Будущее растет, и все смотрят на «ключевой» CPOI

US equity futures are higher, led by small-caps with the rally strengthening after the cooler than expected UK CPI print. As of 8:20am, S&P and Nasdaq futures are up 0.4%, with banking shares advancing in premarket trading after markets inched out a positive close on Tues following firm underlying PPI components & yields continuing to march higher. BlackRock, Bank of New York Mellon, JPMorgan and Goldman Sachs all beat estimates for the fourth quarter, with trading revenues performing strongly. All Mag7 names are also higher. Otherwise, it’s fairly quiet from a headline perspective overnight into CPI, although US reportedly will unveil more regulations to prevent advanced chips from being sold to China, with the planned rules, targeting producers TSMC, Samsung, and Intel. Bond yields are down 1-2bps as the USD is being offered, largely a function of yen strength following comment from BoJ Governor Ueda who said the BoJ will raise rates and adjust the degree of monetary support if improvement in the economy and price conditions continues, while he added that he wants to discuss and decide whether to raise rates at next week’s policy meeting. In commodities, Energy and Metals are leading the complex higher. Today’s focus is on CPI/Bank Earnings but keep an eye on the Beige Book release.

In premarket trading, Mag 7 names were mostly higher: Alphabet (GOOGL) +0.6%, Amazon (AMZN) +0.5%, Apple (AAPL) +0.4%, Microsoft (MSFT) +0.2% , Meta Platforms (META) +0.7%, Nvidia (NVDA) +0.1%, and Tesla (TSLA) +0.6%. Here are some other notable premarket movers:

• BlackRock shares gain 2.8% in premarket trading, after it reported adjusted earnings that exceeded analyst expectations in the fourth quarter. Assets under management missed the average analyst estimate. Shares are up 1.8%.
• Goldman Sachs reported FICC sales and trading revenue for the fourth quarter that beat the average analyst estimate.
• JPMorgan shares are little changed after the bank recorded 4Q FICC sales and trading revenue above expectations. The bank also gave a forecast for 2025 net interest income above the average analyst estimate.
• Wells Fargo shares rise 3.26% after the bank reported net interest income for the fourth quarter that beat the average analyst estimate. The bank also forecast an increase in 2025 net interest income, beating analyst expectations.
• BNY Mellon (BK) rises 2% as 4Q profit, net interest income top expectations.
• Amplify Energy (AMPY) gains 2% after agreeing to combine with some Juniper Capital portfolio companies.
• Compass (COMP) gains 8% after the residential real estate brokerage boosted its revenue guidance for the fourth quarter.
• Keros Therapeutics (KROS) falls 13% after the drug developer said it is halting all dosing in a combination trial of its experimental therapy for patients with a lung disorder, citing side effect concerns. Company is also terminating the trial early.
• NeoGenomics (NEO) rises 3% after forecasting revenue for 2025 of $735 million to $745 million.

Traders remain wary of making big bets ahead of the „pivotal” CPI data (our full preview is here), which comes at a time when investors are paring their expectations of rate-cuts from the Federal Reserve. Forecasters predict CPI to show a fifth month of increases, with so-called core CPI up 0.3%. However, hopes of a benign print have been fanned by lower-than-expected US wholesale prices and slowing inflation in Britain.

“We need to see a more welcome print on the inflation front today,” said Laura Cooper, global investment strategist at Nuveen. “Today’s print will be crucial for the near-term price action as it could trigger another leg in the rate selloff, if we see a hotter-than-expected print.”

Equity traders are braced for a volatile day, with options implying moves of 1.1% in either direction for the S&P 500, the most for a CPI day since March 2023. They are also watching to see if 10-year Treasury yields could move closer to the psychologically key 5% level. Treasury 10-year yields slipped about 3.5 basis points to trade around 4.76% and Bloomberg’s dollar gauge extended Tuesday’s 0.4% drop. Thirty-year rates also eased after hitting new highs above 5% in the previous session.

