10-Year Treasury Yield
The 10-year Treasury yield sharply dropped on the back of the CPI report and was last down 10 basis points at 4.686%. Growth stocks such as Tesla and Nvidia advanced 3.2% and 1%, respectively, as Treasury yields dove.
US Dollar Index
The U.S. dollar index — which measures the greenback against a basket of rivals — hit its highest level in more than two years on Monday, following a hotter-than-expected jobs report out of the United States last week. The recent strengthening of the greenback could both benefit and hurt Europe, analysts say, with market watchers anticipating further weakening of the bloc’s major currencies in 2025 as President-elect Donald Trump takes office in the U.S. and economic uncertainty persists. As the greenback moved upward, European currencies found themselves at multi-year lows. The euro fell 0.4% to $1.0199 by 12:50 p.m. London time on Monday, its lowest value against the dollar since Aug. 2022. It was little changed on Tuesday morning.
Producer Price Index - PPI
Inflation watch: Wholesale prices rose 0.2% in December, less than expected. The producer price index rose 0.2% in December, less than the 0.4% increase in November and below the Dow Jones consensus estimate for 0.4%. Excluding food and energy, the so-called core PPI was flat compared with the forecast for a 0.3% rise. The release is the first of two key inflation readings this week that likely will figure into the Federal Reserve’s interest rate decision later in January. The producer price index rose just 0.2% on the month, less than the 0.4% increase in November and below the Dow Jones consensus estimate for 0.4%, according to a Bureau of Labor Statistics report Tuesday. Excluding food and energy, the so-called core PPI was flat compared with the forecast for a 0.3% rise. Excluding food, energy and trade services, the measure rose just 0.1%. On an annual basis, headline PPI rose 3.3% for the full year, well ahead of the 1.1% increase in 2023.
Treasury Budget
US Treasury reports record $711 billion budget deficit for first months of 2025. The U.S. government posted an $87 billion budget deficit in December, reduced partly by a shift of benefit payments into November but capping a record $711 billion deficit for the first three months of the 2025 fiscal year, the U.S. Treasury Department said on Tuesday. The Treasury, releasing its final budget report before President-elect Donald Trump takes office next week, said that the $711 billion October-December deficit was $201 billion, or 39% higher, than the $510 billion deficit in the same period a year earlier as outlays grew sharply and revenues declined slightly. For December, the $87 billion deficit was reduced by $51 billion by the calendar benefit shift, and compared to a $129 billion deficit in December 2023. Receipts for the month were up 6% to $454 billion, while outlays as reported were down 3% to $541 billion..
Geopolitical Risk
The German economy contracted by 0.2% in 2024, data from statistics office Destatis showed Wednesday. This is the country’s second consecutive yearly economic slowdown and was in line with expectations from economists polled by Reuters. Germany has been facing a series of economic struggles, including a long-standing housebuilding crisis and pressure on its autos industry.
China’s GDP expanded 5% in 2024. China’s economy expanded by 5% year on year in 2024, according to China’s National Bureau of Statistics, in line with Beijing’s official target of “around 5%.” In the fourth quarter, gross domestic product expanded 5.4%, higher than the estimated 5.0% in a Reuters poll of economists, as Beijing’s stimulus measures kicked in. That said, analysts are still hoping for more policies to boost the country’s economy.
Armed conflict is the top risk in 2025, a World Economic Forum (WEF) survey released on Wednesday showed, a reminder of the deepening global fragmentation as government and business leaders attend an annual gathering in Davos next week.
MBA Purchase Applications
Mortgage applications increased 33.3 percent from one week earlier. The Market Composite Index, a measure of mortgage loan application volume, increased 33.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 52 percent compared with the previous week. The Refinance Index increased 44 percent from the previous week and was 22 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 27 percent from one week earlier. The unadjusted Purchase Index increased 48 percent compared with the previous week and was 2 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 42.7 percent of total applications from 40.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.0 percent of total applications.
