Interest Rate Pricing off Fed Fund Futures pared back 36 bps of cuts this week as Comments from Federal Reserve’s Christopher Waller reinforced what markets were thinking – sharp deviation in Futures pricing from Fed Projections without a corresponding deterioration in Economic Data. UST bears were emboldened and the data release supported the Soft-Landing Narrative. S&P 500 closed at all time highs.
USD did not participate in Tsy rally at close of last week. USTs
caught up to the USD bearishness. USD index closed the week higher by 0.80%.
Atlanta Fed GDPNOW Final Est for Q4 GDP are at 2.4%, Control
Group Retail Sales rose 0.80% (est 0.20%, prior revised higher to 0.50%), Initial
Jobless Claims fell to Sep 22 lows and Continuing Jobless Claims fell to levels
seen in Oct 2023. So far we have not seen the trends in employment numbers as
were seen in the sharp dip in Employment
component of the ISM Non-Mfg. This week’s release of the S&P PMI numbers
would be closely watched for similar trends.
U. Michigan Consumer Sentiment hit the highest level in 2.5
yrs and Inflation expectations fell to 2.80%, the lowest since Dec 2020 and
Existing Home sales fell to the lowest in 13.5 yrs. Donald Trump won the Iowa
Republican caucuses by a record margin. Ron DeSantis ends the 2024 Presidential
campaign and endorses Trump. Now it comes down to Nikki Haley and Trump as New Hampshire
vote looms.
Higher UK headline and Core Inflation print supported GBPUSD. GBPUSD lifted off support at 1.2600 however later part of the week saw 1.2715 resistance holding as UK retail sales fell. U.K December Retail sales fell by 3.2%, the largest monthly decrease since January 2021. The figure suggests that the country entered a recession last year.
|
Yields |
W. High |
W. Low |
W. Close |
WoW Change |
|
US 2Y |
4.42 |
4.12 |
4.39 |
24.10 |
|
US10Y |
4.20 |
3.92 |
4.13 |
18.50 |
|
US2s10s |
-0.16 |
-0.28 |
-0.26 |
-5.80 |
|
US30Y |
4.40 |
4.15 |
4.33 |
15.40 |
|
JGB 10Y |
0.67 |
0.57 |
0.66 |
8.50 |
|
DE10Y |
2.33 |
0.22 |
2.30 |
14.90 |
|
Cn |
H |
L |
C |
▲ |
|
USDINR |
83.1875 |
82.77 |
83.11 |
-0.01% |
|
EURUSD |
1.0967 |
1.0844 |
1.0897 |
-0.47% |
|
USDJPY |
148.80 |
144.84 |
148.17 |
2.28% |
|
GBPUSD |
1.2765 |
1.2596 |
1.2700 |
-0.38% |
|
AUDUSD |
0.6705 |
0.6525 |
0.6595 |
-1.29% |
|
USDCAD |
1.3542 |
1.3382 |
1.3423 |
0.15% |
|
USDSGD |
1.3528 |
1.3307 |
1.3408 |
0.69% |
|
USDCNH |
7.2321 |
7.1748 |
7.2017 |
0.21% |
|
USDKRW |
1350.20 |
1313.19 |
1334.22 |
1.60% |
|
Dollar
Index |
103.69 |
102.31 |
103.24 |
0.78% |
|
Crude Oil |
79.33 |
76.21 |
78.44 |
0.51% |
|
Gold
Prices |
2059 |
2002 |
2029 |
-0.93% |
|
Bitcoin |
43566 |
40600 |
41523 |
-2.93% |
|
Sensex |
73427 |
71312 |
71424 |
-2.60% |
|
Nifty |
22124 |
21286 |
21572 |
-2.38% |
|
S&P |
4846 |
4718 |
4845 |
-2.93% |
Jan 23 BoJ Rate Decision
Jan 24 U.S S&P Mfg PMI Est 48.00 Prior 47.90; S&P Services PMI Est 51.00 Prior 51.40, Bank of Canada Rate Decision; U.K PMI ; EU PMI ; German PMI; Japan PMI; Australia PMI
Jan 25 U.S Durable Goods Exp 1% Prior 5.40% / Advance Q4 GDP Estimates
Exp 2.00% ; Atlanta Fed estimates GDP at 2.40%; New Home Sales Dec Est 0.64M
Prior 0.59M; Initial Jobless Claims; ECB Policy Decision; German IFO Business Climate
data;
Jan 26 U.S Core PCE Price Index Median Est 0.17% mom, PCE Price Index Exp 0.20% mom; Japan CPI
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