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16 Jan 2025

Holding on

• Mixed signals. US equities failed to push on despite further falls in bond yields. USD/JPY continues to slip back. AUD & NZD lose a bit of ground.• Data & comments. US consumer spending holding up. Fed’s Waller encouraged by inflation trends keeps the door open to more policy easing.• AU jobs. Another robust Australian labour force report. Unemployment better than RBA expecting. China data batch, which includes Q4 GDP, out today. Global Trends A mixed performance across markets overnight with the data flow and comments by US officials in focus. After yesterday’s strong rally US equities consolidated despite a...

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Markets Pare Gains, But Remain Positive

Global financial markets are still in an ebullient mood after yesterday’s US consumer price index report showed core inflation rising by less than had been feared in December. The dollar reversed lower, ten-year Treasury yields dropped as much as 15 basis points across the curve, and equity markets soared through yesterday’s session, with only small adjustments occurring in this morning’s trading activity. We’re not sure this degree of relief is justified. Taken in combination with this week’s producer and import price data releases, it looks as if underlying inflation is stabilising just below the 3-percent level—well above pre-pandemic averages—with the...

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