Daily Market Roundup

North America News

S&P 500 Falls Just Short of Record, Nasdaq Ends Week Higher

The U.S. stock market closed mixed on Friday, as the Dow Jones Industrial Average declined, while the S&P 500 remained flat, and the Nasdaq finished higher. Despite the uneven session, all three major indices ended the week in positive territory.

The S&P 500 came within four points of setting a new record closing high but ultimately failed to break through. Meanwhile, Meta extended its winning streak to 20 consecutive sessions, and Dell surged on AI-related news.

Market Snapshot: Friday’s Closing Numbers

• Dow Jones Industrial Average: -165.35 points (-0.37%) at 44,546.08
• S&P 500: -0.44 points (-0.01%) at 6,114.63 (just below its all-time closing high of 6,118)
• Nasdaq Composite: +81.13 points (+0.41%) at 20,026.77
• Russell 2000: -2.02 points (-0.10%) at 2,279.98

Key Stock Movers

✔ Meta (META): Continued its impressive 20-day winning streak, rising $8.11 (+1.11%) to $736.67.
✔ Dell Technologies (DELL): Jumped $4.12 (+3.74%) to $114.38, following reports that it is close to selling $5 billion worth of AI computers to Elon Musk’s xAI.

Weekly Performance: All Major Indices Rise

• Dow Jones: +0.55%
• S&P 500: +1.47%
• Nasdaq Composite: +2.58%

Despite Friday’s mixed finish, the broader market continues its upward momentum, fueled by strong earnings, AI-related optimism, and investor confidence in Fed rate cuts later this year.

The Atlanta Fed GDPNow growth estimate for Q1 lower to 2.3% from 2.9% last

Lower retail sales, employment, and Fed governors sentiment cited for the decline

The Atlanta Fed GDPNow forecast for Q1 2025 was subsequently revised down to 2.3% from 2.9%, with the retail slump being a major contributor to the revision.

In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is 2.3 percent on February 14, down from 2.9 percent on February 7. After recent releases from the US Census Bureau, the US Bureau of Labor Statistics, and the Federal Reserve Board of Governors, the nowcasts of first-quarter real personal consumption expenditures growth and real gross private domestic investment growth fell from 2.8 percent and 6.2 percent, respectively, to 2.3 percent and 4.9 percent.

US Retail Sales Plunge in January, Raising Concerns for Q1 GDP

The latest US retail sales data for January 2025 showed a sharp decline of -0.9%, significantly missing economists’ expectations of a modest -0.1% drop. This unexpected contraction suggests that consumer spending may be weakening, a key concern as the US economy enters the first quarter of the year.

With the control group sales—a critical metric for GDP calculations—falling by -0.8% against an expected +0.3% increase, analysts anticipate downward revisions to Q1 GDP forecasts.

Key Retail Sales Figures for January 2025

The control group, which excludes autos, gasoline, and building materials, is considered a more stable measure of core consumer demand. Its sharp decline raises red flags for economic growth prospects in early 2025.

Sector Breakdown: Weakness Across Key Categories

Retail sales declined broadly across multiple categories, with motor vehicles, home furnishings, electronics, and discretionary spending experiencing the most significant drops.

Categories with the Sharpest Declines

• Motor Vehicles & Parts Dealers: -2.8%
• Auto & Other Motor Vehicle Dealers: -3.0%
• Furniture & Home Furnishings: -1.7%
• Electronics & Appliances: -0.7%
• Building Materials & Garden Supplies: -1.3%
• Sporting Goods, Hobby & Book Stores: -4.6%
• Nonstore (Online) Retailers: -1.9%

Categories Showing Resilience

• Gasoline Stations: +0.9%
• General Merchandise Stores: +0.5%
• Department Stores: +0.8%
• Food Services & Drinking Places: +0.9%

Notably, grocery stores managed a small 0.2% gain, suggesting that essential spending remained stable. However, categories dependent on big-ticket purchases and discretionary spending saw notable pullbacks.

Economic Implications: Consumer Spending Concerns Mount

1. Weaker Consumer Spending Could Drag Down Q1 GDP

The steep drop in retail sales raises concerns about overall consumer demand—a major driver of US GDP growth. The control group’s -0.8% decline is particularly concerning, as it directly impacts GDP estimates.

2. High Interest Rates and Inflation May Be Weighing on Consumers

Persistent inflation pressures and high borrowing costs may be dampening consumer enthusiasm, especially for big-ticket items like cars, furniture, and electronics.

3. Will the Federal Reserve Adjust Policy?

The Fed has been balancing inflation control and economic growth. If weak retail sales persist into February and March, the central bank may reassess its stance on interest rates sooner than anticipated.

4. Market Reaction: Lower Retail Sales = Lower Growth Expectations

Stock market futures showed a muted reaction immediately after the report, but bond yields edged lower, signaling that investors see potential economic slowing ahead.

Looking Ahead: Key Questions for February and Beyond

1. Will consumer spending rebound in February, or is this a longer-term trend?
2. How will weaker retail sales impact upcoming corporate earnings reports?
3. Will the Fed adjust its policy based on slowing economic activity?
4. How will GDP forecasts for Q1 be revised in response to this data?

With inflation concerns, high interest rates, and macroeconomic uncertainty, February retail sales data will be critical in determining whether January was an outlier or the start of a prolonged slowdown in consumer demand.

US Import and Export Prices Rise in January 2025, Export Prices See Biggest Jump Since 2022

The latest US import and export price data for January 2025 showed a mixed inflationary picture, with import prices rising modestly while export prices surged significantly past expectations.

