Tech led the US stock rally amid a softer yield environment - Newsquawk Asia-Pac Market Open

US stocks traded higher with gains in the major indices led by the Nasdaq amid strong outperformance in the tech sector and with risk appetite facilitated by lower yields across the curve in the wake of the NY Fed Survey of consumer inflation expectations which saw declines across all forecast horizons. Furthermore, oil prices sold off throughout the session after Saudi Arabia cut its OSPs in what desks are labelling as a sign of weak demand.
USD was pressured amid the rally in equities and softer yields although the DXY held on to the 102.00 status, while EUR only modestly benefitted from the softer dollar and the latest EU retail sales showed a contraction.
Looking ahead, highlights include Japanese Household Spending & Tokyo CPI, Australian Building Approvals & Retail Sales, UK BRC Retail Sales.

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Highlights include Japanese Household Spending & Tokyo CPI, Australian Building Approvals & Retail Sales, UK BRC Retail Sales.
Click here for the Newsquawk Week Ahead.

US TRADE

US stocks traded higher with gains in the major indices led by the Nasdaq amid strong outperformance in the tech sector and with risk appetite facilitated by lower yields across the curve in the wake of the NY Fed Survey of consumer inflation expectations which saw declines across all forecast horizons. Furthermore, oil prices sold off throughout the session after Saudi Arabia cut its OSPs in what desks are labelling as a sign of weak demand.
SPX +1.41% at 4,764, NDX +2.11% at 16,650, DJIA +0.58% at 37,683, RUT +1.94% at 1,989.
Click here for a detailed summary.

NOTABLE HEADLINES

Fed's Bostic (2024 voter) said inflation has come down more than he expected and the rise in unemployment has been 'far less' than what would typically be the case given the reduction in inflation. Bostic added the Fed can let restrictive policy continue to work to slow inflation and expects the process will remain "orderly", while he repeated his forecast for two 25bps rate cuts as appropriate by the end of the year.
US Treasury Secretary Yellen said IRS funding is sufficient to continue modernization efforts in the short- to medium-run and she believes congressional top-line spending deal is consistent with debt ceiling agreement last June. Furthermore, she said President Biden would like to continue individual tax cuts in place for Americans earning under USD 400,000 and will propose ways to raise revenues.
NY FED SCE (DEC) one-year inflation expectation is at 3% (prev. 3.4% in Nov) which is the lowest since January 2021, while the three-year inflation expectation is at 2.6% (prev. 3.0%) which is the lowest since June 2020 and the five-year expectation is at 2.5% (prev. 2.7%) which is lowest since March 2023.
United Airlines (UAL) found loose bolts on plug doors during the 737 MAX 9 inspections and discrepant bolts and other parts on the Plug Doors have been found on at least five United Airlines aircraft, according to Air Current cited by Reuters.

DATA RECAP

US Consumer Credit (Nov) 23.75B vs. Exp. 9.0B (Prev. 5.13B)
US Manheim Wholesale Used Vehicle Index (Dec) -0.5% M/M (prev. -2.1% in Nov, +0.3% in Dec. mid-month) or -7.0% Y/Y (prev. -5.8% in Nov, -6.3% in Dec. mid-month) at 204.0.

USD was pressured amid the rally in equities and softer yields although the DXY held on to the 102.00 status.
EUR only modestly benefitted from the softer dollar, while the latest EU retail sales showed a contraction.
GBP gained a firmer footing after reclaiming the 1.2700 handle against the dollar with tailwinds from the risk tone.
JPY strengthened and USD/JPY briefly dipped below 144.00 owing to the softer US yields.

Treasuries bounced amid declines in both energy prices and consumer inflation expectations.

Oil prices fell in the wake of Saudi Arabia cutting its OSPs which desks viewed as indicative of a “weak demand” narrative.
El Paso Natural Gas Co. declared a force majeure at the Bluewater compressor station.

Israeli PM Netanyahu said Hezbollah miscalculated in 2006 and it is miscalculating again, while he added that Israel will do everything necessary to restore security to the northern border and enable residents to return. Furthermore, he said Israel prefers to secure its northern borders through diplomatic means and without a large-scale war but added that nothing will prevent it from restoring security, according to Sky News Arabia.
Lebanese Hezbollah official was killed in an Israeli raid in Khirbet Selm, according to Sky News Arabia.
US Secretary of State Blinken said he found leaders in the Middle East determined to prevent a wider conflict but added they all recognised hurdles and nobody thinks anything will happen overnight.
US State Department said Secretary of State Blinken and Saudi’s Crown Prince discussed ongoing efforts to reduce regional tensions including deterrence of Houthi attacks on commercial shipping in the Red Sea.
The first shipping lines reportedly made agreements with the Houthis to prevent their ships from being attacked in the Red Sea, according to ShippingWatch citing a number of sources in the Middle East. However, reports noted that it was not the largest container carriers that entered agreements with the Houthis and a Maersk (MAERSKB DC) spokesperson said they had not entered a deal on the Red Sea, while Hapag-Lloyd (HLAG GY) also denied that large shippers have entered a deal with the Houthis to avoid Red Sea attacks.

NOTABLE HEADLINES

PBoC vowed to use various monetary tools to boost credit including the use of reserve requirements, according to Xinhua.
Chinese President Xi said the government will deepen the anti-corruption drive in sectors like SOEs, energy, finance and infrastructure construction, according to state media reports.
Chinese regulators reportedly shut a regulatory loophole which previously allowed indebted LGFVs to increase their borrowing and LGFVs have reportedly been told to stop issuing offshore bonds with a 364-day duration, according to Reuters.
China's Industry Minister issued standards for chips used within autos.
China Maritime Safety Administration said China is to conduct live firing drills in some areas in the East China Sea on January 8th-9th.

NOTABLE HEADLINES

ECB's Vujcic said the EZ will avoid a recession and expects final inflation to slow gradually, while he added that the ECB is not discussing rate cuts and probably will not before summer.
French PM Borne resigned and will act as caretaker until a new government is named. It was later reported that a new French PM is to be named on Tuesday morning, according to AFP.

DATA RECAP