Market Wrap-Up: A Jumbled Day Full of Tariffs, CPI Data & Holiday Hype
What’s Happening Now?
Yesterday’s markets were a bit like a seesaw – buyers and sellers swapped positions, a few kicks of optimism appeared, and then the layman’s jargon of tight marginal gains fizzled out. The grab bags of events are heavy: upcoming US CPI numbers, a 2025 election, and with Inauguration Day coming up, people are riding the wave of uncertainty.
Tariffs & The Turn of the Tides
- Trump’s new approach might be a slower drip: tariffs stepping up 2–5 % each month instead of a hard hit right away.
- Shallow & realistic? Less risky for inflation, so the market smiles a little.
- Still, last week’s political theatrics remind us that policy can change fast – be ready for a roller‑coaster.
Outcomes on the Isles
UK markets were steadier but the Chancellor’s words didn’t spark substantial moves.
- Gilts swayed +5 bp on opening but stayed near the same point by close.
- Yield on the long end rose a smidge, which is worrying when growth is sluggish.
- Market participants keep dodging a “big rally” by staying short on bonds and flat on equity risk.
Yesterday’s PPI Pageant
First, we heard cooler-than-expected US PPI numbers (3.3 % YOY vs. the 3.5 % consensus). Industrial pricing did not spark panic.
- The core of consumer price inflation is still on the cooler side.
- However, airfare spikes warmed the core metrics a tad.
- Fed might re‑think its stance, but the dollar remains in a steady zone.
Today – Ahead of the CPI & Earnings Bonanza
What markets will whisper? US CPI in December might hit 2.9 % YOY, 0.2 pp higher than November, while core stays at 3.3 %.
- Bond positioning? Short bonds, long USD, with a scenario that the Fed stays tight.
- If CPI is hot, bonds will skyrocket and anyone holding them may lose a lot.
- Feel the “policy path” vibrations: Some traders want to see how the Fed moves more than a “strong economy” angle.
UK Side of the Saga
There is also UK CPI data – headline at 2.6 % YOY and core and services slightly lower than expectations.
- Accepting those figures would nudge the Bank of England toward a 25 bps rate cut in February.
- A hotter-than-expected CPI would rattle the Government bond market and raise yields.
Wall Street – Q4 Earnings Roll‑out
Major banks such as JPMorgan, Citi, Wells Fargo, & Goldman Sachs will hit the stage tomorrow. The S&P 500 is expected to grow earnings by 11.7 % YOY, a three‑year high.
- Revenue growth is expected for the 17th straight quarter.
- All eyes on whether the market will hand the earnings ceremony a standing ovation or history.
What to Watch
- US CPI – the most critical release of the day.
- UK CPI – a clue to the Bank’s next move.
- Policy and inauguration announcements – keep an eye out for any surprises.
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