• Import Prices: +0.3% MoM (vs. +0.4% expected)
• Export Prices: +1.3% MoM (vs. +0.3% expected) 🔺 Biggest monthly increase since May 2022
• Import Prices YoY: +1.9% (vs. +2.3% last month)
• Export Prices YoY: +2.7% (largest 12-month rise since December 2022)

Key Insights: What’s Driving the Price Changes?

1. Import Prices Rise Modestly, Easing from December’s Revised Gain

• Monthly import prices increased by +0.3%, slightly below the expected +0.4%.
• The prior month’s data was revised up to +0.5% from +0.3%, marking a stronger-than-initially reported December increase.
• On a year-over-year basis, import prices are up +1.9%, cooling slightly from December’s +2.3% YoY gain.
• January’s increase was the largest one-month rise since April 2024, suggesting that import inflation is still present but not accelerating dramatically.

2. Export Prices Surge: Biggest Monthly Gain in Over Two Years

• Export prices soared by +1.3%, far exceeding the +0.3% forecast.
• This marks the largest monthly increase since May 2022, when export prices jumped +2.7%.
• Export prices have now risen for five consecutive months, last declining in September 2024.
• Year-over-year, export prices are up +2.7%, marking the largest 12-month increase since December 2022.

3. Why Are Export Prices Rising Faster Than Import Prices?

• Weaker US Dollar: A softer dollar makes US exports more competitive abroad, allowing exporters to raise prices.
• Strong Demand for US Goods: Key US export categories, including agricultural products, industrial materials, and capital goods, have seen increased demand from global buyers.
• Global Inflation Trends: As other economies continue to experience inflationary pressures, demand for US goods remains robust.

Economic Implications: Inflation & Trade Dynamics

1. Fed’s Inflation Watch: Could Rising Prices Influence Rate Policy?

• The Federal Reserve has closely monitored inflationary pressures to determine its next rate moves.
• While import price growth remains modest, the surge in export prices could fuel inflationary pressures and increase costs for foreign buyers of US goods.
• If export prices continue to rise sharply, it could contribute to overall inflation and complicate the Fed’s decision on rate cuts in 2025.

2. Trade Balance Considerations: Higher Exports vs. Costlier Imports

• A rise in export prices can be positive for US trade dynamics if demand remains strong.
• However, higher import prices could pressure domestic companies relying on foreign goods, especially in manufacturing and retail sectors.

3. Consumer & Business Impact: Will Higher Prices Feed Through to Inflation?

• While import price growth is cooling, export price increases could contribute to overall inflationary pressures.
• Businesses relying on imported raw materials could see cost increases, but a stronger export market could boost economic growth.

Looking Ahead: Key Questions for February and Beyond

🔹 Will export prices continue their rapid rise, or is this a one-off spike?
🔹 How will the Fed react to trade-driven inflationary pressures?
🔹 Will import price growth remain moderate, or are further increases coming?
🔹 How will global demand for US goods shift amid economic uncertainty?

With import price inflation easing but export prices surging, analysts will closely watch upcoming inflation data, trade figures, and Federal Reserve statements to gauge how this trend develops in early 2025.

US industrial production for January 0.5% versus 0.3% estimate

• US industrial production capacity utilization for January 2025

Prior month:

• Industrial production prior month +0.9% revised twos 1.0%
• Capacity utilization prior month 77.6% revised lower to 77.5%
• Manufacturing output month on month prior month 0.6% revised lower to 0.5%

for the current month:

• Industrial production 0.5% versus 0.3% estimate. 3rd positive read in a row.
• Capacity utilization. 77.8% versus 77.7% estimate. Highest level since August 2024.
• Manufacturing output -0.1% versus +0.1% estimate.

US business inventories for December -0.2% versus 0.0% estimate

• US business inventories for the month December 2024

• Prior month 0.1%
• Business inventories for December -0.2% versus 0.0% estimate
• Retail inventories ex auto -0.1% versus 0.2% last month

Meta planning on major advancement in AI powered humanoid robots

• Bloomberg is reporting

Bloomberg is reporting that Meta is planning a major investment into AI humanoid robots. That is in competition with Elon Musk who is also big on robots.

They also report that they are hiring RealReal CEO to boost sales of AI wearables (which seems to be a move against Apple).

Meta Platforms (META) announce quarterly dividend of $0.525 per share (prior $0.50)

• That’s a 5% jump for the dividend from the Facebook firm

Meta Platforms (META) quarterly dividend of $0.525 per share (prior $0.50 per share)

• payable March 26

The Fed’s preferred inflation measure is PCE – here are estimates from 13 investment banks

• PCE data is due on February 28

Via Nick Timiraos at the Wall Street Journal:

The data is not until the end of this month, February 28. 

Fed Logan (voting in 26): Next couple of months of inflation will be pretty important

• Fed Lorie Logan is speaking

• The next couple of points of inflation will be pretty important.
• Even if get better data on inflation, should be cautious on rates
• if labor market stays stronger, better inflation data doesn’t necessarily mean Fed can cut.
• Also focused on geopolitical, policy changes.
• We are taking our time to see how these affect economy.
• There is a lot of optimism among Texas banks on loan demand, economic growth.
• Need tailoring of banking regulation, based on size as well as risk profile
• Critically important that every bank is set up to use the Fed’s discount window.
• Still are some banks that are not signed up to discount window, still some that have not tested it.
• Some of the increase in longer-term rates came from expectations from stronger economic growth, expectation Fed policy rate will stay high for longer.
• Level of long rate is a key factor in assessing financial conditions
• We will lower rates further if we need, that’s not where we are right now.
• Right now the focus is on restoring 2% inflation.