European markets are trading mostly higher (Stoxx 600 index rose 0.7% while London’s FTSE 350 rallied as much as 1.6%) looking to snap a three-day losing streak. Real estate, telecommunication and retail stocks are leading gains. S&P futures rise 0.1% while Nasdaq 100 contracts add 0.2%. Inflation reading from UK unexpectedly dipped to 2.5% versus 2.6% expected. Services inflation at 3-year low, with markets now discounting 50bps of BoE easing in 2025. Germany’s economy shrank for the second consecutive year in 2024, with a 0.2% decline in GDP. Here are some of the biggest movers on Wednesday:

• Bureau Veritas shares gain 3.6%, while SGS slides, after the testing and certification firms said they’re in talks to combine, a deal that would create a company with a market value of more than $33 billion.
• Vistry shares rise as much as 8.6%, helping the housebuilder extend its recent rebound after closing at its lowest level since April 2020 on Monday.
• UK Rate-Sensitive stocks rise as inflation unexpectedly declined for the first time in three months in December, keeping alive hopes of a Bank of England interest-rate cut next month.
• Nordex shares gain as much as 5.1% after the German wind turbine producer’s fourth-quarter orders came in 30% ahead of consensus, according to Citi.
• Genus shares surge as much as 20%, the biggest jump since 2001, after the cattle breeding company said its full-year adj. pretax profit will likely come in at the top-end of forecasts.
• Currys shares jump as much as 14%, rebounding from a one-month low, after the electrical retailer said its annual adjusted pretax profit will top consensus estimates.
• Serco shares rise as much as 3.3% after the outsourcing company won a new contract from the US Army, adding to its recent wins in the US defense market.
• Hays rises as much as 3%, with the company’s warning that adjusted operating profit will be at the low-end of expectations in the first half already baked-in following recent weakness across the staffing industry that has led to consensus downgrades, according to analysts.
• Partners Group shares fall as much as 3.2% after the Swiss private equity firm’s full-year assets under management and fundraising missed consensus estimates.
• Anglo American shares fall as much as 2.3% after RBC downgraded to underperform from sector perform.

Earlier in the session, Asian stocks gained, as a rally in Indonesian shares after a surprise interest-rate cut helped to counter losses in Taiwan and mainland China. The MSCI Asia Pacific Index was up as much as 0.5%, with Japanese banks among the biggest boosts to the gains given expectations that the Bank of Japan will raise interest rates next week. The Jakarta Composite Index climbed 1.8%, the most in Asia, after Bank Indonesia defied market forecasts by cutting its key interest rate. Chinese equities were mixed, with a gauge of mainland-listed shares declining 0.6% while Hong Kong benchmarks ticked higher, as investors gauged local policymakers’ efforts to revive the economy amid the threat of higher US tariffs. The People’s Bank of China injected a near-historic amount of short-term funds into its financial system Wednesday amid a cash squeeze ahead of Lunar New Year holidays.

In rates, UK government bonds jump as traders add to their Bank of England interest-rate cut bets after data showed UK inflation eased more than expected in December. UK 10-year yields fall 8 bps to 4.81%. Treasuries also rise, albeit to a lesser extent with US and German 10-year borrowing costs dropping 2 bps each.

In FX, the pound reaction was choppy with cable printing fresh session highs and lows since the figures hit. It’s settled a few pips higher at ~$1.22. The yen is the notable mover in currency space, rising 0.7% against the greenback after comments from Bank of Japan Governor Ueda and his deputy his deputy strengthened market expectations for a potential interest-rate hike next week. USD/JPY falls to ~156.80. The Bloomberg Dollar Spot Index falls 0.2%.

Oil prices advance, with WTI rising 0.3% to $77.70 a barrel. Spot gold climbs $8 to $2,686/oz. Bitcoin rises above $97,000.

Looking to the day ahead now, and data releases include the US and UK CPI reports for December, along with Euro Area industrial production for November. From central banks, the Fed will release their Beige Book, and we’ll hear from the Fed’s Barkin, Kashkari, Williams and Goolsbee, ECB Vice President de Guindos and the ECB’s Villeroy and Vujcic, and the BoE’s Taylor. Today’s earnings releases include JPMorgan, Goldman Sachs, Citigroup and BlackRock.

