Daily Comments

The BOJ made no change to its ultraloose monetary policy. China reported Q4 growth above expectations. Asian markets were mixed. After a +0.74% gain on Monday, the Nikkei 225 fell -0.27% today. The Shanghai Composite gained +0.58% on Monday and added +0.80% today. European markets all closed lower. The DAX index rose +0.32% on Monday but fell -0.85% today. 10-year bunds yield -0.016%. The January Empire State Manufacturing Index shocked with a print of -0.7, representing contraction, and this vs. expectations of +25. This is the 3rd largest MoM decline in history. The NAHB Home Builders Index printed at 83 vs. 84 exp. Shares of GS sank -8% on an earnings miss, contributing to 100 pts of DJIA losses. 10-year Note yields surged to 1.877%, the highest level since Nov. of 2018. The March US$ Index continued upwards, adding +0.68, ending at 95.800. February Crude jumped to a 7-yr high on an attack in Abu Dhabi, ending at $85.43. February Gold dipped -0.2% to $1,812.40. In the overnight session, the bears took over, and through regular trading hours they remained fully in charge. Higher 10-year yields and earnings misses by financial giants, kept prices down all day.

South Korea’s central bank raised its benchmark rate by 25 basis points. For December, China’s exports grew faster than expected while imports grew at a slower than expected pace. Asian markets were lower. The Nikkei 225 fell -1.28% and the Shanghai Composite lost -0.96%. European markets fell. The DAX index lost -0.93%. 10-year bunds yield -0.037%. Nov Business Inventories printed at 1.3% vs. est. of 1.1%. Dec Retail Sales slumped -1.9% (ex-vehicles -2.3%), Import Prices dropped -0.2%, Export Prices fell -1.8%. Dec Industrial Production contracted by -0.1% MoM vs. +0.3% expected. The Capacity Utilization rate is 76.5% vs. est. of 77.0%. Prelim Jan UMich Consumer Sentiment fell from 70.6 to 68.8 vs. 70.4 expected. Current Conditions are the lowest since Sept. 2011, and 61% say that bad times are ahead. Inflation expectations rose to 3.1%, the highest since Jan. 2011. Baker-Hughes reported the U.S. rig count for 01/14 at 792. 10-year Notes yield 1.784%. The March US$ Index jumped +0.39% to 95.140. February Crude gained +2.1% to $83.82. February Gold lost -0.30% to end at $1,816.50. Overnight the ES fell 40. During the day bulls fought back, with prices ending marginally higher.

The World Health Organization reported 15M new cases of Covid-19 for a single week, fueled by the omicron surge. Asian markets were mostly lower. The Nikkei 225 slipped -0.96% and the Shanghai Composite fell -1.17%. European markets were mixed. The DAX index edged up +0.13%. 10-year bunds yield -0.094%. Initial Claims for the week of 01/08 moved up to a seasonally adjusted 230K vs. 200K expected. The Dec PPI rose for the 20th consecutive month, up +0.2% vs. consensus of +0.4%. On a YoY basis the PPI was up +9.7% (a record high) vs. +9.8% expected. PPI ex-food and energy gained +0.5% MoM as expected, and +8.3% YoY vs. +8.0% expected. 10-year Notes yield 1.699%. The March US$ Index dipped -0.04% to 94.860. February Crude fell -0.60% to $82.12. February Gold lost -0.30% to $1,821.40. Ahead of the open, the ES was mostly stronger. After the opening bell, prices briefly edged still higher, then quickly reversed to fall into the red. There were a few short-lived attempts by the bulls to drive prices back into positive ground, but bears continued to press. In the last hour, equity prices across the board began a downwards acceleration, with the ES closing deeply red, near session lows.