GGMA Morning Brief: Markets consolidate after sell-off, Miran wants more rate cuts, No US job report, BOJ unlikely to rescue JGBs, NZ labour market, Today: EZ & US services PMIs, EZ final HCPI, US ADP
Good morning,
I hope all is well.
Here are the main overnight news and market movers:
Markets: Stocks consolidate after yesterday’s sell-off
US stock futures are consolidating this morning, after yesterday’s sell-off, which started around midday but reversed later in the evening. The Nikkei 225 Index declined, trimming the previous session’s gains as disappointing earnings from select companies weighed on sentiment, as well as the tech-led selloff on Wall Street. Mainland Chinese equities advanced for a second straight session on Wednesday, as strength in clean energy, consumer, and defence stocks offset continued weakness in the tech sector. (TE)
Bond futures are only a little changed. Bond yields in New Zealand declined after the release of the labour market report.
The US Dollar has strengthened against most of its G10 counterparts, with the Japanese yen showing the weakest performance.
Gold and silver prices extended gains. Copper held the bulk of the biggest one-day advance in more than three years, with futures trading above $13,420 a ton in London after surging 4.6% on Tuesday. Banks project that copper will have its largest 2026 supply deficit in 22 years. Gold and silver rallied on Wednesday after a steep drop earlier in the week, spurred by a rise in the US dollar. (BBG)
Oil rose for a second day as geopolitical tensions resurfaced following the US downing of an Iranian drone near an American aircraft carrier in the Arabian Sea. Brent advanced to around $68 a barrel after adding 1.6% on Tuesday, while West Texas Intermediate was near $64 but has since declined. The skirmish spooked oil markets, but President Donald Trump reiterated the sides are maintaining diplomatic talks, and White House Press Secretary Karoline Leavitt confirmed US-Iran negotiations are still scheduled for Friday. (BBG)
Almost half a trillion dollars has been wiped off cryptocurrencies in less than a week as a selloff led by Bitcoin accelerated, Bloomberg reports. The total crypto market value has slumped by $467.6 billion since Jan. 29, according to CoinGecko data. Bitcoin on Tuesday tumbled to its lowest level since US President Donald Trump won re-election in early November 2024, ushering in a more crypto-friendly administration. Michael Burry warned that Bitcoin's plunge could deepen into a self-reinforcing "death spiral," inflicting lasting damage on companies that have stockpiled the token.
House approves measure to end partial government shutdown
The House passed funding legislation 217 to 214 to end a partial government shutdown and initiate 10 days of immigration enforcement negotiations. The legislation provides $1.2 trillion for five spending bills, while separating Department of Homeland Security funding, which is extended only till Feb. 13. (WSJ)
Investors increase wagers on a steeper yield curve with Warsh as Fed chair
Investors are increasing bets on higher long-term Treasury yields and a steeper yield curve, anticipating that incoming Fed Chair Kevin Warsh will cut interest rates and shrink the central bank’s $6.59 trillion balance sheet. Reducing the balance sheet signals less government demand for Treasuries and tighter financial conditions as the Fed provides less market liquidity. (RTRS)
Amundi, Europe’s largest asset manager with €2.4tn under management, is reducing US dollar exposure in favour of European and emerging-market assets. CEO Valerie Baudson said Amundi will advise clients to reduce their US dollar exposure over the next year if US economic policy remains unchanged. “We will go on seeing a [weakening] of the dollar. Amundi has been diversifying a lot and has been advising [clients] to diversify a lot . . . over the last 12-15 months, and is going on advising its clients to diversify their positions for the year to come,” Baudson said in an interview on Tuesday. (FT)
Miran says the Fed should cut rates by more than 1 percentage point this year
Federal Reserve Governor Stephen Miran said the absence of strong price pressures in the economy means interest rates, which he described as restrictive, need to be lowered again this year. “I’m probably looking for a little bit more than a point of interest-rate cuts over the course of the year,” Miran said Tuesday on the Fox Business Network. “When I look at underlying inflation, I don’t really see a lot of very strong price pressures in the economy,” Miran said. “I don’t see a lot of strong supply-demand imbalances of the type that monetary policy should respond to. So I think we’re keeping rates too high, mostly because of quirks of how we measure inflation, rather than actual price pressures themselves.” (BBG)
