NYSE MAC Desk
Market Update

Good morning,
 
Yesterday was a mixed session with tech continuing this week’s underperformance however, equities held the bulk of the previous day’s gains. While the S&P 500 was down 0.2% the equal-weight version of the index was up 0.8% and is outperforming the market cap weighted index by 1.5% this week (3.4% WTD). Part of yesterday’s strength came following comments from influential Fed Governor Waller who suggested that if ongoing inflation data was similar to this week’s data that rate cuts in the first half of the year were still on the table, a much more dovish view than the current market narrative.

Markets in Asia were mixed overnight despite stronger than expected economic data in China. Most European indices are trading up ~1% capping a strong week. Many of the indices are up >3% with the DAX, Eurostoxx 50, and FTSE 100 hitting new all-time highs. Overnight UK retail sales missed expectations which sent 10yr Gilt yields lower and pulled global yields lower with it.
 
US futures are also trading higher on this options expiration Friday ahead of a long weekend. S&P futures are at the overnight highs currently up ~0.9% picking up some momentum over the last hour after breaking above 6k and just took another leg up after the IMF increased global growth forecasts. This will put the cash market back above its 50d ma where it has stalled out in the last couple sessions. Russell 2k are also up ~1%.
 
IMF 2025   global growth revised up to 3.3% from 3.2%. US -  2.7% from 2.2%; China 4.6% from 4.5%; Eurozone 1% from 1.2%. Treasury yields continue to pull back down 1-4bps across the curve. This morning’s housing starts and building permits were mixed but didn’t move markets. 10yr yields are down >20bps from the highs this week which is the primary driver of this week’s strength. The USD index is up ~0.25% trading just over $109.10 stronger verse the Yen but weaker verse the Euro/GBP a counter trend moves to what we’ve seen throughout the week.
 
Another factor to this week’s strength has been strong bank earnings which have continued to be pretty positive this morning. The first of the industrial earnings have been disappointing with Fastenal and JB Hunt both trading down >5% in the pre-market.
 
Commodities markets are mostly lower despite the better China data and increased growth estimates. ICE Brent is down ~0.5% trading just under $81. After rallying yesterday natural gas prices are pulling back 6%. Metals are down ~2% across the board. Ag is bucking the trend trading mostly higher.
 
With the inauguration on Monday there is an expectation that we will see a wave of executive orders fairly quickly ranging from immigration, to energy policy and tariffs. Bloomberg is reporting that President Trump will also issue an executive order making crypto a priority potentially calling for a national bitcoin stockpile. Bitcoin is up ~2.5% to $102.7k.
 
Industrial production and capacity utilization will be released imminently.
 
Global Markets
Asia:
Japan's Nikkei: -0.3% (-1.9% for the week)
Hong Kong's Hang Seng: +0.3% (+2.7% for the week)
China's Shanghai Composite: +0.2% (+2.3% for the week)
India's Sensex: -0.6% (-1.0% for the week)
South Korea's Kospi: -0.2% (+0.3% for the week)
Australia's ASX All Ordinaries: -0.1% (+0.2% for the week)
Europe:
STOXX Europe 600: +0.7% (+2.4% week-to-date)
Germany's DAX: +1.1% (+3.2% week-to-date)
U.K.'s FTSE 100: +1.3% (+3.1% week-to-date)
France's CAC 40: +1.1% (+3.8% week-to-date)
Italy's FTSE MIB: +1.0% (+3.1% week-to-date)
Spain's IBEX 35: +0.5% (+1.5% week-to-date)
 
Sectors/Other Asset Classes:
Government Yields

• US 2yr -0bps to 4.24%, 5yr -1bps to 4.39%, 10yr -3bps to 4.58%, 30yr -4bps to 4.81%
• USD index: +$0.24 to $109.06
• Oil prices - ICE Brent: -0.5% to $80.90, WTI: -0.1% to $78.59, Nat Gas: -5.7% to $3.53
• Gold: -0.6% to $2,735.00, Silver: -2.4% to $30.95, Copper: -1.8% to $4.36
• Wheat: -0.0% to $5.48, Corn: +0.6% to $4.78, Soybeans: +1.1% to $10.30, Cotton: +0.9% to $0.67
• VIX: -0.71 to 15.89
• Bitcoin: +2.5% to ~102.6k

Central Banks:

• Bank of Canada governor Gravelle says that the central bank will end its QT program in the first half of the year - Reuters

Washington:

• President Trump is prepared to issue a wave of executive orders after inauguration with reports that these will center around tariffs and  immigration according to the WSJ  Earlier this week there were reports about energy policy. Bloomberg is also reporting that an executive order elevating crypto as a policy priority creating a crypto advisory council and a national bitcoin stockpile
• China will send VP Han Zheng to Trump’s inauguration - SCMP and there are reports that President Trump/Xi have held a phone call

Economic Data:

• US:
  • Housing Starts:  1.499ml vs. 1.32ml con.s, prior 1.289ml
  • Building permits: 1.483ml vs. 1.46ml cons., prior 1.493ml
  • 9:15 Industrial production
  • 9:15 Capacity utilization
  • 1:00 Rig Count
• Global
  • China GDP: 5.4% vs. 5% cons, .prior 4.6%
  • China Industrial production: 6.2% vs. 5.4% cons., prior 5.4%
  • China retail sales: 3.7% vs. 3.5% cons., prior 3%
  • China Home prices: -5.3% prior -5.7%
  • FAI: 3.2% vs. 3.3% cons., prior 3.3%
  • UK Retail Sales: -0.3% vs. 0.4% cons., prior 0.1%