NEWS
US
From before Trump's inauguration address, with the WSJ driving the day's market reaction:
US POLITICS (WSJ): Trump to Lay Out Trade Vision -- but Won't Impose New Tariffs Yet
President-elect Donald Trump is planning to issue a broad memorandum Monday that directs federal agencies to study trade policies and evaluate U.S. trade relationships with China and America's continental neighbors -- but stops short of imposing new tariffs on his first day in office, as many trading partners feared.
US POLITICS (BBG): Trump to Hold Off on Immediate China Tariffs, Calls for Study
President-elect Donald Trump will not unveil China-specific tariffs on his first day in office, as the incoming administration starts with potential engagement with Beijing rather than another trade war, according to people familiar with the matter.
US POLITICS (BBG): Trump to Declare Energy Emergency, Unlocking New Powers
President-elect Donald Trump is poised to invoke emergency powers as he orders a series of steps intended to unleash domestic energy production and undo Biden-era policies designed to fight climate change.
Post-address summary:
US POLITICS (MNI): Trump Inauguration Speech Confirms Reporting On Exec Order Strategy
US President Donald Trump's inauguration speech has largely confirmed reporting ahead of today's swearing in ceremony. The speech contained few surprises and hit many of his preferred talking points.
US POLITICS (MNI): Trump Administration Issues Memo To GOP Lawmakers Outlining Priorities
The newly minted administration of US President Donald Trump has sent a memo to Republican lawmakers outlining immediate priorities for the Republican government.
Europe
EU TRADE (MNI): MNI INTERVIEW: EU More Prepared, But Vulnerable, To US Tariffs
The European Union is more prepared to respond to U.S. tariffs on its goods than during the first administration of President Donald Trump, but a trade war could both spark higher inflation and, in combination with fiscal retrenchment, push the bloc towards recession, a leading Austrian trade expert told MNI.
EU DEFENCE (MNI): MNI BRIEF: EU Ministers Could Discuss Defence Spending Monday
European Union finance ministers could discuss the issue of increased defence spending by member states and how that is treated under the bloc’s new fiscal rules when they meet for an informal dinner under the new Polish Presidency later on Monday, an EU source told MNI.
Norges Bank is set to keep its policy rate on hold at the 4.5% level where it has stayed since December 2023 at its meeting this week, with the focus on whether it sees the balance of risks having shifted to the upside since last month, when it stated that the first cut this cycle was most likely to come in March.
The importance of UK labour market data may have fallen a little for the MPC, but it is still incredibly important for the market, despite growth concerns having picked up recently and activity and PMI data increasingly watched. The scope for further revisions make this month's print even more unpredictable.
The chancellor told the Financial Times that she welcomed proposals from the Financial Conduct Authority to lift limits on mortgages and was “absolutely open to looking at ideas that can boost home ownership and help working families get on the housing ladder”.
DATA
CANADA DATA: Mixed Inflation Expectations For Firms, Better For Consumers
- There is, as always, a lot to unpack within the BOS and CSCE surveys but on inflation expectations, businesses in Q4 broadly gave back some of the downward progress seen in Q3 whereas consumers further converged towards more typical readings.
- Within the details, the BOS 2Y confirmed last quarter’s notable step lower to 2.5% but the separate monthly Business Leaders’ Pulse (BLP) readings all accelerated 20bps in December vs September readings across 1-5Y periods.
- Ranging from 2.6-2.8%, these BLP readings remain within the 1-3% target range although 2.6% for the 2Y is the highest end-quarter reading since Dec’23 whilst the 2.7% for the 5Y is the highest end-quarter reading since the BLP started in mid-2022 (but with a few joint highs at 2.7% in other months).
- Consumer inflation expectations meanwhile saw a sharp step lower for the 1Y to 3.05% (-80bps) whilst the 2Y and 5Y broadly consolidated Q3’s moderation with 3% readings.
