Ring Ring its 7am, move yourself to go again

So goes the first week and the year, so they say. I’m unsure how reliable that saying is, although I am sure someone will have done the study. Anyway, this week is looking like being the first week in nine where global indexes will have retreated. The minutes of the Federal Reserve’s last meeting, which was held in November, and therefore before the December PCE reading, confirmed the mood of the committee was rates had peaked, but a tightening bias was to be maintained. Officials “stressed that they would need to see more data indicating that inflation pressures were abating”. Higher for longer was the message still; equities and bonds took a further breather.

Geopolitical risk remains on the agenda as tensions in the Middle East, particularly impacting the shipping of goods, remain. The redirecting of ships away from the Red Sea could have several implications for prices. Firstly, the increased shipping cost is either borne by the client or they try to pass it on to the end customer; supply disruptions could also impact prices, not to mention the risk of rising energy prices. This is at a time when the  Panama Canal is running so dry that the canal authorities are looking at an artificial lake to pump water into it.

Later today, we get the first real piece of data for the year that could further influence interest rate sentiment and US payrolls. On Thursday, continuing claims data fell, signaling that individuals have an easier time finding new employment.  In the past few months, stock markets have been comforted by falling job openings, as this has been taken as a further indication inflationary pressures are easing and the economy is cooling just enough to allow the Fed to start cutting. John Authers, writing for Bloomberg, points out that there has been a correlation in the past between job openings and the stock market’s performance. Recently, this relationship has broken down. Later today, the consensus is for around 170,000 jobs to have been created in December; we also get the latest US wage inflation data. Later today, we will get the monthly inflation data for the euro area after yesterday, when German inflation rose from 2.3% in the previous month to 3.8% in December.

This will have been quiet on the trading floors, as it feels that most people have had an extended break. As the Magnificent Seven continued to struggle at the start of the year, one fund manager survey suggested that Apple may be the most popular phone amongst users, but it’s the least favored of that group by investment managers. The most favored is Amazon. It feels like more froth has yet to come out before the next run at the peaks can take place.