Market Snapshot

• S&P 500 futures little changed at 5,886.25
• STOXX Europe 600 up 0.4% to 510.17
• MXAP up 0.3% to 177.03
• MXAPJ little changed at 556.66
• Nikkei little changed at 38,444.58
• Topix up 0.3% to 2,690.81
• Hang Seng Index up 0.3% to 19,286.07
• Shanghai Composite down 0.4% to 3,227.12
• Sensex up 0.3% to 76,735.87
• Australia S&P/ASX 200 down 0.2% to 8,213.27
• Kospi little changed at 2,496.81
• German 10Y yield down 2.6 bps at 2.63%
• Euro little changed at $1.0309
• Brent Futures down 0.2% to $79.75/bbl
• Gold spot up 0.3% to $2,685.95
• US Dollar Index down 0.20% to 109.05

Top Overnight News

• US President-elect Trump announced on Truth Social that Keith Sonderling will serve as the next United States Deputy Secretary of Labor.
• US Treasury Secretary Yellen says the US economy is doing well, but more work needed to invest in infrastructure, labour force and R&D
• Hegseth’s odds of being confirmed as Secretary of Defense jumped after his hearing on Tues (Sen. Ernst came out Tues night and said she would back him for the role, a key endorsement). Politico
• The US is planning to unveil additional regulations designed to keep advanced chips made by TSMC (2330 TT/TSM) and Samsung Electronics (005930 KS) from flowing to China: BBG
• China’s central bank injected a near record-high amount of liquidity into the banking system to help meet demand for cash even as it looks to support the yuan. The People’s Bank of China on Wednesday pumped 959.5 billion yuan, or about $130.9 billion, worth of liquidity via seven-day reverse repurchase agreement and the second highest amount on record. WSJ
• The Bank of Japan will debate whether to raise interest rates next week, Governor Kazuo Ueda said on Wednesday, signaling its intention to take borrowing costs higher barring a Trump-driven market shock. The remarks, which echo those made by BOJ Deputy Governor Ryozo Himino on Tuesday, pushed up the yen as markets continued to price in the chance of a rate hike at the bank’s next policy meeting on Jan. 23-24. RTRS
• South Korean President Yoon Suk Yeol was arrested in a pre-dawn operation for questioning over his martial law move. Yoon can be held for 48 hours and, with a warrant, could be detained for up to 20 days. BBG
• UK inflation undershoots the Street, w/the December headline CPI coming in at +2.5% (vs. the Street +2.6%), core CPI at +3.2% (vs. the Street +3.4%), and services CPI +4.4% (vs. the Street +4.8%). RTRS
• Germany’s economy shrank 0.2% in 2024, as expected, marking the first time GDP fell for two years in a row since 1950. BBG
• Global oil markets face a surplus of 725,000 b/d this year, smaller than an earlier forecast, amid stronger demand and new risks to supply, the IEA said. BBG
• Equal-weight S&P ETF sees a spike of inflows as investors worry about the market being increasingly imbalanced due to huge gains from mega-cap tech stocks. The Invesco S&P 500 Equal Weight exchange traded fund took in about $14.4bn in the second half of 2024, and $17bn for the total year. FT

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were choppy after a similar performance stateside where PPI data printed cooler-than-expected ahead of the incoming US CPI report. ASX 200 failed to sustain early gains with upside in consumer stocks, real estate and financials offset by losses in tech and miners. Nikkei 225 faded its opening advances with price action indecisive amid a lack of notable drivers and ongoing uncertainty regarding BoJ policy. Hang Seng and Shanghai Comp were softer as trade frictions lingered with the US finalising rules to effectively ban Chinese vehicles and it also banned imports for over 30 entities over Uyghur forced labour, while China placed 7 US firms on the unreliable entity list for involvement in arms sales to Taiwan. Nonetheless, some of the downside was stemmed following the PBoC’s firm liquidity effort in which it conducted a CNY 960bln 7-day reverse repo operation.