TSMC is receptive to Intel factory deal

• TSMC considers teaming up with Intel to run US factories. Shares fluctuate on potential deal news.

TSMC is reportedly interested in an Intel factory deal.

The company is weighing taking a controlling stake in partnership and considering operating US Intel factories after a request from US President Trump.

Other tech firms may also take a stake in possible deal.

Intel is currently without a CEO after the former CEO Pat Gelsinger was ousting back in December. At the time Frank Yeary, Intel Board chair said that “We are working to create a leaner, simpler, more agile Intel,”.

A deal like this would be a simpler, more agile Intel.

Shares of Intel traded as high as $25.19 shortly after the open today, but then fell to a low of $22.86. The price spiked to $24.50 on the news headlines but has since moved down to $23.73 currently.

Goldman Sachs: Trump’s Trade Strategy Signals Potential Tariffs and Negotiation Leverage

• Goldman Sachs on the reciprocal tariff plan

Goldman Sachs analysts indicate that President Trump’s “Fair and Reciprocal Plan” could reshape U.S. trade policies, aligning tariffs, taxes, and non-tariff barriers with those of major trading partners. The firm cites a memo suggesting that while no firm deadline has been set, the administration expects to unveil the plan between April and August. Analysts view the extended timeline as a potential signal aimed at encouraging trade negotiations.

The investment bank maintains its outlook, forecasting another 10% tariff on Chinese imports and additional duties on key sectors such as semiconductors, pharmaceuticals, and automobiles from the European Union. Although a broad reciprocal tariff policy remains unlikely, Goldman Sachs notes that a narrower version could emerge, targeting select trading partners later this year.

According to the report, Trump’s trade strategy appears to be a tactical effort to apply pressure on trading partners while maintaining flexibility for negotiation, reflecting ongoing U.S. trade policy trends.

Navarro says German auto tariffs are grossly unfair

• Navarro is a Trump trade adviser, speaking on Bloomberg TV:

• German auto tariffs are grossly unfair
• Tariffs will be an important part of defending the US
• Steel, aluminium tariffs are not going away

TikTok has returned to US app stores – Apple and Google

• Follows a letter from the Trump admin

Google Play said it restored TikTok to the US app store on Thursday.

Apple also. This follows a letter from the Trump admin. Trump earlier issued a decree delaying the enactment of a ban on the social media platform.

Canadian Consumer Spending Declines in January 2025 – RBC Report

Key Takeaways from the RBC Canadian Consumer Spending Tracker:
📉 Retail sales (excluding autos) declined in January, both in nominal and inflation-adjusted terms.
📉 Discretionary goods spending dropped, likely due to a post-holiday pullback in shopping.
📉 Discretionary services, which had been resilient, showed weak growth, particularly in accommodation and food services.
📉 Restaurant reservations fell 1.2% MoM (seasonally adjusted), indicating softer consumer demand.
📈 Home-related spending increased, hinting at a potential lift in the housing market.

Insights from the RBC Chart: Consumer Trends by Category

The RBC chart visually reflects consumer spending trends since late 2022, highlighting shifts in discretionary goods, discretionary services, and essential spending:

1. Discretionary Goods (Blue Line)
   • Spending on discretionary goods declined sharply in January after the holiday season.
   • This category had remained volatile over the past year, showing brief peaks but overall stagnation.
   • January’s drop aligns with seasonal post-holiday declines as consumers focus more on essentials.
2. Discretionary Services (Yellow Line)
   • This category saw steady growth throughout 2023 and into 2024.
   • However, January saw a slowdown in growth, likely influenced by weaker demand in travel, entertainment, and dining.
   • Despite this dip, discretionary services remain on an upward trend overall.
3. Essential Spending (Dotted Black Line at ~100 Index Level)
   • Essential spending has remained relatively stable since late 2022.
   • This suggests that necessities continue to see steady demand, unaffected by seasonal fluctuations.

Economic Implications & Consumer Outlook

💰 Consumers appear to be tightening spending on non-essential goods and services, likely due to:

• Higher interest rates and inflation pressures.
• Post-holiday budget constraints.
• Weaker sentiment regarding economic conditions.

🏠 The uptick in home-related spending could indicate renewed interest in the housing market, potentially driven by:

• Lower mortgage rate expectations.
• Home renovation investments.

📉 Overall, the weaker discretionary spending trends may weigh on economic growth in Q1 2025, unless a rebound occurs in February and March.

BOC senior loan officer survey for Q4: -1.89% versus +1.71% prior

• Worsening conditions for business lending

This is a lower-tier indicator but something the Bank of Canada is watching.

• Business lending conditions fell to -1.89% versus +1.71% in Q3
• Mortgage lending conditions -10.39% versus -2.86% in the third quarter
• Non-mortgage lending conditions -1.2% versus -1.53% in the third quarter

Canada manufacturing sales for December 0.3% vs 0.7% expected

• Canada manufacturing sales and wholesale trade
• Prior month 0.8%
• Wholesale trade for December -0.2% vs 0.2% expected
• Prior month -0.2%

Manufacturing sales increased for the third consecutive month, rising 0.3% to $71.4 billion in December, with gains in 12 of 21 subsectors. Higher sales of petroleum and coal (+3.4%), food products (+1.9%), and primary metals (+3.9%) were partially offset by a 5.0% decline in motor vehicle sales. Compared to December 2023, total sales were 0.3% higher.

