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Ardern / SPX500 stalls @4K / Weaker U.S macro data / USDJPY all the way back? / ECB hawkish still



  • U.S PPI : biggest drop since April 2020 and US retail sales continued to fall in December, dropping by 1.1% amid high inflation, the Commerce Department reported Wednesday, US Industrial Production (M/M) Dec: -0.7% (est -0.1%)....all weaker...(this after a very weak Empire on Tuesday..) >>> USD, bonds, risk reacted as you would expected

  • Fed's Harker says he is ready to downshift to 25-basis-point rate hikes ''few more 25bp

  • Fed's Logan supports slower rate hike pace, possibly higher stopping point ''we can offset the effect by gradually raising rates to a higher level than previously thought''

  • Fed' Bullard ( non voter) ...but he did the damage yesterday for market sentiment, rates to get above 5% 'as quickly as we can''

  • Beige book : U.S. firms pessimistic about economic growth this year, Fed survey shows >>> market, people wants to be optimistic, BUT, the reality setting in, in terms of costs and lowering expenses for many, choice have to be made

  • The NY Fed's recession indicator (derived from the 3m10yr curve) is now showing a 47% change of a U.S recession. There have only been two other occasions in the past 62 yrs where it's been higher..HOWEVER..IMHO & for now anyway...high-yield credit spreads around 400 bps are wildly inconsistent with recession pricing.

  • #MSFT hosted Sting performance in #Davos the night before it announced layoffs. While much of comp’s leadership team was halfway around the world from its Redmond headquarters—it announced plans to lay off 10,000 people, largest layoffs since 2014

  • ‘No more in the tank’: New Zealand PM Jacinda Ardern announces shock resignation,‘Politicians are human. We give all that we can, for as long as we can, and then it’s time. And for me, it’s time’

  • ECB’s Knot : ECB Planning To Hike By 50bps `Multiple' Times

  • Kissinger says..”that NATO membership for Ukraine would be an "appropriate outcome." "The idea of a neutral Ukraine under these conditions is no longer meaningful.”

  • "Game-Changer:" High-Powered laser steers lightning bolts for first Time (Switzerland)..

 

Markets :
  • US 3-month/10-year yield curve now inverted by 128 bps, the most since 1981. It was +225 bps as recently as May 2022 >>> Jerome Powell on to you sir ! Home / Twitter (chart)

  • USDJPY, BoJ was unch, BUT... nice round trip yesterday (still in downtrend, chartbelow, target 120 area).. helped by much weaker U.S. data in the afternoon. Lower yields, eventually dragged CROSSJPY's lower again, similar round trip!

  • SPX500 - well documented resistance levels at/above 4'000 area held, and weaker U.S macro data (reaction to all those 2022 hikes..) pushed risk lower overall, BULLS don't want market to go and close below 3850 area

  • Markets were full of optimism (from oversold levels at end of Dec) lots of short-covering early in the year, in the so-called lower quality stocks, which is/was far enough, together with the HUGE move lower in yields, reality setting in now

  • As a seasoned trader told me ''Old adage , the Fed hikes , the market cuts'', UST curve most inverted since 1981

 


should not, and probably won't happen, however, some delays always possible, its politics after after all..short-term markets 'may' react












USDJPY - break of 127/128 calls for 120 or even 115 area - perhaps quicker than many think



SPX500 - same old chart - cluster of resistance 4K+ - now support 3850 short-term and 3750 area








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