Top Asian News

• BoJ Governor Ueda said they will raise rates and adjust the degree of monetary support if improvement in economy and price conditions continues, while he wants to discuss and decide whether to raise rates at next week’s policy meeting. Furthermore, he said the US economy and momentum towards Spring wage talks are key points and noted that the branch managers’ meeting showed an encouraging view on pay, as well as stated that the timing of adjusting monetary policy is up to future economy, price and financial conditions.
• South Korean authorities have arrested impeached President Yoon, while Yoon said it is deplorable to see a series of illegal acts of law enforcement including his arrest and noted he agreed to attend investigators’ questioning to prevent bloodshed despite its illegality.

Top European News

• ECB’s Lane said they are essentially still in economic recovery mode and Eurozone GDP grew 1.1% in 2024, while they will have some improvement in investment in 2025 and the savings rate will come down in Eurozone though not massively. Furthermore, Lane said the labour market is resilient for now and services inflation will come down in the coming months, as well as noted that if inflation stabilises around 2%, rates will go to neutral.
• ECB’s de Guindos says the disinflation process is well on track. The balance of macroeconomic risks has shifted from concerns about inflation to concerns about low growth. The high level of uncertainty calls for prudence in setting rates. Severe global trade frictions could increase the fragmentation of the world economy. Uncertainty about fiscal policy and its present challenges could weight on the borrowing costs. Will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. The risks to economic growth remain tilted to the downside. Not committing to any particular rate path.
• ECB’s Villeroy says practically won battle against inflation; on France, says risks to 0.9% French growth forecast for 2025 are on the downside, but we do not see a recessionGovernment needs to detail savings and tax measures needed to achieve its new deficit forecasts of 5.4% of GDP this year.
• Riksbank’s Bunge says making it easier to borrow will not solve challenges in the housing market. Economy is close to a turning point but risks remain. Sweden is in a mild recession but 2025 outlook is favourable. Forecast is that rates may be cut one more time during H1 2025; judges that it is better to cut in the near term rather than wait.
• Germany Economy Minister says outlook for exports is modest; consumer recovery not in sight. Inflation dampening factors should dominate over the course of the year.

FX

• DXY is lower, largely as a by-product of JPY strength in the run up to US CPI data. On which, headline US CPI is expected to rise +0.3% M/M in December. The release follows hot on the heels of yesterday’s softer-than-expected outturn for PPI. DXY has returned to a 108 handle with a session trough at 108.96.
• EUR is flat vs. the USD as EZ-specific drivers remain light aside from various ECB commentary. On which, ECB’s de Guindos has been on the wires noting that the disinflation process is well on track. EUR/USD is currently treading water above the 1.03 mark vs. yesterday’s 1.0238 low. The next upside target comes via the 9th Jan high at 1.0321.
• JPY is the clear outperformer across the majors following comment from BoJ Governor Ueda who said the BoJ will raise rates and adjust the degree of monetary support if improvement in the economy and price conditions continues, while he added that he wants to discuss and decide whether to raise rates at next week’s policy meeting. USD/JPY has slipped onto a 156 handle for the first time since 6th January; current session low at 156.72 vs YTD trough at 156.23.
• GBP marginally weaker vs. peers following soft UK inflation metrics which saw Y/Y CPI print @ 2.5% vs. Exp. 2.6%, core Y/Y 3.2% vs. Exp. 3.4%, services 4.4% vs. exp. 4.9% and MPC 4.7%. Typically, such a soft outturn would trigger more pronounced softness in GBP. However, given concerns surrounding the UK’s fiscal position, the subsequent pullback in yields has been seen as a positive for the domestic economy. Price action for the GBP was relatively choppy, with a brief dip reversed to a session high of 1.2241; upside which faded a touch to current 1.2219.
• Antipodeans are both marginally firmer vs. the USD alongside a quiet antipodean calendar. AUD is now up for a third session in a row after printing a multi-year low on Monday at 0.6130.
• PBoC set USD/CNY mid-point at 7.1883 vs exp. 7.3240 (prev. 7.1878).

