Mike Dolan examines the upcoming day in U.S. and global markets. The recent surge in bank stocks reporting strong earnings has marked the best day of the year so far, with a focus on retail data due Thursday.
Following surprising December consumer price index figures, core CPI inflation showed a decline, mainly driven by stable prices in shelter and services. This led to a notable rally in U.S. Treasuries and global sovereign bonds, pushing the 10-year Treasury yield down with expectations of a possible Fed rate cut increasing.
The dollar weakened alongside speculations on future interest rate hikes, while U.S. bank stocks like Bank of America, JPMorgan Chase, and Wells Fargo saw significant gains. Market relief spread over U.S. stock indexes with the S&P 500 bank index performing well. Geopolitically, a ceasefire announcement provided some reassurance amidst energy market volatility.
As more bank reports are anticipated and economic indicators released, investors await Donald Trump's second-term inauguration next week. Economic reports, including retail sales, weekly jobless claims, and the Philadelphia Fed's business sentiment survey, will shed light on the economic landscape.
In the international arena, the Bank of England's actions and reports on Chinese economic measures impact global markets. European and Asian stock markets have responded positively, with hopes of easing measures from China boosting sentiments. Eyes are also set on U.S. corporate earnings and key economic events unfolding that will steer market movements throughout the day.