SVET Reports
Friday's Markets Update (January 31, 2025)
On Friday, equities closed the week in the red after large morning gains, as the White House confirmed tariffs on Mexico, Canada, and China. Core PCE inflation met estimates, showing slight growth and keeping expectations of two Fed rate cuts this year intact. The dollar rose along with gold, which hit a new ATH following the reaffirmed tariffs. Argentina’s central bank cut the rate to a 4-year low as inflation reached a 2-year low, demonstrating the efficiency of Milei's anti-bureaucratic, free-market policies. BTC and SOL rose before correcting sharply, while ETH outperformed with a sudden rally.
Details
The US core PCE price index, excluding food and energy, increased by 0.2% in December 2024, meeting expectations and rising from a six-month low of 0.1%. Annual core inflation held at 2.8%, exceeding the Fed's 2% target. 1Y trend: "Side" (BEA)
The Chicago PMI increased to 39.5 in January - the first rise after three declines, up from a six-month low (36.9) but below expectations (40). Still it remains below November 2024 levels and the 2024 average. New orders surged, reversing prior declines, while production rose. Inventories jumped, entering expansion for the first time since November 2023. Employment fell, hitting the lowest since June 2020. Prices paid dropped, the fourth consecutive decline and the lowest since July 2024. 1Y trend: "Down" (ISM)
World Markets
Argentina’s central bank cut its benchmark rate by 300bps to 29%, as inflation eased to 117.8% annually and 2.7% monthly - third consecutive month below 3. Inflation reached the lowest level since July 2023, down from 166% in November. This ninth cut under Milei lowered borrowing costs to October 2020 levels, aligning with a reduced currency depreciation rate. 1Y trend: "Down" (Bcra)
Currencies
The dollar index surpassed 108.3 as the White House confirmed 25% tariffs on Mexico, Canada, and China, reversing earlier pressure from delay rumors. The greenback gained on inflation and Fed hawkishness expectations, despite muted Core PCE growth. Dovish moves by other central banks also supported the dollar. 1Y trend: "Up"
Commodities
Gold surged to a new record $2,805 per ounce on tariffs and as major central banks adopted looser policies. 1Y trend: "Up"
On Week 6, the jobs report and ISM PMIs will be highlights, alongside Trump's 25% tariffs on Canada and Mexico starting Feb 1st. Earnings from Amazon, Alphabet, PepsiCo, AMD, and others are due. China reopens post-Lunar New Year, while the RBI and BoE may cut rates. Global PMIs, Eurozone inflation, German factory orders, Canadian jobs, and GDP data for Indonesia and Hong Kong will also be watched.