Wall Street closed with a mixed sign this Monday (Dow Jones:+0.86%; S&P500:+0.16%; Nasdaq:-0.38%), with the Nasdaq taking the fall, after Friday's losses and after ending a bearish weekmarked by the strength of employmentwhich has reduced expectations of rate cuts from the Federal Reserve (Fed)and the rise of the bond yield. Now, and during the next sessions, the attention will fall on the inflation and the beginning of the results season. «In general, the jobs report looked very strong. That's great news for the U.S. economy, but that's not necessarily good news for the market, as the strength of U.S. jobs data further frustrated the Fed's dovish expectations«, assesses Ipek Ozkardeskaya, senior analyst at Swissquote Bank. «The probability that the US central bank will not cut rates in May increased to 67% after the publication of the data, and the probability of a cut in June is close to that of a coin toss«adds the expert. For Link Securities analysts «it is very unlikely that the Fed will lower its benchmark interest rates again in the short term while inflation expectations continue to rise in the US and the labor market continues to show such strength.»
WILL THE 10-YEAR BOND YIELD REACH 5%?
Another point of attention for the market is the rise in US 10-year Treasury bond yieldwhich remains on the rise and 4.78% levels. «We believe that 10-year US Treasuries likely to hit 5%. However, if we take a medium-term view, yield levels will likely end up looking attractive at these levels. But we believe that so we see a significant rally in US Treasury bonds (at least in the short term), we would have to see data that points to economic weaknessor a further deterioration in the labor marketand at this moment neither of the two conditions are met. The rate movement, although significant, is mostly justified given the current economic context,» says Danny Zaid, manager of TwentyFour Asset Management, Vontobel boutique.
THE PROTAGONIST INFLATION
In this sense, at a macro level the focus of investors is on the inflation. The most relevant data will be known on Wednesday, with the publication of the December CPIwhich is expected to rebound slightly in the general rate to 2.8% from 2.7% the previous month, and to remain stable at 3.3% in the underlying variable. The agenda also includes other notable references such as production prices (Tuesday), the weekly unemployment data or the retail sales (Thursday). All of this will also be decisive for the Fed rate decision ahead of its meeting on January 29 and for which the market discounts, with a 97.3% probability, according to the CME Group's FedWatch tool, which the body will pause in its monetary flexibility process. «There is a possibility that Stronger-than-expected CPI reading could see all 2025 rate cuts off the table. «This may be an overreaction, but traders should be prepared for another leg of decline in stocks and risk assets if there is a nasty surprise to the upside in US prices,» says Kathleen Brooks, director of research at XTB.
COMPANIES AND OTHER MARKETS
At the business level, the large US banks as JP Morgan, Goldman Sachs, blackrock either Citigroup This Wednesday they will kick off the results season for the fourth quarter and for 2024 as a whole. Bank of America either Morgan Stanley They will do the same on Thursday. You lie, Nvidia has been critical of the new limitation on the export of chips and components designed for the development of artificial intelligence (AI), which the United States Government made public this Monday, with one week left before the president Joe Biden leave the White House and donald trump begins his second term. The firm's shares have fallen 1.97% on Wall Street. On the other hand, the actions of modern have sunk 16.8% after the company will revise downward the revenue forecast for 2025 by $1 billionso it now anticipates a turnover of between 1,500 and 2,500 million dollars. At the opposite extreme, the actions of US Steel have risen 6.1% due to information that points to a possible purchase by Cleveland-Cliffs and Nucorwho plan a joint action to take over the company. In other markets, oil West Texas has risen 2.81% ($78.73) and the Brent has advanced 1.40% ($80.89). For his part, the euro has depreciated 0.26% ($1.0217), and the ounce of gold has decreased by 1.33% ($2,676). Furthermore, the 10-year American bond yield has revalued to 4.786% and the bitcoin has lost 1.09% ($93,639).