approval and Goldman Sachs issuing huge 2024 Crypto Prediction.
- Today: Germany unemployment, US FOMC minutes, ISM Manufacturing and US Job openings.
- Key Mover: Oil prices slumped to $70.30 after an intraday peak of $73.64 amid concerns over events on the Red Sea. The escalating tensions in the Middle East are fueling concern that supply may be disrupted.
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Andria Pichidi
Market Analyst
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