Consumer Price Index
The consumer price index increased a seasonally adjusted 0.4% on the month, putting the 12-month inflation rate at 2.9%. The annual number was in line with forecasts. Core CPI annual rate was 3.2%, a notch down from the month before and slightly better than the 3.3% outlook. The consumer price index increased a seasonally adjusted 0.4% on the month, putting the 12-month inflation rate at 2.9%, the Bureau of Labor Statistics reported Wednesday. Economists surveyed by Dow Jones had been looking for respective readings of 0.3% and 2.9%. Core CPI rises less than expected year over year. Core inflation unexpectedly slowed in December, giving investors hope of Federal Reserve rate cuts later this year. The so-called core consumer price index, which strips out volatile food and energy prices, rose 3.2% in December year over year. Economists polled by Dow Jones expected a gain of 3.3%. Overall CPI increased 2.9% year on year, in line with expectations.
Empire State Mfg Index- Claims
NY Empire State Manufacturing Index plunges, signaling worsening conditions. The NY Empire State Manufacturing Index, a key indicator of business conditions in New York state, has taken a sharp downturn. Comparing the actual figure to the forecasted number, the drop is considerable. The actual figure released shows a reading of -12.60, a significant drop from the forecasted 2.70. This negative reading indicates worsening conditions in the manufacturing sector, a stark contrast to the forecasted improvement. The index is compiled from a survey of approximately 200 manufacturers in New York state, with a level above 0.0 indicating improving conditions and below 0.0 indicating worsening conditions. This latest figure, being well below 0.0, suggests a bearish outlook for the USD.
Earnings Season - JPM
JPMorgan Chase on Wednesday topped estimates for fourth-quarter revenue and profit. The bank was helped by better-than-expected net interest income and fixed income trading and investment banking results. Profit rose 50% to $14 billion in the quarter as noninterest expenses fell 7% from a year earlier. JPMorgan Chase on Wednesday posted record quarterly and annual earnings and revenue, reinforcing the company’s status as the biggest and most profitable bank in U.S. history. Here’s what the company reported: Earnings: $4.81 a share vs. $4.11 LSEG estimate Revenue: $43.74 billion vs. $41.73 billion expected. The bank said profit rose 50% to $14 billion in the quarter as noninterest expenses fell 7% from a year earlier, when the firm had a $2.9 billion FDIC assessment tied to regional bank failures.
Earnings Season - BLK
BlackRock pops on stronger-than-expected earnings BlackRock shares were up more than 3% in the premarket after the world’s largest asset manager reported fourth-quarter results that beat expectations. The company earned $11.93 per share on revenue of $5.68 billion. Analysts expected a profit of $11.19 per share on revenue of $5.68 billion. Assets under management ballooned to $11.551 trillion from $11.475 trillion quarter over quarter.
Earnings Season - C
Citi stock climbs after earnings beat. Citigroup beat estimates on the top and bottom lines in its fourth-quarter report, helping boost the stock 6% in premarket trading. Here is how the company did relative to LSEG analyst consensus estimates: Earnings: $1.34 a share, vs $1.22 expected. Revenue: $19.58 billion, vs $19.49 billion expected Citi reported revenue growth across most of its businesses, with investment banking and fixed income trading being two of the main highlights. The bank also announced a $20 billion stock buyback program.
Earnings Season - Well Fargo
Wells Fargo climbs on earnings beat, strong guidance. Wells Fargo mreported fourth-quarter earnings that beat the Street’s expectations, sending shares higher by around 3%. The company earned an adjusted $1.42 per share, beating an LSEG forecast of $1.35 per share. Wells also said it expects net interest income to increase 1%-3% in 2025 from the year-earlier period.
Earnings Season - GS
Goldman Sachs rises on strong fourth-quarter results. Goldman Sachs shares advanced 1.8% Wednesday after posting an earnings and revenue beat in the fourth quarter. The investment bank reported $11.95 earnings per share on $13.87 billion in revenue. Analysts surveyed by LSEG forecast earnings of $8.22 per share on revenue of $12.39 billion. Stronger than expected trading revenue in the prior period helped boost the company’s results.
