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Core bonds grinded higher again yesterday. Bunds outperformed Treasuries with the latter returning from their intraday highs after a batch of important economic data. ADP job growth for December (+41k, recovering from -29k) and JOLTS job vacancies for November (7146k, down from 7449k) fell short of expectations but got balanced out by a stronger-than-anticipated services ISM. The headline number unexpectedly improved from 52.6 to 54.4, which was among the highest in around three years. Subindices such as employment (52, returning to growth), new orders (surge to 57.9) and general business activity (56, from 54.5) drove the uptick. Net daily changes for US rates eventually varied between +0.7 (2-yr) to -3.5 bps (20-yr). German/European rates extended their decline by 1 to 3.3 bps. Such a correction was perhaps due after a quarterly-long steady rise that brought the likes of the 10 year to the first important resistance zones. Sub-consensus (core) inflation figures for the euro area (2.3% core, 2% headline) simply acted as a trigger to some short-covering. Should the corrective move lower continue, the 2.73%-2.78% area and 2.65% pops up as first support in the 10-yr swap and the German 10-yr yield respectively. The ultra short end of the European yield curve after this week’s national and yesterday’s EMU CPI figures priced out any speculation on rate hikes (late) this year, which was probably premature anyway. UK gilts had a stellar performance, pushing yields at the longest maturities up to 7 bps lower. The 10-yr and 30-yr yield at the other side of the Channel are near important support zones (2025 lows). FX markets remained stoic with the dollar having held a slight advantage over G10 peers. We fear more of the same listless trading today given the empty eco calendar. Apart from US jobless claims and some second tier European data (EC economic confidence), there’s not much to inspire the market. Investors may prefer sticking to the sidelines going into tomorrow’s December payrolls report. That probably won’t change the January Fed outcome (unchanged) but could affect market thinking on the timing of a next rate cut. The money market is currently split between April and June. The empty calendar today does allow us to gauge any self-sustaining momentum behind the core bond yield correction. We’re also closely watching oil prices, which seem to be at a make or break point near $60/b, a level repeatedly tested in 2025 and the lowest since 2021. In another important note, the US Supreme Court could tomorrow release so-called opinions on Trump’s (IEEPA) tariffs that may end up in actual rulings on the matter as well. If it were to strike them down, uncertainty undoubtedly flares up again, despite the US administration claiming it has other ways of introducing import levies.

News & Views

S&P Global argued in a study “the future of copper” that a significant looming deficit poses a systemic risk to global economic growth. By 2040, the study fears a 10mn tonnes deficit, equivalent to 1/3 of current global demand in absence of a meaningful extension of supply. The significant demand/supply mismatch is expected to start showing from early 2030 onwards. Copper is in huge demand because of the energy transition and the booming AI sector (construction data centers). Copper prices rallied significantly since the start of Q4 2025 with spot prices hitting an all-time high earlier this week above $13000/ton.

US President Trump will ask US Congress to raise defense spending from $901bn on the current year’s budget to $1.5tn for the year 2027. “Because of tariffs and the tremendous income that they bring, we are able to easily hit that number”. He also said he would “not permit” US defense companies to issue share buybacks or dividends until they responded to his call for military equipment to be produced more quickly and reliably. He also issued an executive order asking the defense department to add clauses to military supply contracts not to link executive incentive compensation to short term financial metrics.

The RBA remains biased against further near-term rate cuts, despite the softer-than-expected inflation data, according to comments from Deputy Governor Andrew Hauser. Speaking in an interview with Australian Broadcasting Corporation, Hauser said the likelihood of additional easing in the near term remains "probably very low".

Hauser stressed that the November CPI downside surprise has not altered the central bank’s thinking. He described the data as “helpful” but said it was “largely as we expected,” adding that there was “not a lot of news” in the release from a policy perspective. Inflation remains above the RBA’s 2–3% target range, reinforcing the case for caution.

He also noted that part of the moderation in inflation reflected temporary factors such as Black Friday discounting, while cost pressures in housing-related components actually picked up. As a result, policymakers are placing greater emphasis on the upcoming quarterly inflation report due later this month.

Hauser said the RBA will assess that quarterly data in the context of the broader economy rather than reacting mechanically to a single number. While an extreme outcome would prompt deeper scrutiny, he made clear there is no simple rule linking specific inflation prints to policy move.

"We don't have a rule that says if it's 0.9 we hold, and if it's 1 we raise and if it's 0.7 we cut — we take a view of the whole economy," Hauser emphasized.

Japan’s economy continues to recover gradually across the country, according to the latest Regional Economic Report from the BoJ. The central bank maintained its assessment for all nine regions, noting that activity is either picking up or recovering at a modest pace.

