Futures Rise For Second Day After Post-CPI Surge As Earnings Come In Hot

US equity futures are higher led by Tech one day after a powerful burst higher in stocks following a weaker than expected CPI. As of 7:00am. S&P futures are up 0.2% extending on Wednesday's 1.8% rally, the best day since the November election; Nasdaq futures rise 0.5%, led by NVDA (+1.5%) and AAPL (+0.6%) after stellar earnings by TSMC and a boost to the company's 2025 CapEx spending budget. Europe’s Stoxx 600 climbed for a third day, with luxury goods maker Richemont soaring 18% after it reported a jump in jewelry sales. Its results lifted an index of European luxury stocks by the most since March 2022. Bond yields are 1-2bp higher after yesterday’s rally; USD is higher. On Commodities, base metals rallied ahead of major China data release tonight. Today, key macro catalysts are Retail Sales (analysts expect a 0.6% MoM print , down from 0.7% prior while the Control Group is expected to print unchanged at 0.4%) and banks earnings (MS and BAC).

Thursday's gains come after the latest core CPI print came in at 0.2%, missing expectations and marking the first step down in six months. The inflation print has helped calm investor fears that the US economy could run too hot, keeping inflation and Treasury yields higher for longer, and possibly forcing the Fed to reverse course on rate cuts.

“Markets had been hit by a ‘Goldilocks-is-gone’ narrative for about a month, but it seems the US inflation data has set us back on course,” said Francois Rimeu, a strategist at Credit Mutuel Asset Management in Paris.

Rimeu sees no real reason for market sentiment to be derailed, noting “global and US growth are holding, the euro zone is sluggish but growing, fiscal stimulus policies are broadly unchallenged and the upcoming earnings season is looking OK.”

Even so, the renewed appetite for risk will be tested in coming days, as the Fed and the Bank of Japan hand down policy decisions, and President-elect Donald Trump takes office. US initial jobless claims and retail sales figures due later Thursday will provide a broader picture of the health of the economy, with economists forecasting retail sales to have slowed slightly last month.

“What we want to see is pretty much a Goldilocks scenario of decent growth in the US but no strong re-acceleration,” said Amelie Derambure, a portfolio manager at Amundi Asset Management. “What we don’t want is something too crazy on the retail sales that would put pressure on the Fed.” Investors are also watching the US earnings season unfold, with reports due from Bank of America and Morgan Stanley, after JPMorgan, Goldman Sachs and others posted blockbuster earnings on Wednesday. 

In Europe, the Stoxx 600 extended on Wednesday's gains, rising 0.6%, lifted by the luxury and technology sectors. A double-digit jump in Richemont’s sales reignited optimism for the luxury sector, driving the sector higher. An upbeat outlook by Taiwan Semiconductor Manufacturing Company also boosted sentiment, with ASML Holding rising as much as 4.9%. Here are some of the biggest movers on Thursday:

• Richemont shares jump as much as 18%, their best day since Nov. 2022, after the Swiss luxury giant posted a stellar third-quarter report thanks to demand for its high-end jewelry, especially over the holiday season
• Luxury stocks soar after Richemont’s sales, with LVMH gaining as much as 8.6% and Gucci owner Kering rising as much as 9.6%
• Zalando shares jump as much as 16%, after the online fashion retailer’s financial performance for the year exceeded its guidance
• Trustpilot shares jump as much as 16.6%, after the consumer review platform said annual adjusted Ebitda will come in ahead of expectations
• European Chip-Tool stocks rally on Thursday after TSMC set its capital expenditure target for the year well ahead of analyst estimates, with ASML up 3.4% and BE Semiconductor up as much as 7.1%
• Deliveroo shares rise as much as 8.3% after the food delivery firm reported stronger-than-expected orders in the core UK market, offsetting a weaker international segment that’s dragged by competition from Meituan in Hong Kong
• Vaisala Jumps shares gain as much as 9.2%, the most since July, after the Finnish measurement technology firm reported preliminary FY24 results, which Inderes described as “clearly stronger than market expectations.”
• Wise shares drop as much as 9.5%, after the money-transfer firm said reported income growth will come in at the lower-end of its guidance range due to foreign-exchange headwinds
• Verbio shares drop as much as 25% to their lowest value since May 2020 after the German biofuel maker issued a profit warning ahead of its full-year results, reducing its Ebitda forecast due to “unforeseen technical quality problems.”
• Siemens Energy shares fall as much as 2.6% after Swedish wind farm Bjornberget discovered damage to a turbine blade supplied by the company

