HIGHLIGHTS
S&P500 ended 2024 with a strong return of 23.3%. Historically, January has been one of the two best trading months.
High Rate: 30Y mortgage rate is at 6-month high of 6.97%, which will continue to affect housing demand because of the high borrowing cost. There was a 7% decline in home purchase application last week.
Parity: EURUSD is at its 2Y low around 1.02 and reaching parity (i.e. 1), mainly driven by the concerns about growth in Europe. The gross domestic product (GDP) growth is expected to be low because of the fiscal tightening, tariffs and China competition.
China: Chinese stocks had a bad start this year. CSI300 and HSCEI dropped 4.06% and 1.34% respectively. It is driven by weak manufacturing data, tariffs, uncertainty about economic recovery and continuous struggle in housing market.
MARKETS
19,621.68 | -0.51% | |
S&P 500 | 5,942.47 | -0.48% |
Dow | 42,732.13 | -0.60% |
10-Year | 4.60% | -2bps |
Brent | 76.59 | +3.77% |
DXY | 108.92 | +0.84% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
J.P. Morgan: Among different asset classes, equity is the clear winner in 2024. US large cap and small cap returns are 26.9% and 12.2% respectively, supported by the expectation of corporate tax cuts and deregulation. Emerging market equities also performed well driven by China’s stimulus and strength in Taiwan and India.
UBS: We believe the AI rally is likely to continue in 2025. We expect to see more upward revisions from large-cap tech capital expenditures spending, especially in Q4 could potentially detail larger investment plans.
Fixed Income
J.P. Morgan: Global high yields benefited from the cutting cycles and low default rates, returning 9.2% this year. Cash had its highest return since 2000 despite the downward pressures on short rates because of rate cuts. We expect to see modest cash returns in the coming year as the Fed is likely to slow down its cutting cycle.
Goldman Sachs: The debt limit suspension period ended at the start of 2025, and the deadline for debt limit action is likely not until the second half of the year. Debt ceiling limitation implies that there will be broader liquidity and less bill supply.
Economy
Barclays: The divergence tone between the Fed and central bankers of other major economies continues to reflect the growth and inflation in the US are strong.
Goldman Sachs: 2025 US economic projection remains healthy. President Trump will preview the policies later this month, such as domestic oil production, immigration and tariffs, which the macro risks are mainly tied to these factors.
KNOWLEDGE TRANSFER
GLP-1
Here's all you need to know about the Game-Changing Obesity Drugs.
DISCLOSURE
This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.
Comments