The report highlighted continued wage pressure, with many firms indicating the need to raise wages in fiscal 2026 at roughly the same pace as in 2025. Strong corporate profits and a tight labour market were cited as key drivers. That said, the BoJ flagged emerging divergence beneath the surface. Some regions warned that smaller firms may struggle to match last year’s wage hikes.

Some export-oriented areas reported softness linked to "the impact of U.S. tariffs and intensifying competition from Asian companies". Others, however, pointed to "increasing global demand mainly for artificial intelligence-related goods."

Full BoJ Regional Economic Report here.

Japan’s real wages fell sharply in November, dropping -2.8% yoy, marking the 11th consecutive month of decline and the steepest fall since last January. Inflation-adjusted earnings were hit as a 3.3% rise in consumer prices more than offset a modest increase in nominal pay.

Nominal wages rose just 0.5% yoy, far below expectations of 2.3% and a sharp slowdown from October’s 2.5% pace. While nominal pay has now risen for 47 straight months, the latest reading marks the weakest growth since December 2021.

The softness was driven largely by a -17.0% drop in special earnings, mainly volatile one-off bonuses outside the usual summer and winter payment periods. More concerning for the underlying trend, regular pay growth eased from 2.4% yoy to 2.0%. Overtime pay slowed from 2.1% to 1.2%, pointing to waning momentum in private-sector income growth and continued pressure on household purchasing power.

Feelings were as mixed as the US data yesterday. The S&P 500 kicked off the session on a positive note and hit a fresh record high, as the ADP report printed a softer-than-expected number of job additions in December. According to the report, the US economy added around 41K new private jobs last month versus 50K expected by analysts. The number was weak enough to fuel Federal Reserve (Fed) rate-cut expectations but not weak enough to revive recession fears. Just sweet.

Then, the ISM data that landed later showed a strong expansion in the services sector since November 2024 — though December numbers tend to be boosted by the Christmas and year-end holiday period, so seasonality should be taken into account.

Finally, the JOLTS data warned that US job openings unexpectedly fell in November to the lowest level in more than a year, while hiring slowed.

Together, the data pointed to a slowing — but not collapsing — US economy. Traders slightly pared back March rate-cut expectations, the US 2-year yield fluctuated just below the 3.50% mark, and equities gave back gains. The S&P 500 ended the session down 0.34%, while the tech-heavy Nasdaq — now less sensitive to rate expectations — eked out a small gain, even though its growth-heavy constituents should, in theory, see valuations more impacted by rate changes, but this relationship is partly offset by strong cash flows and solid balance sheets of the heavy-weight Big Tech companies.

In energy, the S&P 500’s energy ETF posted a second consecutive loss — and with notable swings — though performance diverged across components. Exxon, for example, fell 2% (after Tuesday’s 3% retreat from an all-time high) as the US announced that Venezuela “will be turning over” up to 50 million barrels of oil to the US, while Valero Energy, an oil refiner, gained more than 3%. “We’re just going to get that crude moving again and sell it,” the White House said.

US crude prices fell on rising supply prospects linked to these additional Venezuelan barrels — even though Venezuelan oil production would take years to return to levels seen a decade ago. Venezuela still operates with outdated infrastructure and exports less than 1% of global oil supply. Still, Exxon Mobil warned that lower oil prices reduced its Q4 results by $800 million to $1.2 billion. The upcoming earnings season may prove challenging for oil majors. Could this mark a turning point in the recent oil-stock rally? One to watch.

Beyond oil, the Venezuelan developments are highly unusual. The US intervening directly, removing a country’s leadership and seizing access to natural resources would mark a major escalation. It raises uncomfortable questions about who could be next — Colombia, Greenland, Canada — all regions Trump has previously targeted either for their natural resources, strategic positioning, or both. We may yet regret last year’s trade war.

European defence stocks extended their rally, with the sector up more than 10% since the start of the year. Across the Atlantic, however, major US defence names including Lockheed Martin and RTX came under pressure after Trump said he would not allow dividends or share buybacks for defence firms, preferring they reinvest the capital. That gives an idea of what may lie ahead.

This is not the first time the White House has intervened in corporate affairs. The US government now holds stakes in key sectors (including rare-earth miners and Intel), takes a cut of Nvidia’s China-related revenues, and is signalling limits on capital returns for defence firms. It is an odd turn for a country long seen as the godfather of free capital markets. Investors may grow increasingly sceptical of rising government influence in corporate decision-making, especially where political goals diverge from shareholder value. One wonders whether this accelerates rotation out of US assets.