Earlier, Asian stocks advanced for a third day of gains, fueled by technology shares after softer-than-expected US core inflation bolstered expectations for interest rate cuts by the Federal Reserve. The MSCI Asia Pacific Index climbed as much as 1.2% Thursday, the most in over three weeks. Stocks were in the green across most of the region. Taiwan led gains among Asian markets, with chipmaker TSMC providing the biggest boost after a stellar earnings report.

In FX, the Bloomberg dollar index edged higher, halting a two-day losing streak. The latest lackluster GDP data from Britain underscored the divergence between the US economy and its peers in the developed world, knocking the pound lower against the greenback. The yen firmed, however, on a report that BOJ officials see a good chance of a rate increase next week.

In rates, 10Y TSY yields, which slid 10 basis points after the data, held steady on Thursday as traders fully priced a Fed rate reduction by July, reinstating bets that had been dashed by stronger-than-expected December jobs numbers.

In commodities, there has been subdued trade in the crude complex as prices take a breather from yesterday's surge. Prices this morning have been trundling lower despite the constructive risk tone as DXY attempts to regain some composure and against the backdrop of ongoing geopolitics. Brent Mar trades in an $81.75-82.57/bbl range. There is also mixed trade in the precious metals complex with spot gold and silver continuing to benefit from the US CPI and mixed noise surrounding the Israel-Hamas ceasefire. Spot gold topped $2,700/oz and currently sits within a USD 2,690-2,706/oz range.

Looking to the day ahead, US data releases include retail sales for November and the weekly initial jobless claims. We also got the UK GDP reading for November which came in weaker than expected and sent the pound sliding. From central banks, we’ll get the ECB’s account of their December meeting, and hear from the ECB’s Panetta. Earnings releases include Bank of America and Morgan Stanley. Finally in the political sphere, the US Senate will hold Scott Bessent’s nomination hearing to become Treasury Secretary.

Market Snapshot

• S&P 500 futures up 0.2% to 6,000.00
• MXAP up 1.0% to 178.93
• MXAPJ up 1.3% to 563.92
• Nikkei up 0.3% to 38,572.60
• Topix little changed at 2,688.31
• Hang Seng Index up 1.2% to 19,522.89
• Shanghai Composite up 0.3% to 3,236.03
• Sensex up 0.4% to 77,006.93
• Australia S&P/ASX 200 up 1.4% to 8,326.96
• Kospi up 1.2% to 2,527.49
• STOXX Europe 600 up 0.6% to 518.07
• German 10Y yield up 1 bp at 2.58%
• Euro little changed at $1.0294
• Brent Futures down 0.3% to $81.82/bbl
• Gold spot up 0.3% to $2,704.37
• US Dollar Index little changed at 109.07

