Markets Overview
- ASX SPI 200 futures little changed at 8,786.00
- S&P 500 down 0.3% to 6,952.88
- Dow Average down 0.8% to 49,192.14
- Aussie down 0.4% to 0.6682 per US$
- US 10-year yield little changed at 4.1693%
- Australia 3-year bond yield rose 0.8 bps to 4.11%
- Australia 10-year bond yield rose 0.5 bps to 4.71%
- Gold spot little changed at $4,598.70
- Brent futures up 2.5% to $65.45/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$1 Billion 4.25% 2036 Bonds on Jan. 14
- 11:30: (AU) Nov. Job Vacancies QoQ, prior -2.7%
Wall Street traders sent stocks lower as inflation data failed to alter bets on a pause in Federal Reserve rate cuts while JPMorgan Chase & Co. led a slide in banks after its results. Bonds wavered. The dollar rose.
Signs that price pressures are gradually abating gave a degree of comfort to investors in the immediate aftermath of the data, but the moves across asset classes waned as the session progressed. The S&P 500 fell from a record. JPMorgan sank 4.2% as investment-banking fees missed the guidance, with revenue from both underwriting and advising on mergers dropping.
Not even a slower-than-expected increase in the core consumer price index was able to sustain the advance in Treasuries that followed the data. After Fed Chair Jerome Powell and his colleagues deployed three rate cuts since September, money markets continued to project the next reduction only in mid-2026.
“The initial excitement sparked by a cooler-than-anticipated core CPI was short-lived,” said Jose Torres at Interactive Brokers. “The reversal was influenced, in part, by the report’s failure to pull forward the next expected rate reduction from June to April, as fixed-income watchers project Powell’s December cut will be his last at the helm.”
With low unemployment, growth running above trend, fiscal stimulus providing an offset, and inflation remaining above target, the Fed can comfortably keep rates on hold this month and likely over the next few meetings, noted Seema Shah at Principal Asset Management. But as inflation concerns ease, the Fed is likely to shift towards a stance where one or two more cuts can be justified.
“As a cooling jobs environment persists, inflation may not be as much of a constraint when it comes to interest rate policy,” said Bret Kenwell at eToro. “However, the report should do little to rock the boat for equity investors, who are likely to turn their attention to the start of earnings season.”
Following JPMorgan’s results Tuesday, earnings from megabank rivals Bank of America Corp., Wells Fargo & Co, Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley are slated for Wednesday and Thursday. The group is expected to post its second-highest annual profit ever, boosted by President Donald Trump’s policy changes.
Traders are also mindful of the potential for a US Supreme Court ruling Wednesday on tariffs the White House has been enforcing this year. An adverse ruling could draw a negative market reaction, even as the administration has alternative legal avenues for most of the levies.
The S&P 500 fell to around 6,965. The yield on 10-year Treasuries was little changed at 4.17%. The dollar rose 0.2%. Oil climbed after Trump amped up rhetoric over Iran.