Ironically, RTX jumped 4% in after-hours trading after Trump mentioned its Raytheon unit in a Truth Social post. Give me a break.

Geopolitical tensions are also heating up between China and Japan at the intersection of trade and technology. Beijing has imposed export restrictions on dual-use goods to Japan — including key semiconductor inputs and rare-earth materials — and launched an anti-dumping investigation into dichlorosilane, a critical chipmaking chemical imported from Japan, following complaints from domestic producers. Tokyo said the export curbs were unacceptable and warned of disruptions to global supply chains. Funnily, the dispute comes against the backdrop of Japan’s own export controls on advanced chip technology and rising tensions over Taiwan.

Japan’s tech-heavy Topix index has retreated from all-time highs reached earlier this week. European and US futures point to a bearish open amid ongoing trade and rising geopolitical uncertainty.

Australian exports, for example, fell sharply in November — down more than 10% to the US — reflecting the impact of newly imposed tariffs and sending the AUDUSD lower this morning.

Closer to home, the Swiss franc is slightly weaker against the US dollar despite geopolitical tensions. Switzerland will publish its latest inflation data today, expected to show flat monthly and annual prices, helped by the strong franc.

Gold, meanwhile, is facing resistance near record highs, but any pullback is likely to attract fresh demand as it increasingly serves as a strategic store of value amid waning appetite for the US dollar.

Turkey, for example, will implement a Precious Metal Tracking System (KMTS) requiring all gold products — from one-gram bars to kilogram pieces — to carry an official banderol and unique serial number, making their origin and trade history fully traceable. The policy will take effect in April 2026. Under the system, cash gold transactions will be phased out in favour of bank transfers and card payments, with invoices recorded digitally. Among other reasons, this move reflects efforts to reduce dollar dependence indirectly while tightening control over domestic gold holdings — an asset gaining strategic importance in today’s increasingly fragmented geopolitical landscape.

In focus today

In the euro area, focus turns to the November unemployment data. The unemployment rate has led steady at 6.4% in the previous six releases showing a labour market in balance, following a large revision to earlier data that we got in September. We expect the unemployment rate remained at 6.4% in November.

In Sweden, inflation data for December is released today. In November, inflation showed an unexpected decline, as core prices fell by -0.6% m/m, bringing the yearly rate to 2.4%. For December we expect a seasonally normal rise in inflation. Core inflation in December is expected to land at 0.6% m/m, bringing the year-on-year change to 2.6%. Energy prices have been low because of the mild winter weather, resulting in CPIF to be largely unchanged at 2.3%.

Economic and market news

What happened overnight

In the US, President Trump said that he is taking steps to ban Wall Street firms from buying single-family homes to address affordability concerns and reduce housing costs. The move targets private-equity landlords like Blackstone and American Homes 4 Rent, which have been criticised for contributing to reduced housing supply and rent inflation. Homebuilder stocks dropped sharply, with American Homes 4 Rent hitting a three-year low, falling 4%, and Blackstone shares down 5.6%.

On a busy evening, President Trump also announced measures to block dividends and share buybacks for defence contractors until they accelerate production and improve cost efficiency. Defence shares fell sharply, with Lockheed Martin dropping 4.8%, Northrop Grumman falling 5.5%, and General Dynamics sliding 3.6%. The executive order further proposes capping executive pay and tying future contracts to production targets.

Furthermore, President Trump announced plans to withdraw from 35 non-UN groups and 31 UN entities, including the UN Framework Convention on Climate Change and UN Women, citing conflicts with US interests and inefficiency. The move aligns with Trump's broader scepticism of multilateral institutions, raising concerns about the US losing influence on global issues like climate change and gender equality.

What happened yesterday

In geopolitics, tensions over Greenland have escalated as President Trump revived ambitions to take control of the Arctic island, citing its strategic importance for US defence and mineral resources. European allies, led by Denmark, are coordinating a response, reaffirming Greenland's autonomy amid concerns over potential unilateral US action. NATO is set to address the issue at its next meeting, while Denmark has disputed Trump's claims of Russian and Chinese presence near Greenland. Overnight, US Secretary of State Marco Rubio announced plans to meet Danish leaders next week but gave no indication of retreating from Trump's ambitions.

Furthermore, crude oil prices initially fell after President Trump announced plans to release up to 50 million barrels of Venezuelan crude stuck under blockade. However, they recovered much of the losses overnight. This follows the seizure of a Russian-flagged tanker linked to Venezuela and signals Trump's ambition to control oil flows in the Americas while reviving Venezuela's oil sector. The move has sparked condemnation from China and Russia.