Top Overnight News

• US Commerce Department announces USD 1.5bn in final awards to support next generation of US semiconductor advanced packaging.
• US President Biden said in his farewell address that he wishes the Trump administration success and is concerned about a dangerous concentration of power in the hands of a few wealthy people, while he added that excessive wealth threatens democracy. Biden is also concerned about the tech industrial complex and said Americans are buried in disinformation and free press is crumbling. Furthermore, he said AI needs safeguards and that they must make AI safe and trustworthy, as well as noted that America must lead on AI, not China.
• US Treasury Secretary Yellen said a duplicative agency doesn't seem like a good step to save money for taxpayers when asked about Trump's plan for an 'external revenue service', while she said Trump's plan to impose new tariffs will raise costs for US goods and services.
• US Treasury Secretary nominee Bessent said in prepared remarks ahead of his Senate testimony that sanctions must be part of a whole government approach, and they must ensure the dollar remains the world's reserve currency. Bessent also stated that the US must secure supply chains vulnerable to strategic competitors and the US must carefully deploy sanctions as part of a government-wide approach to address national security requirements. Furthermore, he said Trump has a generational opportunity to unleash a 'new economic golden age' with more jobs, wealth, and prosperity for Americans.
• US House Speaker Johnson said one bill strategy makes sense, while he added that they will pass the budget and target by late February.
• Israel Says New Demands by Hamas Casting Doubt on Gaza Deal
• Oil Holds Gain as IEA Warns on Russia Curbs and Stockpiles Ebb
• BOJ Is Said to See Good Chance of January Hike Barring US Shock
• Trump Fuels Hedge Fund Bets on Stocks Under Attack by GOP
• TSMC’s Upbeat Outlook Fuels Hopes for 2025 AI Spending
• Israel and Hamas Reach a Deal to Pause 15-Month-Long War in Gaza
• Short Seller Nate Anderson Says He’s Disbanding Hindenburg
• Investors Seek $5 Billion for Basketball League to Rival NBA
• Bitcoin Flirts With $100,000 Level as Angst Over Fed Path Eases
• China Is Facing Longest Deflation Streak Since Mao Era in 1960s
• Tencent Stake in Skydance-Paramount Draws Lawmaker Scrutiny
• China Hackers Broke Into 400-Plus Treasury PCs, Report Says
• US to Finalize Billions in Funding for Rivian, Plug Before Trump
• Universal Plans US Share Sale for Pershing Square Stake
• FTC, States Sue Deere Over Alleged Tractor-Repair Monopoly
• Bessent to Say Dollar’s Global Status Is Critical to US Economy

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly higher as the region took impetus from the rally on Wall St in the aftermath of the soft-leaning US CPI data which boosted Fed rate cut bets and saw money market pricing of cuts for this year return to around pre-NFP levels. ASX 200 advanced at the open with outperformance in tech and financials although miners lagged with Rio Tinto shares indecisive after its quarterly update. Nikkei 225 gained but was well off today's best levels amid a firmer currency and the risk of a potential BoJ rate hike next week.
Hang Seng and Shanghai Comp were choppy and initially boosted after the PBoC continued with its liquidity efforts and with analysts suggesting the PBoC could lower RRR ahead of the Chinese New Year later this month, although the gains in the mainland were then pared amid lingering trade frictions after the US strengthened restrictions on advanced computing semiconductors to prevent diversion to China. Indices then resumed to the upside heading into the European open.

