Equities Tread Water Before US CPI, Yen Gains: Markets Wrap

(Bloomberg) — European stocks were poised to follow muted moves in Asia as traders awaited US inflation data for clues on the path of Federal Reserve policy. The yen strengthened. 

The Euro Stoxx 50 futures climbed 0.2% while contracts for US equities were little changed. The MSCI Asia Pacific Index was up 0.1%, erasing most of its earlier advance as shares fluctuated in Japan and Hong Kong. The dollar gauge steadied after dropping 0.4% in the previous session. 

The US consumer price report comes at a crucial time for global markets, after a spate of solid economic data trimmed Fed rate cut expectations and triggered a debt selloff. Forecasters expect the monthly report to show a fifth month of firm increases, with the so-called core consumer price index seen rising 0.3% in December. 

“US interest rate markets have now nearly completely unwound expectations for rate cuts in a very short period of time,” said Eric Robertsen, Standard Chartered Plc’s chief strategist and head of global research. However, “to give up on the idea of rate cuts completely in the US economy is a mistake considering the amount of economic uncertainty in the world.”  

The yen strengthened 0.4% against the dollar, as Governor Kazuo Ueda said the Bank of Japan will decide on a potential rate hike at next week’s meeting, adding that he has heard encouraging views on pay from various industries. 

The 10-year Treasury yield fell one basis point to 4.78%. Some bond traders are betting that the relentless selloff in Treasuries will soon lose momentum, in part because of questions around how President-elect Donald Trump’s policies will take shape. 

Underscoring persistent geopolitical tensions, the US plans to unveil more regulations aimed at keeping advanced chips made by Taiwan Semiconductor Manufacturing Co. and other producers from flowing to China. The rules could be unveiled as soon as Wednesday.

Elsewhere in Asia, the People’s Bank of China pumped a near-historic amount of short-term cash into its financial system on Wednesday, dialing up liquidity support amid a cash squeeze with the new year holiday looming. China’s short-term interbank lending rates dropped. 

The injections show “that the PBOC easing stance has not changed,” said Xiaojia Zhi, economist at Credit Agricole CIB. “The PBOC would need to inject more liquidity via other tools to meet high seasonal liquidity demand” for tax payment and pre-Lunar New Year liquidity, and prevent a surge in interbank rates, she said. 

Bank Indonesia is expected to keep its key rate at 6%. In South Korea, investigators arrested President Yoon Suk Yeol after launching a pre-dawn operation to bring the impeached leader in for questioning over his short-lived martial law declaration.

Bank Earnings

Eurozone industrial production data is due ahead of the US inflation reading. Wall Street is also gearing up for the unofficial start of the earnings season, with results from big banks hitting the tape on Wednesday. 

Lenders including JPMorgan Chase & Co. and Wells Fargo & Co. are expected to show continued gains from trading and investment banking, which helped offset net interest income declines caused by higher deposits and sluggish loan demand.

In commodities, oil steadied after dropping by the most in more than a month as the impact of US sanctions against Russian flows continued to reverberate. 

Key events this week:

• Eurozone industrial production, Wednesday
• Citigroup, JPMorgan, Goldman Sachs, Bank of New York Mellon, Wells Fargo and BlackRock earnings, Wednesday
• US CPI, Empire manufacturing, Wednesday
• Fed’s John Williams, Tom Barkin, Austan Goolsbee and Neel Kashkari speak, Wednesday
• TSMC earnings, Thursday
• ECB releases account of December policy meeting, Thursday
• Bank of America, Morgan Stanley earnings, Thursday
• US initial jobless claims, retail sales, import prices, Thursday
• China GDP, property prices, retail sales, industrial production, Friday
• Eurozone CPI, Friday
• US housing starts, industrial production, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 6:34 a.m. London time
• S&P/ASX 200 futures were little changed
• Japan’s Topix rose 0.3%
• Hong Kong’s Hang Seng rose 0.1%
• The Shanghai Composite fell 0.4%
• Euro Stoxx 50 futures rose 0.1%
• Nasdaq 100 futures rose 0.1%
• Australia’s S&P/ASX 200 fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0298
• The Japanese yen rose 0.3% to 157.42 per dollar
• The offshore yuan was little changed at 7.3460 per dollar
• The Australian dollar was little changed at $0.6193
• The British pound was little changed at $1.2204

Cryptocurrencies

• Bitcoin rose 0.4% to $96,835.79
• Ether was little changed at $3,215.6

Bonds

• The yield on 10-year Treasuries declined one basis point to 4.78%
• Australia’s 10-year yield advanced one basis point to 4.62%

Commodities

• West Texas Intermediate crude rose 0.7% to $78.05 a barrel
• Spot gold rose 0.2% to $2,681.77 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Wenjin Lv and Ruth Carson.

©2025 Bloomberg L.P.