Fed’s Barkin is focused on the ‘last mile’ to inflation target
Federal Reserve Bank of Richmond President Tom Barkin said last year’s interest-rate cuts supported the labour market, while officials now focus on reducing inflation to target levels. Though the economic outlook has improved, hiring is limited to a few sectors, and inflation remains high. Barkin noted that further action is needed on both employment and inflation and expressed an intent to work with Kevin Warsh, nominated by President Trump for Fed leadership. (BBG)
US January jobs report delayed due to government shutdown
The Bureau of Labour Statistics will not release the January jobs report on Friday as scheduled due to the partial government shutdown. "The release will be rescheduled upon the resumption of government funding," Emily Liddel, BLS associate commissioner for publications and special studies, said in a statement. (BBG)
Eurozone banks tighten credit for businesses unexpectedly
Eurozone banks tightened corporate lending standards at the end of 2025 due to concerns about economic and firm outlooks, as well as lower risk tolerance. They anticipate further slight tightening for companies in early 2026, with nearly half viewing trade policy changes as significant. The ECB noted rising corporate credit demand for inventories and working capital, and a minor easing in housing loan standards. (BBG)
Senior Chinese official pledges to increase consumer spending to transform the economy
China's Vice Finance Minister Liao Min vowed to advance a unified national market to unleash domestic consumption amid a "pivotal juncture" in the global economic transformation facing Asia-Pacific nations. Speaking at an APEC finance and central bank deputies' meeting in Shanghai, he emphasised that further opening China's economy would generate more regional business opportunities. (BBG)
BOJ unlikely to aid Takaichi-led bond selloff
The Bank of Japan has maintained stringent intervention criteria that have not yet been met, according to sources. Available measures include emergency bond purchases and the suspension of tapering. The Bank currently appears disinclined to moderate yield increases driven by fiscal concerns. Certain analysts interpret recent movements in Japanese Government Bonds as a period of calm preceding potential volatility. (RTRS)
New Zealand's unemployment rate is the highest in over a decade, but Westpac sees early signs of improvement
New Zealand’s unemployment rate rose to its highest level since 2015 in the final quarter of 2025. However, Wespac notes that the labour market showed early signs of improvement in the December 2025 quarter, with employment rising 0.5% and hours worked up 1%, though the unemployment rate edged up to 5.4% due to stronger participation growth. Wage pressures remained subdued, with the private sector Labour Cost Index increasing 0.5% quarterly and 2.0% annually, the slowest pace since March 2021. The results align closely with Reserve Bank of New Zealand forecasts. They are unlikely to prompt immediate policy changes ahead of the February 18 review, given persistent slack and muted wage growth. Westpac maintains its view of a first-rate hike in December 2026, allowing time to gauge the strength of the recovery. Household survey positives contrast with a dip in paid hours from the business survey.
Today’s Macro Roadmap: EZ & US services PMIs, EZ final HCPI, US ADP
In the Euro Area, headline consumer price growth in the Eurozone last month likely fell even further beneath the level preferred at the European Central Bank, where the officials could maintain monetary policy for all of the current year and beyond, according to observers. An economist’s poll predicted that the annual Eurozone headline inflation rate in January slipped two-tenths to 1.7%, bringing it well below the ECB’s medium-term target of 2.0%. The less-volatile core rate was set to remain at 2.3% y/y, observers said. (LS – Continue Reading)
In the US, the main event will be the release of the January ISM services PMI. The consensus expects a decline to 53.5 from 54.4 in December. Some of the leading indicators we are watching have accelerated recently, so we wouldn’t be shocked if the data surprised to the upside. Regarding the subcomponents, we are closely monitoring the price paid and employment series.
Good luck today, and feel free to ping me in the chat to discuss markets and views!