Commodities - Oil
Oil prices rose more than 2% on Wednesday, supported by a large draw in U.S. crude stockpiles and potential supply disruptions caused by new U.S. sanctions on Russia, while a Gaza ceasefire deal limited gains. Brent crude futures settled $2.11, or 2.64%, higher at $82.03 a barrel, the highest since August 2024. U.S. West Texas Intermediate crude (WTI) <CLc1> settled up $2.54, or 3.28%, at $80.04 a barrel, the highest since July. In post settlement trade, Brent rose to the highest since July and WTI gained more than $3 a barrel. U.S. crude oil inventories fell last week to their lowest since 2022, the U.S. Energy Information Administration reported, as exports rose and imports fell. Gasoline and distillate inventories rose more than expected. A weaker dollar (.DXY), opens new tab usually supports oil prices and lower interest rates can boost economic growth. The dollar index slipped on Wednesday after U.S. data showed consumer prices rose slightly above expectations in December, heightening expectations for more interest-rate cuts by the Federal Reserve.
Beige Book
Fed’s Beige Book Points to Slight to Moderate Growth at Year-End. Several firms noted concerns about tariff, immigration policy. Six districts saw slight hiring increase, others saw no change. Fed’s Beige Book Points to Slight to Moderate Growth to End Year. Economic activity increased slightly to moderately across the twelve Federal Reserve Districts in late November and December.Consumer spending moved up moderately, with strong holiday sales exceeding expectations. Manufacturing decreased slightly on the net; some manufacturers stockpiled inventories in anticipation of higher tariffs. Commercial real estate sales edged up. Economic activity increases slightly to moderately at year-end. The Federal Reserve reported that economic activity slightly increased in 9 districts. Employment levels increased in 6 districts, but there was no change in the remaining districts. Uncertainty about future employment plans has increased in some areas.
Hedging Gold
Gold prices extended gains on Tuesday after U.S. inflation data came in slightly weaker than expected, giving investors faint hope that the Federal Reserve would continue on its rate-easing path this year, sending the dollar lower. Spot gold gained 0.3% to $2,671.27 per ounce as of 01:50 p.m. ET (1850 GMT). U.S. gold futures settled 0.1% higher at $2,682.30.
Jobless Claims
Initial claims for state unemployment benefits rose 14,000 to a seasonally adjusted 217,000 for the week ended Jan. 11. Economists had forecast 210,000 claims for the latest week. Claims data tend to be volatile at the start of the year, but have continued to signal low layoffs. Claims last week were likely boosted by unseasonably cold weather, with unadjusted applications surging 15,175 in Michigan. There were also sizeable increases in Illinois, Ohio and Missouri.
Retail Sales
Retail sales rose 0.4% December 2024 after an upwardly revised 0.8% gain in November, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, advancing 0.6% after a previously reported 0.7% rise in November 2024. Retail sales increased 3.9% year-on-year in December 2024.
Philadelphia Index
Philly Fed's factory gauge surges by most since June 2020. A gauge of manufacturing activity in the U.S. Mid-Atlantic region shot up by the most in about four-and-a-half years in January, with new orders and shipments both surging, a potential indication that the factory sector's long slump may be ending. The Federal Reserve Bank of Philadelphia said on Thursday that its monthly manufacturing index rose to 44.3, its highest since April 2021, from a revised minus 10.9 in December. The net increase was the largest since June 2020 after factories began reopening from the initial wave of COVID-19 shutdowns and was the second largest increase on record.
Import and Export Prices
Import prices in the U.S. crept up in line with estimates in the month of December. The Labor Department said import prices inched up by 0.1 percent in December, matching the upticks seen in November and October as well as expectations. Meanwhile, the report said the annual rate of import price growth accelerated to 2.2 percent in December from 1.4 percent in November, reaching the fastest pace of growth since a 3.2 percent spike in December 2022. The modest monthly increase by import prices partly reflected a jump by prices for fuel imports, which shot up by 1.4 percent in December after climbing by 0.9 percent in November. U.S. import prices increase 0.1% in December; export prices advance 0.3%. Prices for U.S. imports increased 0.1 percent in December, after rising 0.1 percent in November. U.S. export prices advanced 0.3 percent in December following no change the previous month. Over the past year, import prices increased 2.2 percent and export prices rose 1.8 percent.