Fixed Income

• USTs are in the green and just off the session highs of 107-16+. Yields lower across the curve with the long-end leading and the curve as a whole flattening a touch. The session’s main event is US CPI, the headline M/M is expected to remain at 0.3%.
• Gilts were inflated by 68 ticks at the open and have since lifted to a 90.19 peak. From the data, the main point of focus is on the Services metric which eased below market and BoE forecasts to the lowest rate since March 2022 – this led market pricing to shift dovishly. The jump in Gilts has sparked an associated pullback in yields with the 10yr moving from 4.89% at end-of-play on Tuesday to a 4.80% low this morning.
• Modest two-way action on the UK’s 2034 auction results but with Gilts ultimately coming under some very modest pressure and veering back towards the 90.00 handle – despite a decent outing.
• JGBs came under pressure overnight after remarks from BoJ Governor Ueda in which he said he wants to discuss and decide on whether to increase rates at the January meeting. More broadly, he added that the US economy and momentum towards Spring wage talks are key points and branch managers’ views on the latter have been encouraging. Remarks which took a 140.55 low, just above the week’s 140.51 base, posting downside of a handful of ticks.
• Bunds are firmer on the session in-fitting with global peers. 2024 growth data for Germany was bleak as expected with the prelim. figures pointing to a consecutive year of contraction. Furthermore, forward-looking remarks from the Economy Ministry were also downbeat. At the top-end of a 130.32-74 band, if the upside continues then we look to 130.98 from Monday before the WTD high at 131.09.
• UK sells GBP 4bln 4.25% 2034 Gilt Auction: b/c 2.80x (prev. 2.87x), avg yield 4.808% (prev. 4.332%) & tail 0.9bps (prev. 1.3bps).
• Germany sells EUR 1.19bln vs exp. EUR 1.5bln 2.50% 2054 Bund and EUR 0.754bln vs exp. EUR 1bln 1.80% 2053 Bund.

Commodities

• Crude price action has been choppy today with participants awaiting US CPI for a larger impulse, although geopolitical risks remain as Russia and Ukraine target each others’ energy infrastructure whilst an Israel-Hamas ceasefire deal is seemingly imminent, although sticking points remain. Some weakness in the complex was seen after the EIA OMR, which trimmed its 2025 world oil demand growth forecast. Brent Mar sits in a 79.62-80.64/bbl parameter at the time of writing.
• Modest gains for precious metals with prices supported by a softer Dollar and a lack of macro newsflow at the time of writing. Spot gold currently resides in a USD 2,669.36-2,688.56/oz range.
• Mixed trade across base metals with copper prices indecisive since APAC trade amid the mixed and choppy sentiment seen across global markets.
• Private inventory data (bbls): Crude -2.6mln (exp. -1.0mln), Distillate +4.9mln (exp. +0.8mln), Gasoline +5.4mln (exp. -2mln), Cushing +0.6mln.
• EU is considering a gradual ban on Russian LNG and aluminium, according to Bloomberg. It was earlier reported that the EU Commission intends to propose a ban on imports of Russian primary aluminium in the latest package of sanctions.
• IEA OMR: Trims 2025 world oil demand growth forecast to 1.05mln BPD (prev. 1.1mln BPD); says new US sanctions on Russia could significantly disrupt Russian oil supply and distribution chains. Global oil supply is projected to rise by 1.8mln BPD in 2025 to 104.7mln BPD, compared with an increase of 660k BPD in 2024. While it is too early to fully quantify the potential impact from these new measures, some operators have reportedly already started to pull back from Iranian and Russian oil.
• Russia to provide crude oil and LNG to Vietnam, according to a statement cited by Reuters.
• India’s December Gold imports at USD 4.7bln, according to Trade Ministry.
• Russia’s Kremlin says possible EU sanctions on Russian aluminium could destabilise an „already fragile market”. Says „nothing can be ruled out” when it comes to Russia’s response to the latest US sanctions on the energy sector.