Top Asian News

• China Commerce Ministry says will initiate anti-dumping and anti-subsidy investigation into US subsidies in its chip industry at Chinese Mature Node chip industry's request.
• China's NDRC will raise retail gasoline and diesel prices by CNY 340/t and CNY 325/t respectively, effective January 17th.
• PBoC might cut RRR before the Lunar New Year this month, according to analysts cited by Shanghai Securities News.
• BoJ Governor Ueda reiterated they will raise the policy rate this year if economic and price conditions continue to improve, while he added how to proceed with monetary policy adjustment will depend on economic, price, and financial conditions at the time. Ueda also commented that the new US administration's policy outlook and domestic wage negotiations are key factors in the policy decision, as well as repeated that they will debate at next week's meeting whether to hike rates.
• BoJ is said to see a good chance of a January rate hike barring a major market rout following Trump's inauguration, according to Bloomberg citing several unnamed people.
• Reuters poll showed nearly two-thirds of 32 economists expect the BoJ to hike rates at next week's meeting with 59 of 61 expecting the key rate to be at 0.50% by end-March, while two-thirds of 21 economists expect Japanese authorities to intervene in FX if yen weakens to 165 vs the dollar and the Japan rate of pay increase in labour talks this year is seen at 4.75% (prev. 4.70% in December poll).
• BoK maintained its base rate at 3.0% (exp. 25bps cut) with the decision not unanimous as board member Shin dissented and wanted a cut, while it announced to expand the cap on the temporary special loan for small to medium businesses to KRW 14tln. BoK said it will determine the timing and pace of any further base rate cuts to mitigate downside risks to economic growth, as well as noted that South Korean consumption weakened, construction investment has been sluggish and economic growth is to slow. BoK Governor Rhee said the need for further cuts is higher now that downside risks to economic growth have heightened and all board members said a rate cut would be necessary but took consideration of dollar-won FX rates fluctuating due to political turmoil. Rhee also stated that six board members said they are open to rate cuts in the three-month ahead window, while Rhee noted it would be appropriate to wait until domestic political turmoil stabilises, and some certainty comes from the new US administration before changing policies. Furthermore, Rhee said Thursday's rate decision was not because dollar-won rates are at a certain level, but because political uncertainties have been impacting the FX rates.

European bourses (Stoxx 600 +0.6%) opened on a strong footing, and have remained at session highs throughout the European morning – continuing the momentum seen in APAC trade overnight, and as sentiment is lifted following strong Luxury/Tech updates. European sectors hold a strong positive bias, with sentiment lifted by positive catalysts within the Luxury and Tech industries. Starting with Luxury; Richemont (+15%) soars after it reported extremely strong Q3 results, lifting heavyweight LVMH (+9.1%). As for Tech; chip-giants such ASML (+3.1%) and ASM International (+3.7%) both gain today,  ollowing strong TSMC results (TSM +5% in pre-mkt trade).

Top European News

• ECB's Centeno said the interest rate will continue on a trajectory ideally towards values close to 2%.

FX

• USD is mixed vs. peers after being sold yesterday in the wake of soft CPI metrics which saw Fed easing expectations return to pre-NFP levels. For today's docket, attention will be on December retail sales data and weekly claims figures. Elsewhere, attention will be on incoming Treasury Secretary Bessent's Senate confirmation hearing which is expected to see him questioned on the USD and tariff policy. Pre-prepared remarks have stressed the role of the USD as the world's reserve currency. DXY is just about holding above the 109 mark and within yesterday's 108.06-109.38 range.
• EUR is trivially softer vs. the USD after fading some fleeting reprieve provided by an upward revision to M/M German CPI for December. Today's EZ-docket includes the minutes from the December meeting which saw the Bank pull the trigger on a 25bps rate cut. The account will be scanned for any views of GC members that could suggest a slowdown in the ECB's rate cutting cycle.
• JPY is the best performer across the majors as expectations of a BoJ hike next week continue to ramp up. In terms of the latest updates, source reporting via Bloomberg noted that the BoJ is said to see a good chance of a January rate hike barring a major market rout following Trump’s inauguration. USD/JPY has made a fresh low for the year at 155.22 with the next downside levels coming via the 155 mark and the 50DMA at 154.61.
• GBP is towards the bottom of the G10 leaderboard following a softer-than-expected outturn for UK GDP; M/M 0.1% vs. Exp. 0.2% (prev. -0.1%). In response to the data, Pantheon Macro lowered its Q4 GDP growth forecast to 0.0% Q/Q from 0.1% previously; also cites the recent outturns for UK PMI metrics. Cable has just slipped below the 1.22 mark but sits within yesterday's 1.2154-1.2306 range.
• Antipodeans are both slightly softer vs. the USD after a recent run of three consecutive sessions of gains. Macro focus for AUD has been on the overnight jobs data, which, although saw a larger-than-expected level of employment change, was largely driven by part-time roles and accompanied by an uptick in the unemployment rate. Accordingly, AUD is a touch softer with a 25bps cut fully priced by April.
• PBoC set USD/CNY mid-point at 7.1881 vs exp. 7.3247 (prev. 7.1883).