On a quarterly basis, sales rose 1.6% to $213.3 billion in the fourth quarter of 2024, following four consecutive quarterly declines. The transportation equipment (+3.3%) and wood product (+10.0%) subsectors contributed the most to the quarterly increase.

Commodities News

Gold Slips Below $2,900 as Traders Lock in Profits, but Weekly Gains Hold

Gold prices fell sharply on Friday, dropping below $2,900 as traders took profits after a strong week. Despite this, gold remains up 0.80% for the week, supported by weak U.S. retail sales, a softer U.S. dollar, and lower Treasury yields.

As of Friday, gold is trading at $2,883, down 1.48% on the day. However, expectations of multiple Federal Reserve rate cuts in 2025 have helped sustain the precious metal’s longer-term bullish outlook.

Key Drivers Behind Gold’s Decline

1️⃣ Weak U.S. Retail Sales and Dollar Decline

• U.S. retail sales plunged by -0.9% in January, far worse than the expected -0.1% drop.
• The U.S. dollar weakened as a result, touching new yearly lows, making gold relatively cheaper for foreign investors.
• Despite this, gold prices fell as traders locked in profits after the metal approached a key psychological level.

2️⃣ Central Bank Gold Purchases Remain Strong

• The World Gold Council (WGC) reported that central banks purchased over 1,000 tons of gold for the third consecutive year in 2024.
• Following Trump’s election victory, demand surged 54% year-over-year, with banks accumulating 333 tons of gold.
• This highlights sustained long-term demand, even as short-term volatility persists.

3️⃣ Market Expectations for Fed Rate Cuts

• Investors are now pricing in over one Fed rate cut in 2025, with 38.5 basis points of easing expected.
• Lower interest rates reduce the opportunity cost of holding gold, boosting its appeal as a safe-haven asset.

Gold’s Outlook: Short-Term Pullback or Long-Term Strength?

While gold faced a sharp drop on Friday, its weekly performance remains strong, signaling continued investor interest. The combination of weak U.S. economic data, a dovish Fed outlook, and central bank demand suggests that gold could regain strength in the coming weeks.

Baker Hughes rig count little changed in the current week

• Total oil rigs up one in the current week

The weekly Baker Hughes rig count data showed small increases in oil and gas rigs:

• Oil rigs rose 1 to 481.
• Natural gas rose 1 to 101
• Total rigs up 2 at 588

Citi project Brent crude oil prices to average between $60 and $65 during second half 2025

• Citi eyeing less geopolitical tension, improved supply

Citi Research on how a resolution to the Russia-Ukraine conflict could influence global oil markets.

The firm indicates that shorter oil tanker routes following a resolution would ease market tightness, adding to the impact of any supply returning from the region. Improved logistics could lower transportation costs and enhance crude delivery efficiency.

Citi projects Brent crude oil prices to average between $60 and $65 per barrel during the second half of 2025. This forecast reflects expectations of market adjustments stemming from more efficient supply routes and increased geopolitical stability.

Additionally, Citi highlights that non-OPEC+ supply growth is expected to exceed weak global demand growth from the second to the fourth quarter of 2025. The soft demand outlook is partially attributed to the lingering effects of tariffs, which continue to suppress economic activity and energy consumption.

Overall, Citi’s outlook suggests that supply-side dynamics, driven by geopolitical shifts and increased non-OPEC+ production, will be key factors shaping oil market trends through 2025.

Info on Citi’s outlook comes via Reuters.

Europe News

European Markets End Mixed as DAX Retreats from Record High

European stock markets closed mixed on the day, as Germany’s DAX pulled back by 0.57% after reaching an all-time high in the previous session. The UK’s FTSE 100 also slipped 0.37%, while France’s CAC 40 and Italy’s FTSE MIB eked out small gains.

Daily Performance Snapshot

• Germany’s DAX: 🔻 -0.57%
• France’s CAC 40: 🔺 +0.18%
• UK’s FTSE 100: 🔻 -0.37%
• Spain’s Ibex: 🔺 +0.15%
• Italy’s FTSE MIB: 🔺 +0.18%

Despite the daily pullback, European equities maintained their positive momentum for the week.

Weekly Performance Overview

• Germany’s DAX: 🔺 +3.19% (sixth consecutive weekly gain)
• France’s CAC 40: 🔺 +2.58% (sixth consecutive weekly gain)
• UK’s FTSE 100: 🔺 +0.37% (third consecutive weekly gain)
• Spain’s Ibex: 🔺 +2.10% (eight consecutive weeks of gains)
• Italy’s FTSE MIB: 🔺 +2.49% (third consecutive weekly gain)

Strong Start to 2025 for European Markets

On a year-to-date basis, European indices are outperforming, with all major markets except the UK’s FTSE 100 posting double-digit gains:

• Germany’s DAX: +12.93%
• France’s CAC 40: +10.81%
• Spain’s Ibex: +11.74%
• Italy’s FTSE MIB: +11.09%
• UK’s FTSE 100: +6.84%

Market Outlook

The continued strength in European equities suggests resilient investor sentiment, though today’s mixed close highlights some profit-taking after recent record highs. The DAX’s pullback was expected after its record-setting rally, and traders will be watching closely for further consolidation or a potential continuation of the bullish trend.