Business Inventories
U.S. business inventories rose marginally in November, suggesting that restocking will probably not contribute to economic growth in the fourth quarter. Inventories ticked up 0.1% after being unchanged in October, the Commerce Department's Census Bureau said on Thursday. The slight rise in inventories, a key component of gross domestic product, was in line with economists' expectations.Inventories increased 2.6% on a year-on-year basis in November. The pace of inventory accumulation could pick up in the months ahead as businesses stockpile goods in anticipation of higher import tariffs. President-elect Donald Trump, who will be inaugurated next week, is planning broad tariffs on goods.
Housing Market Index
U.S. Housing Market Index Unexpectedly Inches Up To Nine-Month High In January 2025. Reflecting hopes for an improved economic growth and regulatory environment, the National Association of Home Builders released a report on Thursday unexpectedly showing a modest improvement by U.S. homebuilder confidence in the month of January. The report said the NAHB/Wells Fargo Housing Market Index crept up to 47 in January from 46 in December. Economists had expected the index to edge down to 45.
Fed Balance Sheet
Level $6.853 T. Total Assets -W/W $-33.472 B. Reserve Bank Credit - W/W $-20.940 B.
Mortgage Rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 7.09 percent from 6.99 percent, with points decreasing to 0.65 from 0.68 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week. US 30-year mortgage rate tops 7%, highest since May 2024. The interest rate for the most popular U.S. home loan rose last week to an eight-month high of 7.09%, extending an upward trend that's squeezing would-be homebuyers already facing rising house prices and limited supply. The average contract rate on a 30-year fixed-rate mortgage rose 10 basis points in the week ended Jan. 10, the Mortgage Bankers Association said on Wednesday..
Housing Starts
U.S. single-family homebuilding increased to a 10-month high in December 2024, indicating some improvement in housing activity at the end of the year, though rising mortgage rates and an oversupply of new properties on the market could constrain recovery. US single-family housing starts, permits hit 10-month high in December. Single-family housing starts increase 3.3% in December. Housing starts in December were at a seasonally adjusted annual rate (SAAR) of 1,499,000. This is 15.8% above the revised November estimate of 1,294,000 but 4.4% below the December 2023 rate of 1,568,000. Single-family housing starts were at a rate of 1,050,000; this is 3.3% above the revised November figure of 1,016,000. The rate for units in buildings with five units or more was 418,000.
Building Permits
Building permits for single-family homes rise 1.6%. Overall housing starts surge 15.8%; permits dip 0.7%. Housing starts drop 3.9% in 2024; permits fall 2.6. Building permits are the forward-looking portion of the report, and in December privately-owned housing units authorized by building permits were at a seasonally adjusted annual rate of 1,483,000. This is 0.7% below the revised November rate of 1,493,000 and 3.1% below the December 2023 rate of 1,530,000. Single-family authorizations were at a rate of 992,000; this is 1.6% above the revised November figure of 976,000. The rate for units in buildings with five units or more was 437,000.
Industrial Production
U.S. Industrial Production Jumps In December As Utilities, Mining Output Surges. Industrial production in the U.S. increased by much more than expected in the month of December, according to a report released by the Federal Reserve on Friday. The Fed said industrial production jumped by 0.9 percent in December after rising by a revised 0.2 percent in November. Economists had expected industrial production to climb by 0.3 percent compared to the 0.1 percent dip originally reported for the previous month. The much bigger than expected increase by industrial production partly reflected substantial rebounds by utilities and mining output. Manufacturing output rises 0.6% on aerospace production.
Treasury International Capital
The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for November 2024. The next release, which will report on data for December 2024, is scheduled for February 18, 2025. The sum total in November of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $159.9 billion. Of this, net foreign private inflows were $156.6 billion, and net foreign official inflows were $3.3 billion. Foreign residents increased their holdings of long-term U.S. securities in November; their net purchases were $115.7 billion. Net purchases by private foreign investors were $124.0 billion, while net sales by foreign official institutions were $8.3 billion.
S&P 500 Index - Week Performance
Open 2025 at 5,903.26 and close at 5,942.47. Positive 0.83%
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