CANADA DATA: Capex Plans Firm Despite Uncertainty But Excess Capacity Remains
In addition to inflation expectation components noted earlier, the BoC’s Business Outlook Survey pointed to some sequential improvement in demand expectations although excess capacity remains and the BOS indicator is still below average. The pick-up in capex intentions is notable to us considering “prevalent” uncertainty around the incoming Trump administration’s policies but it was in part catch-up of postponed plans.
- “Overall business sentiment remains subdued, but firms are beginning to anticipate improvements in sales activity. Meanwhile, businesses expect growth in costs to continue to ease and growth in selling prices to stabilize.”
- “After a period of weak demand, firms expect their sales growth to improve over the coming year. This expectation is largely driven by recent interest rate reductions and the anticipation of further cuts ahead.”
- “With lower financing costs and improving demand outlooks, intentions to increase investment have become more widespread among firms. Part of this is a resumption of previous plans that were postponed.”
- That’s despite “Uncertainty about the effects of the new US administration is prevalent, with firms commonly anticipating higher input costs due to trade tensions” but the fact that this is partly catch-up takes some of its gloss off.
- “Most businesses reported having some spare capacity. Because of this, hiring plans remain modest. Binding labour shortages are not widespread, and most firms describe the availability of outside labour as improved compared with one year ago.”
- With signs of improvement in this report at least partly conditional on further rate cuts ahead, Desjardins, for example, continue to see a case for their baseline of rates going to 2.00% in early 2026.
MARKETS
US TSYS: TY Closes Early After Climb Back Towards Resistance
- TYH5 saw 108-23 (+ 05+) at the early close, close to session highs of 108-24+ seen in sustained momentum originating from the WSJ reporting Trump would stop short of imposing new tariffs on day one.
- The contract has lifted a couple ticks on net since shortly prior to Trump’s address, having at one point dipped to 108-18 before swiftly reversing. There was little by way of details behind “we will tariff and tax foreign countries to enrich our citizens” and his speech contained few surprises.
- Resistance is seen at Friday’s high of 108-27+ before 109-06 (Dec 31 high) but gains are deemed corrective from a technical perspective, against a medium-term bear trend with support at 108-00 (Jan 16 low). It earlier saw a low of 108-08+.
- The MLK Day holiday has heavily depressed volumes despite the inauguration, with cumulative TY volumes tracking at only circa 35% of recent averages.
- Fed Funds futures meanwhile have seen cut expectations build today to 40bp for 2025 (again, all after the WSJ report) vs 38bp at the US crossover and 32bp prior to last week’s CPI report. A next 25bp cut from the FOMC is seen around June/July.
FOREX: USD Weakness Prevails Following Reports of No Imminent Tariffs
- There was a substantial weakening of the US dollar on Monday, as reports from the Wall Street Journal detailed that President Trump was planning to issue a broad memorandum Monday that directs federal agencies to study trade policies, but stopped short of imposing new tariffs on his first day in office. Trump officials later corroborated the reports.
- The greenback was immediately lower on the headlines, and despite being off its worst levels, the USD index remains around 1% lower on the session.
- There has been broad based strength across G10 currencies against the dollar, however, EUR and NZD are outperforming at the margin. EURUSD rose to a session high of 1.0430 on the report as post-election positioning is taken into account and unwound. Initial resistance levels at 1.0338 and 1.0354 have been breached and the pair traded within 7 pips of 1.0437 resistance, the Jan 6 high.
- AUDUSD has risen above initial firm resistance in tandem, breaching the 20-day EMA and recording a high of 0.6287. The 50-day EMA is at 0.6335 and should be the next target barring any reversal of the current tariff rhetoric in place.
- With the strong positive price action for major equity indices, USDJPY is only 0.3% lower on the session at 155.85 as we approach the APAC crossover. Positive risk sentiment is boosting cross/JPY here and may be in focus as the BOJ decision approaches this week.
- Uk labour market data and Canadian CPI highlight the economic calendar on Tuesday.
US STOCKS: Further Gains On Tempering Of Immediate Trade War Concerns
- Cash S&P 500 has been closed today for MLK Day but e-mini S&P has seen further solid gains on the prospect of no tariffs arriving on day one of the second Trump administration.