Eurozone Q4 preliminary GDP +0.1% vs 0.0% q/q expected

• Latest data released by Eurostat – 14 February 2025
• Prior +0.4%

The euro area economy grew marginally in the final quarter of last year, a touch better than first estimated at least. Still, it points to rather tepid growth in the closing stages with Germany continuing to be a key drag. Here’s the breakdown by each member state:

Germany January wholesale price index +0.9% vs +0.1% m/m prior

• Latest data released by Destatis – 14 February 2025
• Prior +0.1%

Compared to January last year, wholesale prices are also seen 0.9% higher year-on-year. The main reason for that is due to an increase in prices for non-ferrous ores, non-ferrous metals and semi-finished products made from them (+24.4%).

Spain January final CPI +2.9% vs +3.0% y/y prelim

• Latest data released by INE – 14 February 2025

• Prior +2.8%
• HICP +2.9% vs +2.9% y/y prelim
• Prior +2.8%

Switzerland January producer and import prices +0.1% vs 0.0% m/m prior

• Latest data released by the Federal Statistics Office – 14 February 2025

The breakdown shows that producer prices increased by 0.1% on the month while import prices increased by 0.2% on the month. Relative to a year ago, producer and import prices are seen down 0.3% compared to January 2024.

EU says Trump’s reciprocal tariffs are a step in the wrong direction

• The European Commission is out with an opening salvo of commentary in response to Trump

• EU remains committed to an open and predictable global trading system that benefits everyone
• EU will react firmly and immediately against unjustified barriers to free and fair trade

Goldman Sachs scenario for 2025 TTF 36%-56% below their 50 eur/mwh base case

• Goldman Sachs

Goldman Sachs:

• If Russia gas flows through Ukraine returned to pre-war levels, they would expect summer 2025 TTF 36%-56% below their 50 eur/mwh base case

GS info via Reuters.

Swiss National Bank’s Tschudin says policy choices include FX intervention, negative rates

• Swiss National Bank (SNB) board member Petra Tschudin dropping hints on a likely rate cut ahead.

The Swiss National Bank (SNB) remains committed to price stability, with inflation targeted between 0% and 2%, despite recent leadership changes, according to board member Petra Tschudin. She emphasized that the SNB’s tools and policies remain unchanged under new Chairman Martin Schlegel, who succeeded Thomas Jordan last year.

Tschudin highlighted that while inflation may temporarily fall outside the target range, the medium-term outlook is what matters most. She reaffirmed that the SNB’s policy toolkit includes foreign exchange interventions and, if necessary, negative interest rates—a tool the bank used from 2014 to 2022. Negative rates could help manage interest rate differentials and prevent excessive appreciation of the Swiss franc, which could lower inflation and harm exporters.

Asia-Pacific & World News

China January M2 money supply +7.0% vs +7.2% y/y expected

• Latest November credit data for January 2025 has been released

• Prior +7.3%
• New yuan loans ¥5.13 trillion vs ¥4.50 trillion expected
• Prior ¥990 billion

That’s sending a message as new yuan loans surge higher to start the new year. But that tends to be typical going into the Chinese New Year seasonal period. In any case, the big number to watch out for will be ¥18.1 trillion. That’s the total for new yuan loans in 2024.

China president Xi set to chair symposium with business leaders next week – report

• Reuters reports, citing three people with knowledge of the meeting

The point of the symposium is said to discuss ways to boost private sector sentiment. The meet will also include Alibaba co-founder Jack Ma, Tencent CEO Pony Ma, as well as other Chinese business leaders mostly from the tech sector. It is expected to take place on Monday.

Xi is said to be expected to encourage those in attendance to expand their businesses domestically and abroad too.

PBOC sets USD/ CNY reference rate for today at 7.1706 (vs. estimate at 7.2739)

• PBOC CNY reference rate setting for the trading session ahead.

The PBOC has injected 98.5bn yuan in reverse repos via Open Market Operations

• 7 days at an unchanged rate of 1.5%
• 183.7bn yuan mature today
• the net impact is a drain of 85.2bn yuan

Trump – Modi press conference: Strong cooperation with India, Australia, and Japan crucial

• Follows Trump’s meeting with India’s Prime Minister Modi

Headlines via Reuters:

• Trump: We will increase military sales to India
• Trump: We will provide F-35 stealth fighters
• Trump: Strong cooperation with India, Australia, and Japan is crucial to peace
• Trump: We have approved extradition of person related to Mumbai attack
• Trump: India announced reduction of tariffs
• Trump: Modi and I will begin talks on disparities on trade
• Trump: Our goal is to sign agreement
• Trump: We are entitled to a level playing field
• Trump: We can make up deficit with sale of oil and gas
• Trump: Reached agreement on energy
• Trump: We hope to be No.1 supplier to India
• Trump says the U.S. and India will build a great trade route including Italy and Israel.
• Trump says they have agreed to work with India on a trade route with undersea cables and train routes.

Modi now:

• India has set a target to double bilateral trade to USD 500bln by 2030
• India and the US discussed increasing cooperation on small modular nuclear reactors
• The US plays a role in India’s defence preparedness

Trump says India will buy oil from the US

• Trump meeting with India’s Prime Minister Modi

Headlines via Reuters so far:

• Trump: India will be purchasing U.S. oil
• Trump: Will discuss trade with Modi
• Modi says he will keep national interest of India supreme, just as Trump keeps U.S. interest supreme
• Modi: Happy that Trump has taken initiative to restore peace in Russia-Ukraine war
• Modi: Firm conviction that Russia and Ukraine have to come to negotiating table
• Trump: Going to make some wonderful trade deals for India

Reserve Bank of Australia expected to cut its cash rate by 25bp on February 18

• Median forecasts project an additional 75 bps of cuts this year

The Reserve Bank of Australia meet on February 17 and 18. The Statement is expected at 2.30pm local time on the 18th:

Reserve Bank of Australia Governor Bullock will hold her press conference an hour later.

