Rising to the Rush: Embrace Your First Full Trading Week of the Year

Getting Back to the Grind: 2025’s First Trading Week

The Scene Is Set

It’s time to buckle up and take the stock market rollercoaster for a spin. 2025 is officially live, and regulators, economists, and traders alike are poised to tackle a packed calendar of data, with the centerpiece being Friday’s US jobs report.

What We’re Seeing Now

After two weeks of low‑volume holiday trading, the market’s recent “price action” is mostly just noise—think of it as background chatter on a crowded street. Once we hit the “real” trading traffic, we’ll likely see a pulse‑like rhythm emerging.

Typically, investors reassess their positions around Martin Luther King Jr. Day (January 20th), which this year also marks the inauguration of President‑elect Trump. That’s a natural time to trim risks and flex a lighter stance before the early days of a second Trump term. We’ll watch to see if investors slide into a more cautious mood over the next two weeks.

My 2025 Outlook

US: Exceptionalism
UK: Stagflation
Eurozone: Stagnation
China: Disappointment
Japan: Normalisation

Current Market Moves

We kicked off the new trading week with a bounce that lifted the S&P 500 and Nasdaq 100 right back from yesterday’s dip. The day was a bit choppy, as volume hung a full 20% below the 20‑day average—a sign of a possible bumpy path ahead for equities. Two factors could keep this volatility in play:

The comforting “Fed put” has been pulled back after Chair Powell’s December briefing introduced more uncertainty into the policy outlook. Inflation risks have climbed, and there’s a real chance of a rate skip later this month.
The fiscal front is a bit unsteady, with the possibility of a new wave of “government by tweet” from the new president’s platform. Cautionary buying of volatility could be warranted.

Treasuries also saw some movement at the end of last week. The 10‑year hit 4.60% and the 30‑year 4.80%. Those runs feel a tad too sharp, so maybe there’s a buying opportunity—especially if the new administration tilts toward a more expansionary stance.

On the hard currency front, the U.S. Dollar Index (DXY) slipped below 109, showing some weakness versus G10 peers. Still, it remains well above both the 100‑ and 200‑day moving averages—its widest gap since late 2022—so a short‑term pullback might be over‑the‑hill rather than a trend reversal.

What’s Coming Next

Data for the next week is a mixed bag:

Multiple services PMI releases today—they’re the final readings, so not a huge market mover.
Germany’s inflation data will be a sharper indicator for the Eurozone’s own print tomorrow.
On the bond side, a 3‑year auction is on schedule with expectations of a tight stop‑through—slightly higher than the average.
And, of course, the much‑awaited US labor market report on Friday could pull the market in new directions.

So, after a buzz of holiday calm, it’s time for the markets to get back into the swing of things. Back in gear, we’ll watch to see if the narrative changes or stays steady as 2025 unfolds.

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