Fixed Income

• USTs are currently trading in-line with peers ahead of another busy data docket with Retail Sales and weekly Claims due before Treasury Secretary nominee Bessent’s confirmation hearing and the announcement for 20yr supply. At a 108-05 trough with yields firmer across the curve, the short end leading and as such the curve itself is flattening.
• Gilts opened lower by 10 ticks, despite cooler-than-expected GDP data for November. Downside which was likely a function of three factors: 1) Weaker economic performance reduces the Chancellor’s fiscal headroom and as such is a Gilt negative. 2) An upward revision to the German Final CPI for December. 3) General fixed income pressure on account of the constructive European open. Opened at the 90.91 mark and has since slipped to a 90.76 trough.
• Bunds are softer hit early doors on the same three factors as Gilts. In terms of the German metric, Final CPI M/M was revised up slightly and seemingly almost exclusively as a function of travel prices, with package holidays +9.1%, and rail up 4.2% or 3.0% for long- and short-distance options. Currently, in proximity to the 131.15 session low with support at the figure and then numerous recent lows between 130.70-28, the latter being the contract trough.
• Spain sells EUR 5.99bln vs exp. EUR 5.0-6.0bln 2.70% 2030, 0.85% 2037 & 1.00% 2050 Bono

Commodities

• Subdued trade in the crude complex as prices take a breather from yesterday's surge. Prices this morning have been trundling lower despite the constructive risk tone as DXY attempts to regain some composure and against the backdrop of ongoing geopolitics. Brent Mar trades in an 81.75-82.57/bbl parameter.
• Mixed trade in the precious metals complex with spot gold and silver continuing to benefit from the US CPI and mixed noise surrounding the Israel-Hamas ceasefire. Spot gold topped USD 2,700/oz and currently sits within a USD 2,690-2,706/oz range.
• Firmer across the board as the base metals complex continues to cheer the softer-than-expected US CPI alongside the constructive risk tone, which brought market expectations for Fed rate cuts back to pre-NFP levels.

Geopolitics: Middle East

• "Trump administration's national security adviser: We made it clear to the Israelis that if Hamas does not abide by the agreement, we will be with them in the war", according to Sky News Arabia.
• Hamas Official says they are committed to the ceasefire agreement announced by the mediators, via Al Arabiya.
• Israeli Prime Minister's Office: "Israel will not set a date for a cabinet and government meeting until the mediators announce that Hamas has approved all the details of the agreement.", according to journalist Stein. "Hamas withdraws from the explicit understandings agreed with the mediators and with Israel in a last-minute blackmail attempt."
• Israel's PM office says Hamas is reneging on the understandings and creating a last-minute crisis that prevents an agreement, according to N12 News.
• Israel-Hamas deal outlines a six-week initial ceasefire phase that includes a gradual withdrawal of Israeli forces from central Gaza and the return of displaced Palestinians to northern Gaza. Hamas will release 33 Israeli hostages, including all women, children and men over 50, while the total number of Palestinians released will depend on the hostages released and could be between 990-1,650. Furthermore, negotiations over the second phase of the agreement will start by the 16th day of phase one and is expected to include the release of all remaining hostages.
• Israeli PM Netanyahu thanked US President-elect Trump for help in the Gaza deal and they agreed to meet in Washington soon, while he also spoke with US President Biden and thanked him for help in the hostages deal. However, it was separately reported that Israeli PM Netanyahu's office said they are working on the final details of a Gaza agreement, according to AP. Yedioth Ahronoth also reported that the Israeli negotiating team will remain in Doha to complete talks, according to Asharq News.
• Israel reportedly conducted violent raids on Gaza City, according to Al Arabiya.