Via Reuters poll:

• Reuters poll indicates the Reserve Bank of Australia (RBA) will cut the cash rate to 4.10% on February 18, with 40 of 43 economists predicting a 25 basis point (bps) reduction.
• Median forecasts project an additional 75 bps of cuts this year, lowering the rate to 3.60% by end-2025.
• Easing inflation, which fell to 2.4% (within the RBA’s target), and slowing economic growth support the decision to cut rates.
• Despite moderating inflation, a strong labour market and wage growth reduce the urgency for aggressive cuts.
• Major banks (ANZ, CBA, NAB, Westpac) expect a 25 bps cut on February 18 and between 50-100 bps in total cuts for 2025.
• Over 75% of economists foresee another 25 bps cut in Q2, bringing rates to 3.85%.
• The cash rate is projected to reach 3.60% by September, followed by a pause through early 2026.

Business NZ January Manufacturing PMI 51.4 (vs. prior 45.9)

• That’s a solid jump back into expansion

Business NZ January 2025 Manufacturing PMI moves into expansion for the first time in 23 months, at 51.4

• prior was 46.2, revised up a touch from 45.9
• the long run average is 52.5

BusinessNZ’s Director, Advocacy Catherine Beard:

• “All sub-index values were in expansion during January.”

BNZ’s Senior Economist Doug Steel:

• “it’s a positive start to 2025, with the manufacturing sector shifting out of reverse and into first gear. While the PMI still sits below its long-run average of 52.5, the improvement is welcome news for manufacturers after a very challenging two years”.

New Zealand Food Price Index (FPI) for January 2025: +1.9% m/m (prior +0.1%)

• The FPI is an important indicator of inflation in New Zealand, as food prices account for a significant portion of household expenditure

New Zealand Food Price Index for January 2025 +1.9% m/m … yeah, I did a double-take on that!

• prior +0.1%

Reserve Bank of New Zealand (RBNZ) expected to cut reduce interest rates by 50bp on Feb 19

• Via Reuters poll

The Reserve Bank of New Zealand (RBNZ) meeting is on February 19. The statement is due at 2pm NZ time:

• 0100 GMT
• 2000 US Eastern time

Reuters poll, in brief:

• The Bank is expected to reduce interest rates by 50 basis points (bps) to 3.75% on February 19, according to a Reuters poll.
• Economists forecast an additional 75 bps of cuts this year, totaling 250 bps since August last year.
• The cuts aim to support an economy emerging from recession, with unemployment still rising.
• At 2.2% last quarter, inflation is within the RBNZ’s 1%-3% target range, providing room for rate cuts.
• Thirty-two of 33 economists expect a 50 bps cut, with only one predicting a 25 bps reduction.
• All major banks (ASB, ANZ, BNZ, Kiwibank, and Westpac) project a 50 bps cut.
• 20 of 29 economists anticipate another 50 bps cut in April, with a median forecast of a 25 bps cut in Q3, bringing rates to 3.00% by September.
• 18 of 27 respondents predict rates at 3.00% or lower by year-end, while seven expect 3.25%, and two see 3.50%.
• The total expected rate cuts of 250 bps over 17 months would exceed those by the U.S. Federal Reserve.

Japan chief cabinet secretary Hayashi will respond appropriately to US tariffs

• Reciprocal tariff prospects

Japan chief cabinet secretary Hayashi:

• Will respond appropriately after examining the impact on Japan regarding the plans for reciprocal tariffs from the US

Headline via Reuters

Japan economy minister Akazawa says the weak yen impacts on the real economy

• Japan economy minister Akazawa

• will respond appropriately to US reciprocal tariffs
• the weak yen has a variety of impacts on Japan’s real economy

South Korea’s acting President Choi Sang-mok says lifting of short selling ban is on track

• End-March date is scheduled

South Korea’s acting President Choi Sang-mok announced that authorities will closely monitor financial markets, highlighting concerns over uncertainty driven by U.S. trade policy and global geopolitical tensions.

Choi added that officials plan to engage with market participants as they move forward with lifting the stock short-selling ban, which was introduced in November 2023, by the end of this quarter as scheduled.

Singapore Q4 GDP blasted higher than estimates at 5% y/y (expected 4.7%)

• Singapore MTI says uncertainties in the global economy remain significant
• Singapore Q4 GDP rose 5.0% year-on-year, surpassing analysts’ estimate of 4.7%.
• Singapore Q4 GDP increased 0.5% quarter-on-quarter on a seasonally adjusted basis.
• Singapore MTI reports 2024 GDP growth at 4.4%.
• Singapore MTI maintains 2025 GDP growth forecast at 1.0% to 3.0%.
• Singapore MTI says uncertainties in the global economy remain significant, with risks tilted to the downside.
• Singapore MTI states the external demand outlook for 2025 remains broadly unchanged.
• Singapore MTI highlights that ongoing trade frictions and geopolitical risks could increase production costs in 2025.
• Singapore MTI expects manufacturing and trade-related services sectors to continue expanding in 2025.
• Singapore MTI forecasts that growth in consumer-facing sectors will likely remain lackluster in 2025.

