Key Themes
Inflation in Focus
U.S. CPI Data (Wednesday):December’s CPI is expected to show a 2.9% year-over-year increase, keeping inflation above the Federal Reserve’s 2% target.
Markets have delayed rate cut expectations to June 2025 following a strong jobs report (+256,000 payrolls).
Fed minutes indicate concerns over the impact of Trump’s trade and immigration policies on inflation.
UK CPI (Wednesday):Forecasted at 2.6% YoY, UK inflation remains above the Bank of England’s 2% target.
Rising gilt yields reflect skepticism over future BoE rate cuts amid fiscal expansion under the Labour government.
BoE commentary from Sarah Breeden and Alan Taylor will provide further clarity.
Earnings Season Begins
Major banks kick off Q4 results:
JPMorgan, Wells Fargo, Citigroup, and Goldman Sachs report Wednesday.
Bank of America and Morgan Stanley follow on Thursday.
Positive outlook driven by:
Robust investment banking fees and trading income.
Anticipation of deregulation and tax reforms under Trump’s administration.
S&P 500 companies are expected to post 10% YoY earnings growth, per LSEG IBES data.
China’s Economic Update
Key Releases:
GDP (Friday): Expected to confirm 5% annual growth for 2024.
Industrial production, retail sales, and housing prices.
Policy Context:
Vice Finance Minister Liao Min highlighted Beijing’s capacity for increased fiscal spending to support growth amid U.S. tariff tensions.
Oil Market Dynamics
Sanctions on Russian Oil:
The Biden administration’s comprehensive sanctions package targets every phase of Russia’s oil supply chain.
Brent crude crossed $80 per barrel, while WTI settled at $76.57.
Outlook:
Analysts expect Trump to leverage the sanctions as a bargaining chip for a Ukraine peace treaty.
Key Takeaways for Investors
Equity Market Sensitivity:
Inflation readings, Fed policy, and robust earnings expectations could drive sector rotations in equity markets.
For sector trends, the Sector P/E Ratio API provides valuable insights.
Global Policy Implications:
Tariff risks under the Trump administration could amplify inflationary pressures and trade uncertainty.
UK bond market activity signals ongoing skepticism toward fiscal policy outcomes.
Energy Sector Watch:
Oil price volatility offers opportunities in energy equities and commodity-focused investments. The Sector Historical Overview API helps track sector trends amid sanctions and supply disruptions.