Geopolitics: Uraine

• Ukrainian President Zelensky sees a higher likelihood for the war to end in 2025.
• UK and Ukraine are to sign a historic partnership as UK PM Starmer travels to Ukraine to meet President Zelensky, according to Downing Street.
• Russian Defence Ministry said it successfully hit a large underground gas storage area in Stryi in western Ukraine, while it added that attacks on energy infrastructure were responses to Ukrainian strikes using Western weapons on the Krasnodar region and TurkStream pipeline.

US Event Calendar

• 08:30: Dec. Retail Sales Advance MoM, est. 0.6%, prior 0.7%
  • Dec. Retail Sales Ex Auto MoM, est. 0.5%, prior 0.2%
  • Dec. Retail Sales Control Group, est. 0.4%, prior 0.4%
• 08:30: Jan. Initial Jobless Claims, est. 210,000, prior 201,000
  • Jan. Continuing Claims, est. 1.87m, prior 1.87m
• 08:30: Dec. Import Price Index YoY, est. 2.1%, prior 1.3%
  • Dec. Import Price Index MoM, est. -0.1%, prior 0.1%
  • Dec. Export Price Index MoM, est. 0.1%, prior 0%
  • Dec. Export Price Index YoY, est. 1.6%, prior 0.8%
• 08:30: Jan. Philadelphia Fed Business Outl, est. -5.0, prior -16.4, revised -10.9
• 10:00: Nov. Business Inventories, est. 0.1%, prior 0.1%
• 10:00: Jan. NAHB Housing Market Index, est. 45, prior 46

DB's Jim Reid concludes the overnight wrap

Wherever you were around the world yesterday, I’m sure you could hear the huge collective sigh of relief from financial markets as downside inflation surprises from the US and the UK allowed us to step back from the recent one-way trade on inflation and bond yields. In turn, this triggered a massive bond rally, which saw the 10yr Treasury yield (-13.9bps) post its biggest decline since August, whilst 10yr gilt yields (-15.9bps) saw their biggest decline since December 2023. But the rally wasn’t just isolated to bond markets, as a strong set of earnings releases added to the upbeat tone. So with all said and done, the S&P 500 (+1.83%) posted its strongest daily performance since it reacted to Trump’s victory in early November, moving back into positive territory for 2025.
We’ll start with the US CPI release, as that really was the main swing factor notwithstanding the earlier global boost from lower UK CPI numbers. For markets, the main headline was that core US CPI fell to a monthly +0.2% pace in December (vs. +0.3% expected), so the year-on-year rate ticked down a tenth to +3.2%. Although in a trillion dollar plus sliding doors moment, it was interesting the YoY core inflation was 0.002 percentage points away from staying at 3.3% as it came in at 3.248%.

However the +0.2% December number (+0.225% unrounded) followed four consecutive months with a core CPI reading of +0.3%, so this led to excitement that the Fed would perhaps feel more confident cutting rates. Indeed, the amount of cuts priced in by the December meeting was up +9.8bps on the day to 39bps. And Treasury yields plummeted across the curve, with the 2yr yield (-10.3bps) down to 4.26%, and the 30yr yield (-9.5bps) down to 4.88%. For context though 2, 5, 10 and 30 year yields are still +2.2bps, +6.5bps, +8.4bps and +9.8bps YTD respectively.

However, for all the market excitement yesterday, it wasn’t actually a great inflation report by several measures. In fact, the headline CPI print was actually at a 10-month high of +0.39%, and it didn’t see a downside surprise like the core print. Moreover, there are growing signs that this stickiness isn’t just a blip, as the 3m annualised rate of CPI reached an 8-month high of +3.9%, so that’s not where the Fed would normally be comfortable cutting rates. Plus it’s worth bearing in mind that this report is covering December, and we’re soon about to face the potential impact from tariffs, whilst Bloomberg’s Commodity Spot Index (+1.40%) just hit its highest level since January 2023. Henry put out a note yesterday on how several global inflation risks are coalescing as we move past the new year.