- ESH5 closed early at 6055.25 (+21.75 points) for a 0.4% gain to extend Friday’s +1.0%.
- President Trump’s inauguration address had little net impact, with the contract having already pared an earlier climb to 6078.25 following the aforementioned WSJ report plus also a Bloomberg report pointing specifically at a desire to negotiate with China.
- The day’s moves continue the bull cycle extension, with next resistance seen at 6107.50 (Dec 26 high) after which lies 6163.75 (Dec 16 high). To the downside, support is seen at 5961.75 (Jan 16 low).
- Other e-mini indices have seen similar gains today, with both Nasdaq 100 and Down Jones +0.4%, although the Russell 2000 outperforms (+1.2%) having heavily underperformed Friday.
- Improved risk sentiment has been reflected more broadly as well, including in Europe the SX5E index marking a fresh twenty-year high.
COMMODITIES: Crude Declines As Near-Term Tariff Fears Ease, Copper Falls Further
- Crude has lost ground today amid news that Trump will stop short of imposing tariffs immediately upon taking office, coupled with the implementation of the Gaza ceasefire have added pressure.
- WTI Feb 25 fell by 1.7% to $76.6/bbl.
- In his inauguration address, President Trump said that the US will fill its strategic reserves again and export American energy all over the world.
- The trend structure in WTI futures remains bullish, with attention on $79.48, the Apr 12 ‘24 high. A clear break of this hurdle would strengthen the bullish theme and open $80.63, a Fibonacci projection.
- On the downside, a further decline would expose the 20-day EMA, at $74.80, a key short-term support.
- Meanwhile, spot gold has edged up by 0.2% to $2,709/oz, with the yellow metal trading in a tight range through much of the session.
- Gold continues to hold on to its recent gains and scope is seen for a continuation higher near-term. Eyes remain on $2,726.2, the Dec 12 high and an important resistance.
- On the downside, initial support is at $2,653.4, the 50-day EMA.
- In contrast, copper has fallen by 1.2% to $432/lb today, leaving the red metal 3.5% below Friday’s high.
- Copper futures remain in a bull cycle, despite the latest pullback. Price has traded through the 50-day EMA and last week’s gains resulted in a move through key short-term resistance at $433.50, the Dec 12 high, opening $452.85, the Nov 5 ‘24 high.
| Date | GMT/Local | Impact | Country | Event |
| 21/01/2025 | 0700/0700 | *** |  GB | Labour Market Survey |
| 21/01/2025 | 1000/1100 | *** |  DE | ZEW Current Expectations Index |
| 21/01/2025 | - |  EU | ECB's De Guindos in ECOFIN Meeting | |
| 21/01/2025 | 1330/0830 | *** |  CA | CPI |
| 21/01/2025 | 1330/0830 | ** |  US | Philadelphia Fed Nonmanufacturing Index |
| 21/01/2025 | 1445/0945 | *** | US | MNI Chicago Business Barometer Seasonal Adjustment |
| 21/01/2025 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 21/01/2025 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 21/01/2025 | 1800/1300 | * | US | US Treasury Auction Result for Cash Management Bill |
| 21/01/2025 | 1800/1300 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 22/01/2025 | 2145/1045 | *** |  NZ | CPI inflation quarterly |
| 22/01/2025 | 0001/0001 | * | GB | Brightmine pay deals for whole economy |
| 22/01/2025 | 0700/0700 | *** | GB | Public Sector Finances |
| 22/01/2025 | 0700/1500 | ** |  CN | MNI China Money Market Index (MMI) |
| 22/01/2025 | 1200/0700 | ** | US | MBA Weekly Applications Index |
| 22/01/2025 | 1330/0830 | * | CA | Industrial Product and Raw Material Price Index |
| 22/01/2025 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 22/01/2025 | 1515/1615 | EU | ECB's Lagarde in dialogue on Unlocking Europe's potential | |
| 22/01/2025 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 22/01/2025 | 1800/1300 | ** | US | US Treasury Auction Result for 20 Year Bond |
| 23/01/2025 | 2350/0850 | ** |  JP | Trade |