The latest PPI data showed that the producer price inflation in the US fell way faster than expected, while retail sales fell 1.1% in December – marking the biggest monthly drop of last year.
The S&P500 didn’t like the mix of slowing economic data, and hawkish comments from Fed officials, and dived more than 1.50% yesterday.
But the dovish expectations – despite the hawkish comments from the Fed, feed well into the bond markets: the US 2-year yield is diving toward the 4% mark, while the 10-year yield hit 3.30%, the lowest level since September.
This means that the positive divergence in the sovereign space, compared with the stocks, is happening.
And the divergence could be even more visible if the stocks fall further on soft earnings. Netflix and P&G will announce their Q4 results today.
In energy, US crude advanced past the $82 mark on Chinese reopening optimism and IEA predicting that the oil demand will hit a record in 2023, before falling back below the $80 on recession pessimism.
In precious metals, gold is bid above the $1900 level, supported by lower US yields and the softer US dollar.
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