Geopolitics: Middle East

• „Security sources: The IDF has not been instructed to change the methods of fighting in Gaza despite the progress of negotiations”, according to Al Jazeera.
• Israel gov’t has reportedly set new conditions which could undermine the Gaza negotiations, via Sky News Arabia citing sources; among those is that the Israeli Army would remain 700 metres into Rafah.
• White House National Security Adviser Sullivan said hopefully we will close out a Gaza hostage deal this week, while he also commented that Iran’s weakness is a concern because it may force them to rethink nuclear weapons posture.
• Iranian President Pezeshkian said Iran never plotted to kill Trump during the US election campaign and will never do that, according to NBC News.
• „Iranian Vice President: We discovered Israel’s planting of explosives inside centrifuges”, according to Al Arabiya.

Geopolitics: Ukraine

• Russian Defence Ministry say they have struck critical energy infrastructure in Ukraine.
• Ukrainian President Zelensky says Russia targeted Ukraine’s gas infrastructure in air strikes today.
• Russia said its forces captured two settlements in eastern Ukraine.

Geopolitics: Otter

• US President-elect Trump’s incoming National Security Adviser Waltz said he wants to deal with the backlog of weapons to Taiwan.

US event calendar

• 07:00: Jan. MBA Mortgage Applications, prior -3.7%
• 08:30: Dec. CPI MoM, est. 0.4%, prior 0.3%
• 08:30: Dec. CPI YoY, est. 2.9%, prior 2.7%
• 08:30: Dec. CPI Ex Food and Energy MoM, est. 0.3%, prior 0.3%
• 08:30: Dec. CPI Ex Food and Energy YoY, est. 3.3%, prior 3.3%
• 08:30: Dec. Real Avg Hourly Earning YoY, prior 1.3%
• 08:30: Dec. Real Avg Weekly Earnings YoY, prior 1.0%, revised 0.9%
• 08:30: Jan. Empire Manufacturing, est. 3.0, prior 0.2
• 14:00: Federal Reserve Releases Beige Book

DB’s Jim Reid concludes the overnight wrap

Welcome to a big US CPI day with the added sprinkle of UK CPI (out just after this hits the press) and the start of US Q4 earnings season to contend with. A selection of large US financials, including JPM, Goldman Sachs, Citigroup and Blackrock report.

We arrive at this big day with markets a little trepidatious. After signs of a rebound in equities on Monday and global bonds into the Asian and early European session yesterday, the rest of the day was a little over all the place. Similarly to Monday, the S&P 500 (+0.11%) climbed from earlier losses with a broad number of advancers narrowly outweighing tech weakness. Meanwhile bond yields mostly edged higher to, in many cases, fresh multi-month or multi-year highs. For instance, the 10yr Treasury yield (+1.3bps to 4.79%) closed at its highest since October 2023, whilst the 30yr real yield (+1.8bps) hit another post-2008 high of 2.61%. 30yr gilts (5.45%) hit another 27-year high. To be fair it wasn’t all bad news, and a downside surprise in the US PPI reading made a change from the consistently hawkish newsflow over recent days. But even there, the details weren’t as positive on further inspection.

In terms of that PPI release, the main numbers all surprised on the downside, which triggered a reflexive move lower in Treasury yields straight afterwards. In particular, headline PPI inflation was running at a monthly pace of +0.2% (vs. +0.4% expected), which meant the year-on-year rate only rose to +3.3% (vs. +3.5% expected). Core PPI was also lower than expected, with the measure excluding food, energy and trade services up just +0.1% (vs. +0.3% expected). But as markets began to inspect the numbers in a bit more depth, it became clear that the components which feed into PCE (the Fed’s target measure) were more robust. One notable upside surprise came on airfares, which rose by a monthly +7.2% in December. So that limited the scale of the rally in Treasuries, as ultimately the Fed are looking for 2% inflation on the PCE measure, rather than CPI or PPI.

In terms of what to expect today, our US economists are projecting headline CPI to come in at a monthly +0.40%, thanks to strong seasonally adjusted gains in food and energy prices. If realised, that would be the fastest pace in 10 months, and push up the year-on-year rate by two-tenths to 2.9%. However, they see core falling to +0.23%, the slowest pace in five months, which would keep the year-on-year rate steady at 3.3%.

