Markets Take a Breather on Friday
Quick Reflections on a Wobbly Week
After a whirlwind of data last week, the markets finally settled into a calmer groove yesterday. A solid report on U.S. retail sales carried the day, while traders kept an eye out for more headlines that promised to stir the pot—though none seemed likely to topple the week.
U.S. Retail Sales: Holiday Cheer or Market Fuel?
December’s retail sales turned out to be less of a surprise than it seemed at first glance. The headline numbers slipped a touch below expectations (0.4% versus the 0.6% consensus), but don’t let that fool you. The control group—essentially the same set of goods that feeds into GDP—jumped a whopping 0.7%. Even more fascinating, November’s headline figure nudged up to 0.8%, just a single point in the right direction.
What does that all mean? Think of it as a holiday shopping spree that gave the economy a much-needed jolt. With labour still tight, this consumption surge is poised to keep growth humming along. Fast‑track corporate earnings are dialled up, giving stocks a soft landing. But remember: the “Fed put” has been retired, and fiscal policy remains a bit of a wild card, so volatility still keeps its sneakers on the sidelines.
ECB: Growth Outlook Gets a Reality Check
Minutes from the ECB’s December session hint that the eurozone’s growth forecast may’ve been slightly too rosy. The panel worries the country’s trade policies aren’t as steady as they could be—especially after hearing rumors that a new U.S. president might nail the euro zone with tariffs. Coupled with the risk of falling short of the 2% inflation target, the ECB is considering stump‑ing rate cuts of 25 basis points each time.
The euro is comfortably scrolling at about $1.03, and nobody’s seeing an immediate appetite for shorts at the moment. In short, the euro’s future feels like a tightrope walk with a view of a winding road ahead.
UK GDP: Still a Slow Drag in Acceleration
The latest data paints a gloomy picture: the UK’s economy grew a meager 0.1% in November, a slight break from consecutive contractions. The nation continues to wrestle with sluggish growth and stubbornly high prices, a double‑whammy that’s keeping the government’s fiscal options in a tight shell.
Chancellor. Reeves might be looking at this a bit sideways. The general sentiment? GBP-backed assets are, for now, pretty unattractive and might stay that way for a while.
What’s on the Calendar Today?
Today’s release slate is packed but probably won’t tip the scales of the market. Key items include:
- UK retail sales update
- Eurozone CPI figure for December
- U.S. housing starts and building permits
- Industrial production from the U.S.
- A Fed “blackout” period kicking off this afternoon
In a nutshell, keep your eyes on the news feed; the market’s daily rollercoaster may not be the stop‑and‑roll you expect—yet.
