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Markets in a Minute 27th January 2025

BACK TO CENTRAL

Last week, markets were focused on the Trump administration's policies during the first week in office. A softer tone around tariffs, as well as positive business sentiment data, helped push up global equities.
This week, focus is set to be on the Fed (Wednesday) and ECB (Thursday) rate decisions and any forward guidance, as well as numerous activity measures including GDP, retail sales and durable goods. Q4 earnings and 2025 guidance will also be of interest, with Microsoft, Meta, Apple, Amazon and Tesla all reporting.
KEY DATA AND EVENTS

After Monday's inauguration of President Trump there were a number of executive orders signed. These included a reversal of some Biden policies, revoking the offshore oil drilling ban as well as freezing funds for projects related to the Inflation Reduction Act.

Trump's tone was also softer on tariffs. On Thursday, he said he would "rather not" impose tariffs on China. A lower likelihood of trade disruptions helped push the US dollar index (DXY) to a one-month low last week as it fell by 1.7%. For more on the dollar, see our Chart of the Month in the link below.

Global PMIs (a business survey) also surprised on the upside, with that for the Eurozone moving into expansionary territory while US services moved to the highest level in nearly three years. This suggested a positive global growth backdrop at the start of 2025.

EQUITY MARKETS

Stocks rallied last week as the potential for a global trade war was seen as less likely while positive PMI data also boosted sentiment. The S&P 500 was up by 1.7% and the Euro Stoxx 600 rose by 1.2%.

BOND MARKETS

Bond yields rose (bond prices fall as yields rise) as a healthy growth backdrop may mean that rates need to remain higher to keep inflation controlled. The 10-year US Treasury yield increased by 1bp to 4.62% last week, while the equivalent German Bund rose by 6bps to 2.58%.

WATCH POINTS
  • Mon 27th Germany - IFO business survey, retail sales
  • Tue 28th US - Durable goods, consumer confidence • Eurozone - ECB lending survey
  • Wed 29th US - Fed meeting decision and press conference
  • Thu 30th US - GDP, initial jobless claims • Eurozone - ECB meeting decision and press conference, GDP, unemployment rate
  • Fri 31st US - Employment cost index, personal income data

This is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person.

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