► Global markets saw stocks further retreating and bond yields climbing amid speculation that the Federal Reserve will not rush to cut interest rates. Strong US retail sales and higher than expected import prices – an overall still solid US economic landscape fueled these market movements.
► In Europe, the Stoxx 600 index remains little changed after it’s drop yesterday. Bank of England rate cut bets fell post-inflation data resulting in gilt yields to rise. Central bank officials and Davos financiers suggest rate-cut expectations be tempered.
► In the US, stocks retreated yesterday amid speculation the Federal Reserve won't rush rate cuts. All 11 S&P sectors closed in the red. US futures are currently trading flat in US pre-market trading. Bond yields climbed, and the USD rose. US retail sales rose significantly in December, showing consumer resilience or at least a healthy holiday shopping season. Swap traders adjusted expectations, reducing the likelihood of a Fed rate cut in March to about 50%. Analysts still suggest a recession appears unlikely, with a potential “soft landing” ahead.
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