This week's Fixed Income Weekly hones in on the ECB's steady policy with a slight nod towards future rate cuts and solid U.S. economic data, leading to a pronounced steepening in yield curves. These developments are fueled by declining inflation, underlining the resilience of economic trends in a shifting inflationary landscape.

US money market funds and deposits reached record levels of $8.8 trillion,Chinese equity valuations hit all-time low and geopolitics are the main source of concern for investors according to survey.Each week, the Syz investment team takes you through the last seven days in seven charts.

US stocks ended mostly higher but the advance was narrow with technology stocks outperforming, helped by a rally in semiconductor shares. AI chip giant NVIDIA was particularly strong, as was rival AMD. On Tuesday, shares of Boeing fell sharply after the company reported earnings following an analyst downgrade. The week’s data offered some starkly different pictures of the economy’s health. On Tuesday, the New York Manufacturing index reached its lowest level since early in the pandemic. Conversely, Wednesday’s December retail sales numbers easily exceeded expectations, up 0.6% in October, with online sales growing 1.5% and hitting a new record high.

This week, central banks globally face the intricate task of balancing market anticipations with their policy decisions, as they address the aggressive expectations for rate cuts amidst evolving economic landscapes.

The SEC approves 11 Bitcoin spot ETFs, witnessing billions of dollars exchanged on the inaugural trading day, and Taiwan elects Lai-Ching-te much to China's dismay. Each week, the Syz investment team takes you through the last seven days in seven charts.

In this week's report, we delve into the intriguing dynamics of the US yield curve. A comforting US Producer Price Index (PPI) countering a slight rise in the Consumer Price Index (CPI) has pushed the US 2-year yield to its lowest since May 2023, while long-term interest rates demonstrate stability.

Stocks moved higher over the week. The Nasdaq Composite index surged over 3% on the week (best one since early Nov '23) while The Dow and Small Caps were unchanged (S&P closed up almost 2% on the week). Several tech giants recorded solid gains, including Facebook / Meta Platforms and chipmaker NVIDIA. Energy stocks underperformed as oil prices pulled back early in the week. US our largest banks—JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo—reported fourth-quarter results on Friday. Data releases on the week’s light economic calendar came in roughly in line with expectations. US Headline core CPI rose 0.3% in December, a tick more than expected, but core CPI also rose 0.3%, in line with consensus.

Houthi attacks in the Red Sea result in surge of maritime freight prices, the amount of US debt is now greater than the value of the economies of China, Germany, Japan, India and the UK combined and the BRICS welcome 5 new members! Each week, the Syz investment team takes you through the last seven days in seven charts.

Stocks gave back a portion of the past several weeks’ solid gains as investors appeared to rotate into sectors that lagged in 2023, including utilities, energy, consumer staples, and health care. Conversely, a slide in Apple shares following analysts downgrade weighed on the Nasdaq Composite Index. Trading volumes were relatively muted over much of the holiday-shortened week. Geopolitical concerns (Chinese president Xi speech on Taiwan, Red Sea tensions) appeared to weigh on sentiment as 2024 trading began. Macro data offered mixed evidence about the economy’s momentum heading into the new year. US labor market data generally surprised on the upside, although underlying trends were more mixed.

2024's first week veered from 2023's end-of-year bond rally to a sharp sell-off, as widening spreads and rising rates introduced a sobering start. This correction, following the potent rally since mid-October, alongside primary market activities pressuring spreads and rates, underscores the inherent volatility in fixed income markets and sets a cautious tone for January.