Fed officials welcomed the inflation print but remained cautious on the path ahead. New York Fed President Williams said that “The process of disinflation remains in train. But we are still not at our 2% goal”. Richmond Fed President Barkin similarly noted that “inflation is coming down toward target” but that “we need to be restrictive to seal the final mile”. So despite the excitement in markets, there’s no obvious reason for the Fed to cut at their next meeting in a couple of weeks, particularly when you consider the strength in last week's jobs report, where payrolls hit a 9-month high. If they do hold, that would end a run of three consecutive rate cuts that’s delivered a total of 100bps of cuts. That said, the downside surprise in the core print meant that markets saw a H1 rate cut as more likely than they did 24 hours ago, with the probability of a rate cut by June priced at 91%, up from 68% the previous day.

When it came to equities, the decline in bond yields unleashed a significant rally, with the S&P 500 up +1.83% on the day. The rally got further support from the start of earnings season as well, with several US financials rallying after their results, including Citigroup (+6.49%), Goldman Sachs (+6.02%) and BlackRock (+5.19%). JPMorgan had to be content with a +1.97% gain. Beyond this, it was the cyclicals that led a broad move higher, with the Magnificent 7 (+3.72%) posting its strongest day in the last month. Meanwhile in Europe, there were similar gains for the STOXX 600 (+1.33%), which posted its biggest daily advance since September.

That bond rally was a global phenomenon yesterday, and here in the UK, 10yr gilt yields (-15.9bps) saw their biggest decline since December 2023. That outperformance was thanks to a downside surprise in the UK’s own CPI reading, which fell to +2.5% in December (vs. +2.6% expected). And the details were also pretty good, as core CPI surprised on the downside at +3.2% (vs. +3.4% expected), along with services CPI at +4.4% (vs. +4.8% expected). So that cemented the view that the Bank of England were still on track to cut rates at their next meeting, and investors dialled up the likelihood of a February cut from 64% to 90% by the close.

Sovereign bonds rallied across the rest of Europe too, with yields on 10yr bunds (-9.1bps), OATs (-11.7bps) and BTPs (-14.5bps) all moving lower. That was primarily driven by the downside surprises in US and UK inflation, but we also found out that the German economy contracted by -0.2% over 2024 as expected, marking a second consecutive annual contraction for the first time since 2002-03.

Elsewhere, oil prices reached 5-month highs yesterday, with Brent crude moving above $82/bbl where it remains this morning. This came amid ongoing supply concerns as EIA data showed US crude inventories at their lowest since April 2022, while the International Energy Agency warned that new US sanctions announced last week could “significantly disrupt Russian oil supply”. Yesterday’s rise in oil prices came even amid news that after 15 months of war Israel and Hamas had agreed a ceasefire deal that will come into effect on Sunday.

Overnight in Asia, the Japanese Yen has seen another strong performance after Bloomberg reported that Bank of Japan officials saw a good chance of a rate hike next week, unless the start of Trump’s presidency led to any negative surprises. So the yen is currently trading at 156.05 per US Dollar, which is its strongest in nearly a month.

Elsewhere in the region, there’s been a mixed performance across the major equity markets. In South Korea, the KOSPI (+1.06%) has posted a strong gain, as has Australia’s S&P/ASX 200 (+1.38%). But the gains haven’t been as large elsewhere, with the Hang Seng (+0.49%) and the Nikkei (+0.25%) posting smaller advances, alongside losses for the Shanghai Comp (-0.19%) and the CSI 300 (-0.36%). Looking forward, US equity futures are basically flat, with those on the S&P 500 down -0.02% this morning.

To the day ahead now, and US data releases include retail sales for November and the weekly initial jobless claims. Elsewhere, we’ll also get the UK GDP reading for November. From central banks, we’ll get the ECB’s account of their December meeting, and hear from the ECB’s Panetta. Earnings releases include Bank of America and Morgan Stanley. Finally in the political sphere, the US Senate will hold Scott Bessent’s nomination hearing to become Treasury Secretary.