Equity markets are a 'sea of red' following Friday's NFP number, as bets on Federal Reserve interest rate cuts are being revised. Simply put, the first 25bps cut, which was previously priced in for June 2025, is now being priced for October.
Another story gathering momentum is oil, which has extended gains to hit the highest level in more than four months. A fresh wave of U.S. sanctions against Russia’s energy industry threatens to reduce supplies, with WTI opening at $78 per barrel and Brent trading with an $81 handle.
What’s ahead this week? The U.S. inflation data on Wednesday stands out, with the release of the December Consumer Price Index and Producer Price Index. U.S. retail sales and housing starts are also scheduled for the same day.
Over the course of the week, several major banks are set to report their earnings, including JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup, and Wells Fargo, among others.
On the speaking front, we’ll hear from several Federal Reserve officials: New York Fed President John Williams, Kansas City Fed President Jeffrey Schmid, Richmond Fed President Tom Barkin, Minneapolis Fed President Neel Kashkari, and Chicago Fed President Austan Goolsbee. Notably, Friday marks the last day before the Federal Reserve’s blackout period on monetary policy comments ahead of its January 28–29 meeting.
Market-wise, Bitcoin fell 0.9% to $93,507.34, Ether dropped 2.1% to $3,196.96, and the yield on 10-year Treasuries advanced seven basis points to 4.76%. Cable opens with a 1.21 handle, EURUSD at 1.0210, USDJPY at 157.50, and spot gold was little changed at $2,688.
Asia-Pacific markets traded lower on Monday, while the dollar held near 14-month peaks after an unambiguously strong payrolls report pushed up bond yields and tested lofty equity valuations just as the earnings season gets underway. The impact of the jobs report on U.S. rate cut prospects also raised the stakes for consumer price figures on Wednesday, where any rise in the core greater than the forecasted 0.2% would threaten to close the door on easing altogether.
Hong Kong’s Hang Seng Index fell 1.6%, trading below 19,000 for the first time since last September, according to data from LSEG. Mainland China’s benchmark CSI 300 dropped 0.75%, having closed at its lowest level since September 2024 on Friday. China is slated to release its December trade data later in the day, while India is expected to report its inflation numbers.
Japan’s markets are closed for a holiday. South Korea’s Kospi lost 0.85%, while Australia’s S&P/ASX 200 fell 1.17%.
