📆 Monday, January 13
❗️ Stocks retreat on Fed rate-cut outlook & further rising yields; Oil surges amid sanctions on Russia
► European markets saw declines, with the Stoxx 600 falling by 0.9%, weighed down by diminished expectations for Federal Reserve rate cuts and investors being increasingly rattled by rising yields. Energy stocks provided some support, buoyed by rising oil prices. German bonds slumped for an eighth consecutive session (=rising yields), marking the longest losing streak since December 2022, as global bond markets faced mounting pressure. The GBP fell 0.8% to around $1.21100, its lowest since November 2023, amid concerns over the UK’s fiscal and current account deficits.
► In the US, futures for the S&P 500 dropped over 0.7% in early trading, while Treasury yields extended last week’s surge, with the 10-year yield climbing to 4.78%. The USD strengthened for the fifth consecutive session, hitting a more than two-year high. Friday’s strong payroll data, reflecting resilience in the labor market, reduced hopes of Fed rate cuts in 2025. Bank of America now predicts no rate cuts this year, while Goldman Sachs has revised its forecast to “only” two cuts, down from three. This week’s key economic data includes US inflation figures on Wednesday, which could offer further insights into the Federal Reserve’s trajectory. Traders will also watch for producer prices on Tuesday, jobless claims on Thursday, and the New York Fed’s one-year inflation expectations due later today.
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