MTI is the Ministry of Trade and Industry

Crypto Market Pulse

Altcoins Surge as XRP, Solana, and Dogecoin Lead Weekly Gains

XRP, Solana (SOL), and Dogecoin (DOGE) posted strong gains on Friday, benefiting from a decline in Bitcoin dominance and growing ETF speculation. While Bitcoin (BTC) remains stable around $97,000, these three altcoins have outperformed, securing gains between 3% and 6%.

Weekly Performance of Leading Altcoins

• XRP: 🔺 +5.91%
• Solana (SOL): 🔺 +2.88%
• Dogecoin (DOGE): 🔺 +3.36%

Over the past seven days, XRP has surged 17%, Dogecoin climbed 12%, and Solana gained 6%, highlighting a broader shift in momentum towards altcoins.

Bitcoin’s Declining Dominance Opens the Door for Altcoins

Historically, when Bitcoin’s dominance declines, altcoins tend to rally. Since February 7, BTC dominance has dropped from 62.27% to 60.48%, creating a favorable environment for alternative cryptocurrencies.

This shift is essential for an “altcoin season”, a phase in which 75% of the top 50 cryptocurrencies outperform Bitcoin over a 90-day period. Currently, the Altcoin Season Index stands at 45, up from 39 earlier in the month. However, it still needs to cross 75 to confirm a full-fledged altcoin season.

ETF Speculation Fuels Altcoin Demand

Much of the recent bullish momentum in XRP, Solana, and Dogecoin has been driven by hype surrounding potential ETF approvals. Analysts James Seyffart and Eric Balchunas from Bloomberg have estimated approval odds for several altcoin-based ETFs in the U.S.:

• Litecoin (LTC): 90%
• Dogecoin (DOGE): 75%
• Solana (SOL): 70%
• XRP: 65%

This ETF optimism has created positive sentiment, drawing investors toward these assets.

Bitcoin Volatility Decline Supports Altcoin Market

Analysts at K33 Research noted that Bitcoin’s six-day volatility has significantly decreased, leading to reduced trading activity in BTC derivatives. With fewer fluctuations in Bitcoin, altcoins have found room to grow as traders seek higher returns in alternative digital assets.

Looking Ahead: Is an Altcoin Season on the Horizon?

Although the market is not yet in a confirmed altcoin season, the combination of Bitcoin’s declining dominance, ETF anticipation, and rising investor interest could set the stage for continued altcoin gains. If these trends persist, XRP, Solana, and Dogecoin may lead the next leg of the crypto rally.

Billions in Bitcoin and Ethereum Options Expire: Market Braces for Volatility

Over $2.5 billion in Bitcoin (BTC) and Ethereum (ETH) options are set to expire today, sparking discussions around potential market volatility. Historically, large-scale options expirations have led to significant price fluctuations, as traders and institutions adjust their positions in response to shifting market conditions.

Bitcoin & Ethereum Options Expiry: Key Market Insights

• According to Deribit, the leading crypto options exchange, Bitcoin’s put-to-call ratio remains below 1, indicating that more traders are betting on price increases rather than declines.
• Ethereum’s options contracts also exhibit a bullish bias, with traders positioning themselves in anticipation of potential price movements.
• The max pain price—the level where the most options expire worthless—is significantly below key psychological levels for both BTC and ETH.

While this week’s options expiration is slightly smaller than last week’s multi-billion-dollar event, market analysts expect increased price swings, especially given the recent macroeconomic backdrop.

Volatility & Market Sentiment

Despite the significant notional value of expiring contracts, implied volatility in the crypto market has remained at near-yearly lows. Analysts suggest this is due to institutions viewing February as a slow trading period, reducing overall market activity. However, as options settle, traders expect short-term price fluctuations before stability returns.

As the market braces for today’s expiration event, crypto traders will closely monitor post-expiry price action to assess potential breakouts or further consolidation.

BNB Price Rally as Trading Volume Surges to $5.13 Billion

Binance Coin (BNB) has been on a strong bullish run, surging nearly 11% this week and trading around $680 on Friday. The rally has been fueled by increased trading volume, investor interest, and positive on-chain data, signaling continued strength for the asset.

BNB Market Performance & Key Drivers

• BNB Trading Volume: Reached a weekly high of $5.13 billion, indicating heightened market activity.
• Long-to-Short Ratio: Hit the highest level in over a month, reflecting a growing bullish sentiment.
• Meme Coin Hype: Santiment data shows a surge in interest for Broccoli, a meme coin linked to former Binance CEO Changpeng Zhao’s (CZ) dog.

BNB Surpasses Solana in Market Cap Rankings

BNB’s rally has propelled its market capitalization past Solana (SOL), making it the fifth-largest cryptocurrency according to CoinGecko rankings. Analysts attribute this rise to an increase in liquidity and demand for BNB-related products within the Binance ecosystem.

Coinglass data shows that BNB’s long-to-short ratio sits at 1.13, reinforcing a bullish market structure. With traders betting on continued upside momentum, BNB remains a strong contender in the current market cycle.

Trump’s US Reciprocal Tariff Pause Fails to Improve Bitcoin & Crypto Market Outlook

Bitcoin (BTC) and the broader crypto market saw a temporary recovery following President Donald Trump’s decision to pause the implementation of reciprocal tariffs on foreign trading partners. However, despite the short-term relief, macroeconomic uncertainty continues to weigh on investor sentiment.

