Inflation figures

Today's Significance:

Today marks a crucial day of the week as American inflation figures are released, alongside earnings reports from major American banks.

Market Recap from Yesterday:

Stock Market Performance:

New York: +0.1%

Europe: +0.5%

Bond Yields:

Bund at 2.65% (+3bp)

T-Note stable at 4.79%

The slight rise in the markets was primarily driven by American Industrial Prices for December, which increased less than expected (+3.3% year-over-year vs. +3.5% estimated and +3.0% previous). This sets an optimistic tone for today's American CPI data.

European Economic Highlights:

Noteworthy interventions from ECB officials Lane and Rehn, who maintained a dovish stance, advocating for further rate cuts and emphasizing their intention to act independently from the Fed.

Current EUR/USD exchange rate stands at 1.029.

UK Inflation Data:

This morning, the UK reported a good inflation reading of +2.5%, slightly below the expected +2.6%. The core inflation rate also declined to +3.2% from +3.4% expected and +3.5% previous. This positive data might influence the European market opening.

Key American Economic References Today:

Earnings Season Kickoff:

At 13:00, major banks will release their earnings:

JP Morgan: $4.12 (+35.6%)

Wells Fargo: $1.33 (+54.6%)

Goldman Sachs: $8.26 (+50.7%)

Citi: $1.22 (compared to -$1.16 in Q4 2023)

These figures are expected to provide some support for market activity.

Inflation Report:

At 14:30, December inflation is anticipated to rise for the third consecutive month to +2.9% (compared to +2.7% in November, +2.6% in October, and +2.4% in September). The core inflation has remained stagnant at +3.3% since September. If predictions hold, this could remind the Fed to stay vigilant, reinforcing our estimate of a maximum of two rate cuts in 2025, targeting 3.75% to 4.00%.

Market Outlook:

Given the current environment, it seems unlikely for the market to move decisively today, especially with T-Note yields around 4.80% and the upcoming inauguration of Trump on January 20.

Current Futures and Market Data:

S&P 500: +0.1%

Nasdaq 100: -0.1%

Euro Stoxx 50: +0.5%

VIX: 18.71% (-0.48bp)

Bund: 2.59%

T-Note: 4.79%

USA 2A-10A Spread: 42.5bp

Spain 10A: 3.30%, Italy 10A: 3.82%

12m Euribor: 2.58% (futures 12m 2.42%)

USD: 1.031

JPY: 162.8

Gold: $2,677.16

Brent Crude: $79.92

WTI: $77.50

Bitcoin: +2.41% ($96,443)

Ether: +3.2% ($3,215)

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