With the PPI release in hand, and even with the long-end sell-off, there was a bit more confidence, or maybe hope, that the Fed would still manage to cut rates this year. So that meant the 2yr Treasury yield (-1.3bps) pared back its initial increase yesterday to close at 4.37%. But other than front-end US Treasury yields, the overwhelming trend was still towards higher borrowing costs in both the US and Europe yesterday.

For once, the UK saw a comparatively smaller increase, with the 10yr gilt yield only up +0.5bps to 4.89%. But even so, that was still the highest 10yr yield since 2008, whilst the 30yr gilt yield (+1.2bps) hit a post-1998 high of 5.45%. That means all eyes are now on the UK CPI report this morning. Meanwhile in Germany, 10yr bund yields (+3.8bps) moved up for a 9th consecutive session, and reached their highest level since June at 2.65%.

In France, there were some fresh announcements on the budget as Prime Minister François Bayrou spoke to the National Assembly. Specifically, Bayrou said that he would aim for a 2025 deficit at 5.4% of GDP, which is a bit higher than Barnier’s budget which had sought to bring down the deficit to 5% of GDP this year. However, Bayrou is still planning to keep the target of reducing the deficit to 3% by 2029. When it came to French bonds, the rise in yields was in keeping with the global moves, with the 10yr yield (+1.3bps) at its highest since October 2023, at 3.47%.

When it came to equities, the S&P 500 (+0.11%) posted a narrow advance after an up-and-down session. The broader equity mood was more positive as the equal-weighted S&P 500 gained +0.78% with three quarters of the index’s constituents higher on the day. And the small-cap Russell 2000 advanced +1.13%. On the other hand, the Magnificent 7 (-1.02%) fell back for a 5th consecutive session. Weakness was also visible in healthcare stocks (-0.94%) after underwhelming Q4 results from pharma giant Eli Lilly (-6.59%). Meanwhile in Europe, the STOXX 600 (-0.08%) lost ground for a third consecutive session. This was also mostly driven by healthcare (-1.35%), while geographically UK equities underperformed, with the FTSE 100 falling -0.28%. By contrast, Germany’s DAX (+0.69%), France’s CAC 40 (+0.20%) and Italy’s FTSE MIB (+0.93%) all posted decent gains.

In geopolitical news, prospects for a ceasefire in Gaza look to be improving, with CBS reporting yesterday evening that Israel and Hamas had agreed in principle to a draft deal while Qatari officials mediating the talks said that a ceasefire was at its “closest point” yet. The headlines helped oil prices retreat from their near 5-month highs, with Brent crude down -1.35% to $79.92/bbl, and saw the broad dollar index (-0.62%) decline for the first time in six sessions.

Asian equity markets are generally a bit lower this morning. The Nikkei (-0.25%) has been swinging between gains and losses while the Shanghai Composite (-0.46%), S&P/ASX 200 (-0.22%) and KOSPI (-0.15%) are also lower. The Hang Seng is flat alongside S&P futures with NASDAQ futures up a tenth of a percent. 10yr US yields are rallying -1.8bps. Overnight reports suggest the Biden administration is planning one last round of regulations tightening up the flow of advanced chips to China which could be announced today.

In central bank news, the People’s Bank of China (PBOC) injected significant amount of funds into its financial system, marking the second highest on record in data compiled by Bloomberg since 2004. The central bank pumped a net +958.4 billion yuan ($131 billion) via 7-day reverse repurchase agreement during daily open market operations. This seemingly is aimed at offsetting facilities rolling off, peak tax season and cash demand ahead of the upcoming Lunar New Year holidays.

There wasn’t much in the way of other data yesterday, but the NFIB’s small business optimism index from the US was up to a 6-year high of 105.1 in December (vs. 102.1 expected).

To the day ahead now, and data releases include the US and UK CPI reports for December, along with Euro Area industrial production for November. From central banks, the Fed will release their Beige Book, and we’ll hear from the Fed’s Barkin, Kashkari, Williams and Goolsbee, ECB Vice President de Guindos and the ECB’s Villeroy and Vujcic, and the BoE’s Taylor. Today’s earnings releases include JPMorgan, Goldman Sachs, Citigroup and BlackRock.