Financial Markets
The
week started weak on the equity markets, but quickly turned around and the main stock
market
indices ended in the green – the S&P500 and
the NASDAQ
100 gained 2.9% and 2.8%, respectively. The small
cap
index (Russel 2000) recovered 4.1%. Trading volumes were average.
The
metals were volatile but closed the week without much change relative to the previous week – gold
gained 0.4% and silver lost 0.2%. Gold is looking more bullish, but will encounter resistance at ~2750$/oz. Silver will likely trade in the range of 28-31$/oz during the next weeks.
WTI traded higher, but retraced after hitting 80$, and ended the week at ~77$/bbl. Oil can trade in any direction from here.
Bitcoin is at an all-time high of 104500$, which is naturally a resistance level, but nothing is impossible at this point. If crypto momentum and optimism with the new US presidency continues, bitcoin will charge on.
The
relative
strength of the US dollar (DXY) moderated only so slightly this week (~109). The
EUR/USD is around 1.027$, the GBP/USD is at 1.216$, and the USD/JPY is at
156.26 JPY.
US M2 money supply at the date of 25th November 2024 was up by 0.64%.
The
national financial
conditions index (NFCI) for the week of 6th January 2025 loosened by
2.44%, which shows a continuous loosening of financial
conditions. Note that this indicator is
delayed by a week.
US
bond yields were down this week, and now sit at 4.283% for the
2-year
and 4.623% for the 10-year.
With the stock market rally, the VIX returned to ~16, indicating a moderation in fear and less search for put
options from the part of investors/speculators.
Comment Section
Recent economic data coming from the US indicates that inflation is moderating (PPI and inflation came in at the expected values, and core inflation actually below expectations!), which increased expectations for interest rate cuts – a net positive for the stock markets.
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