Syz the moment

Indeed, with Germany and France shrinking, the pressure was on. The eurozone economy is barely moving with Q4 GDP flat for the eurozone, with Germany (-0.2%) and France (-0.1%) dragging things down while Portugal (+1.5%) and Spain (+0.8%) showed some life. The ECB is playing it cautious, adjusting rates based on data. They reiterated that the disinflation process is well under way and that they see inflation converging towards 2%. The ECB says it’s not locking into a rate path—just watching inflation and economic data closely. The bond market is taking it quite positively with 10y Bond yield down 7bps at the time of our writing. With growth slowing, more cuts might be on the table. Let see what Mrs. Lagarde have to say during the conference call - especially with regards to wages and tariffs. Baring a major positive surprise coming from Germany on the fiscal side, the Eurozone growth outlook remains bleak - this opens the door to at least 1 rate cut every quarter.

The FOMC statement contains only minor changes that mark to market recent economic developments: 👉 "Labor market conditions remain solid" = Hawkish❗ 👉 "Inflation remains somewhat elevated." (The central bank notably removed reference to inflation making progress towards the goal) = Hawkish❗ The Fed will continue its QT program at an unchanged pace of $60 billion a month. The market does not expect rate cuts at least until June 2025. Source: Nick Timiraos, The Kobeissi Letter

Source: Bloomberg thru Willem Middelkoop

Interesting thing on this is how even after their big buy-up, Russia & China lag far behind USA + Eurozone holdings of gold. Source: Callum Thomas, Visual Capitalist

US President Donald Trump said Thursday he would seek to bring interest rates lower, speaking remotely to the World Economic Forum in Davos, Switzerland. "I'll demand that interest rates drop immediately," he said, in a signal that he might pressure US Federal Reserve officials on the matter. "Likewise, they should be dropping all over the world. Interest rates should follow us all over." Source: Barron's, www.investing.com

The Bank of Japan hiked rates by 25 basis points Friday to 0.5%, bringing its policy rate to its highest level since 2008, as it seeks to normalize its monetary policy. The move comes in line with expectations from CNBC’s survey from Jan 15-20, which saw an overwhelming majority of economists predict a hike. In its statement, the BOJ revealed that the decision was a 8-1 split, with board member Toyoaki Nakamura dissenting. Nakamura said the central bank should only make change in policy after confirming a rise in firms’ earning power from reports that would be out by the next monetary policy meeting. Following the decision, the Japanese yen strengthened 0.3% to trade at 155.61 against the dollar, while country’s benchmark Nikkei 225 stock index was slightly up. The yield on the 10-year Japanese government bonds rose 1.7 basis points to 1.222%. Announcement is pretty much in-line with market expectations - no big surprise. Source. The Kobeissi Letter, CNBC

The market is pricing a 90% chance that the BoJ will raise rates by 0.25% to 0.50% on Friday, the highest in 16 years. That would be the 3rd rate hike in less than 12 months, after 17 years without an increase. Source: The Kobeissi Letter, Bloomberg

the Fed won't send the Treasury a dime for the entirety of Trump's term; that's never happened since the inception of the Fed - another challenge for Trump... Source: E.J. Antoni, Ph.D. @RealEJAntoni