MARKET WRAPS

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No major economic updates expected; trading updates for JD Sports, Persimmon, OMV

Opening Call:

European stock futures were higher, after Asia stocks were mixed. The dollar and Treasury yields held steady. Gold rose and oil fell.

Equities:

European futures pointed to a higher open as ahead of the release of U.S. producer-price index, the first of a pair of highly anticipated inflation reports, with markets on edge and traders betting on little-to-no easing by the Federal Reserve in 2025.

Ongoing U.S. economic strength has come hand-in-hand with above-target inflation, and markets have moved to sharply reduce the degree of Fed easing expected this year.

"All eyes are on PPI and CPI this week as the market's focus shifted from growth to inflation," said BofA Securities strategists.

"While hotter prints could put further pressure on equities, we believe the blowout [jobs report] increases how much inflation equities can withstand, especially after last week's selloff," BOFA analysts said.

Forex:

The dollar continued to hold ground as investors closely monitored the trajectory of major central banks across the world, notably the Bank of Japan Deputy Gov. Himino refraining from hinting at the likelihood of a rate hike in its January meeting.

"Dollar strength has been marked over the last few weeks," Morgan Stanley said in a report.

"Foreign exchange movements lead to complicated dynamics for other central banks," the bank said.

Its analysts forecast the European Central Bank to cut rates in January and March "to a level the Council sees as essentially neutral." That view is a bit faster than market expectations, they added.

Morgan Stanley noted that wage growth will be a key data point, pointing to similar forecasts for the Bank of England.

Bonds:

The yield on 10-year Treasurys were flat, while maintaining at elevated levels on a hotter-than-expected U.S. jobs report.

"Yields have already risen above levels seen in past non-recessionary cycles," the bank said.

"Given the extent of the repricing already seen, we believe the skew of outcomes favors modestly lower bond yields from here," a view that the investment strategy group said is reinforced by its expectation the Fed may deliver more interest-rate cuts than the market has priced as the central bank aims to find the neutral level for its policy rate.

Energy:

Oil edged lower, slightly paring back gains after the U.S. imposed sanctions on Russia's energy industry.

"The underlying assumption behind our analysis remains that Trump, like Biden, would prefer to keep oil prices low and avoid potential inflation catalysts," J.P. Morgan strategist Natasha Kaneva wrote.

Even if the sanctions are effective, OPEC and its allies, known as OPEC+, could easily ramp up production to fill the gaps.

Metals:

Gold edged higher on a possible technical recovery after the front-month gold contract closed down 1.3% on Monday.

The precious metal's overnight drop was mainly influenced by a strengthening dollar and rising Treasury yields, XTB MENA's Hani Abuagla said.

The broader outlook for the precious metal may stay favorable, the senior market analyst added.

"Gold could continue to benefit from sustained geopolitical uncertainties and steady central bank demand," Abuagla said.

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"A decoupling appears to be emerging between base metals and the dollar, which traditionally exhibits a strong negative correlation," said Daria Efanova, head of research at Sucden Financial.

"If copper gains above the $9,200/t level, we expect that more market participants will rejoin the market, leading to further price increases, " she added.


TODAY'S TOP HEADLINES

Producer Inflation Expected to Stay Stubbornly High

The first of a pair highly anticipated inflation reports will land on Tuesday, with markets on edge and traders betting on little-to-no easing by the Federal Reserve in 2025.

With a solid economic and labor market backdrop, policymakers will need to see progress resume on slowing inflation to resume their interest-rate cuts. And that's far from a sure bet these days.


The 10-year Treasury yield is nearing 5% again. Why stock-market investors are freaking out.

Just days into the new year, a sharp selloff in the world's largest bond market has already sent shockwaves among financial-market investors.

U.S. Treasury yields have soared over the past week, propelling the rate on the 10-year note BX:TMUBMUSD10Y to the brink of the 5% mark rarely seen since the global financial crisis.


Germany Puzzles at Elon Musk's Embrace of Its AfD Populists

BERLIN-During Elon Musk's freewheeling conversation with the leader of a far-right German party last week, spanning Hitler, multiplanetary civilizations and the existence of god, the billionaire tech entrepreneur insisted that the Alternative for Germany was moderate.

"Hopefully, people can tell just from this conversation, like nothing outrageous is being proposed, just common sense," he said, during their live discussion on his X social-media platform.


Israel, Hamas on Verge of Deal for Gaza Cease-Fire

Israel and Hamas are on the brink of a cease-fire deal, President Biden said Monday, moving closer to bridging a fundamental divide: Israel wants its hostages back and then continue the war, while Hamas doesn't want to release captives without ending the war.

Arab mediators and Israeli officials say there has been progress ahead of President-elect Trump taking office next Monday. Under the first stage of the deal being discussed, Hamas would release up to 33 hostages in exchange for Israel releasing Palestinian prisoners and a pause in fighting, Israeli and Arab officials said.


Jamie Dimon Wants to Take JPMorgan Chase to Germany and Beyond

Jamie Dimon is taking JPMorgan Chase on a big adventure.

The long-serving CEO, heading into what he says is his final chapter as chief executive, has set his sights on a major territorial expansion: building a sprawling digital-focused consumer bank outside the U.S.


Israel Defies Expectations With Surge in Tech Funding Despite War

TEL AVIV-As the war against Hamas dragged into 2024, there were worries here that investment would dry up in Israel's globally important technology sector, as much of the world became angry against the casualties in Gaza and recoiled at the unstable security situation.

In fact, a new survey found investment into Israeli technology startups grew 28% last year to $10.6 billion. The influx buoyed Israel's economy and helped it maintain a war footing on several battlefronts.


TikTok Refugees Find an Alternative-in China

They call themselves TikTok refugees-and the app they are fleeing to is a lot more Chinese than the video-sharing app whose U.S. fate now hangs in the balance.

After Supreme Court justices Friday seemed inclined to let stand a law that would shut down TikTok in the U.S., the Chinese social-media platform Xiaohongshu, translated in English as Little Red Book, received a flood of American TikTok users. They are looking for a sanctuary or a way to protest the potentially imminent TikTok ban-never mind that they don't speak Chinese.


Write to singaporeeditors@dowjones.com


Expected Major Events for Tuesday

00:01/UK: Dec UK Nations and Regions Growth Tracker

05:30/NED: Dec CPI

06:00/FIN: Dec CPI

07:00/ROM: Dec CPI

07:30/HUN: Dec CPI

09:00/EU: Dec Long term interest rates statistics

09:00/ITA: Nov Industrial Production

09:00/POL: Nov Merchandise trade

15:59/UKR: Nov Trade

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This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

01-14-25 0015ET