Trump’s Tariff Decision & Market Reactions

• Trump signed a memo ordering his administration to draft a detailed plan for reciprocal tariffs, postponing their immediate implementation.
• The tariffs, originally set to begin this week, will now likely take effect in April 2025.
• Bitcoin initially dropped from $98,000 to $95,000 during the Asian session but rebounded slightly after the tariff pause.

Crypto Market Struggles Amid ETF Outflows & Bearish Macroeconomics

Despite the temporary recovery, Bitcoin ETFs have seen consistent net outflows, totaling nearly $680 million over the past four days, per Farside data. Analysts suggest that investors remain cautious ahead of Q2, as uncertainty over tariffs, inflation, and regulatory developments continues to loom over the market.

Looking Ahead: What’s Next for Crypto?

With the macroeconomic landscape remaining uncertain, Bitcoin and other top cryptocurrencies are expected to trade sideways unless a major catalyst shifts market sentiment. Analysts will be watching ETF flows, Federal Reserve policy updates, and institutional interest in crypto assets to gauge the next market move.

GameStop is considering investing in bitcoin and other crypto

• CNBC citing “sources familiar with the matter.”

• GameStop is exploring investments in alternative asset classes, including crypto and in particular bitcoin, three sources said. The retailer could decide not to follow through with the investments.
• The company is still in the process of figuring out if this made sense for the GameStop’s business, according to one source.

 CNBC with the report

The Day’s Takeaway

Day’s Takeaway

The markets and economy saw a mix of gains and setbacks across various sectors today. Stock markets were mixed, gold tumbled, altcoins surged, and economic data pointed to shifting trends in consumer spending and inflation expectations. Here’s a breakdown of the key developments:

U.S. Stocks: S&P 500 Misses Record, Nasdaq Leads Gains

• S&P 500 fell just short of a record close, finishing at 6,114.63 (-0.01%).
• Dow Jones lost 165 points (-0.37%), while Nasdaq gained 0.41%.
• Meta extended its winning streak to 20 days.
• Dell surged (+3.74%) on reports of a $5 billion AI deal with Musk’s xAI.
• For the week:
  • Dow +0.55%
  • S&P 500 +1.47%
  • Nasdaq +2.58%

Takeaway: AI enthusiasm and strong earnings are keeping tech stocks and broader markets resilient.

U.S. Retail Sales Slump Signals Consumer Weakness

Retail sales in the U.S. fell sharply, missing expectations and raising concerns about consumer spending trends. Discretionary sectors, including automobiles, home furnishings, and electronics, saw notable declines, while essential goods and services remained stable. This downturn adds pressure on economic growth forecasts, prompting speculation about how policymakers will respond in the coming months.

Atlanta Fed GDPNow Estimate Drops to 2.3%

• The Atlanta Fed lowered its Q1 GDP growth estimate from 2.9% to 2.3%.
• Weak retail sales and slowing employment numbers contributed to the downgrade.

Takeaway: The U.S. economy is still growing, but consumer weakness is a concern for future growth.

U.S. Import & Export Prices Rise More Than Expected

• Import prices rose 0.3% in January (vs. 0.4% expected), the largest one-month increase since April 2024.
• Export prices jumped 1.3% (vs. 0.3% expected), the biggest monthly increase since May 2022.
• Year-over-year, import prices rose 1.9%, down from 2.3% last month, while export prices saw a 2.7% gain, the highest since December 2022.

Takeaway: Inflationary pressures persist, but export demand remains strong.

European Markets Close Mixed, But Weekly Gains Hold

• The German DAX (-0.57%) retreated from its record high.
• Other indices like France’s CAC (+0.18%) and Spain’s Ibex (+0.15%) posted gains.
• For the week, all major indices finished higher, with the DAX up 3.19% for its sixth consecutive weekly gain.

Takeaway: Despite today’s dip, European stocks are in a strong uptrend, led by Germany.

Gold Plummets Below $2,900 on Profit-Taking

• Gold fell 1.48% to $2,883, but remains up 0.80% for the week.
• U.S. retail sales plunged -0.9%, fueling speculation of more Fed rate cuts.
• The U.S. dollar weakened, helping gold hold onto weekly gains.

Takeaway: Short-term profit-taking pushed gold lower, but Fed expectations are keeping long-term sentiment positive.

Altcoins Rally as Bitcoin Dominance Declines

• XRP (+5.91%), Solana (+2.88%), and Dogecoin (+3.36%) led the charge.
• Bitcoin’s dominance fell from 62.27% to 60.48%, opening the door for altcoin gains.
• ETF speculation fueled the rally, with analysts estimating high odds of altcoin ETF approvals in the U.S.
• Altcoin Season Index climbed from 39 to 45, signaling growing investor interest.

Takeaway: The market isn’t in full-blown altcoin season yet, but ETF speculation and Bitcoin’s declining dominance are driving fresh gains.

Atlanta Fed GDPNow Estimate Drops to 2.3%

• The Atlanta Fed lowered its Q1 GDP growth estimate from 2.9% to 2.3%.
• Weak retail sales and slowing employment numbers contributed to the downgrade.

Takeaway: The U.S. economy is still growing, but consumer weakness is a concern for future growth.

Final Thoughts

• Stock markets remain resilient, driven by tech and AI optimism.
• Gold dipped, but long-term fundamentals remain strong due to Fed rate cut bets.
• Crypto markets are showing strength, fueled by ETF speculation and Bitcoin’s declining dominance.
• Economic data is mixed, with consumer spending slowing but inflation pressures still present.