In the US, mixed signals emerged from key labour market and activity data. The ISM Services index rose more than expected in December to 54.4 (from 52.6), driven by new orders and employment components. However, the series has been volatile recently and opposing signals from other PMI surveys suggest caution in interpreting the data. Meanwhile, the ADP employment report showed private-sector jobs increasing by 41k in December, close to consensus (47k).

The JOLTs survey highlighted a notable decline in job openings to 7.1 million (from 7.4 million), with the ratio of job openings to unemployed falling to 0.91, its weakest level since March 2021. While this supports the Fed's case for rate cuts amid cooling labour market conditions, the number of involuntary layoffs remains low, suggesting a stable 'low hiring, low firing' environment. Overall, the mixed data package leans dovish, reflecting labour market risks that the Fed continues to monitor closely.

In the euro area, HICP inflation fell to 2.0% y/y in December (cons: 2.0%, prior: 2.1%), while core inflation declined to 2.3% y/y (cons: 2.4%, prior: 2.4%), below expectations due to weak goods inflation. Headline inflation softened primarily due to lower energy prices, though services inflation remained sticky at 3.4%. The weaker-than-expected data has supported lower market pricing for inflation in Q1 2026 and raised expectations of potential ECB rate cuts, with the markets now pricing in 5bp of cuts from the ECB by July. However, with growth still holding up, services inflation being sticky, and as inflation expectations are anchored, we do think the bar for new rate cuts from the ECB is high.

Additionally, the December euroCOIN indicator from Bank of Italy pointed towards strong growth in Q4 2025, with 0.5% q/q GDP growth compared to the consensus and ECB projection of 0.2% q/q. The indicator has historically had a decent correlation with actual GDP growth, although not perfect.

In Australia, November's monthly inflation landed below expectations at 3.4% year-on-year, while core inflation momentum remained steady at 0.3% month-on-month. With full monthly inflation readings only recently introduced, the Reserve Bank of Australia is likely to continue prioritising quarterly prints, leaving markets pricing a 50% chance of a rate hike in Q1.

In Sweden, the composite PMI declined to 56.3 in December from 57.9 in November, driven by a fall in Services PMI to 56.7. The decrease was primarily due to lower business volumes and delivery times, which had previously supported November's strong reading.

In China, authorities have reportedly asked tech firms to suspend orders for Nvidia's H200 chips as Beijing considers mandating domestic AI chip purchases. This reflects ongoing tensions over semiconductor trade amid US export controls and China's efforts to reduce reliance on US-designed chips. The H200 is the predecessor to Nvidia's current flagship chip. Nvidia CEO Jensen Huang said this week that demand in China for its H200 chip was strong and the company is viewing purchase orders as a signal of approval rather than expecting any formal announcement from Beijing.

Equities: Global equities pulled back yesterday after a strong start to the year. The sell-off was relatively broad-based, and it was difficult to pinpoint a single, clear driver behind the move. That said, there were a few notable cross-currents. In Europe, cyclicals once again outperformed defensives, even on a down day for equities overall. Small caps continued to outperform, reinforcing the message that leadership remains broader than last year's narrow rally. Energy stocks underperformed as oil prices fell a further 2% on the day. In the US yesterday, Dow -0.9%, S&P 500 -0.3%, Nasdaq +0.2%, and Russell 2000 -0.3%. This morning, the negative tone is continuing in Asia, with most markets lower. Futures point to a softer open in both Europe and the US.

FI and FX: The USD was on the rise yesterday when it was outshined only by the SEK. The stronger USD looked to be coupled with a setback in stock markets after a strong first couple of days and a rally in US Treasuries with the 10Y yield falling to 4.13% and EUR/USD ending below 1.17. Weak risk sentiment also hit the oil market and consequently NOK which reversed course after the rally to start the year. DKK continued to be under pressure prompting a sharp rise in EUR/DKK FX forwards as the market speculating in potential FX intervention from the central bank.

The short-term sequence of the S&P 500 (SPX) from the November 21, 2025 low reveals a diagonal Elliott Wave structure currently unfolding. A diagonal is characterized by five waves, with the distinctive feature of overlapping between waves one and four. From the November 21 low, wave ((i)) advanced to 6903.46, followed by a corrective pullback in wave ((ii)) that concluded at 6719.8. The Index then resumed its upward trajectory in wave ((iii)), which subdivided into an impulsive structure. Within this advance, wave (i) terminated at 6815.19, while wave (ii) dipped to 6758.5. Momentum strengthened as wave (iii) extended higher, reaching 6882.03, before a modest retracement in wave (iv) ended at 6868.81.

The final leg, wave (v), carried the Index to 6945.77, completing wave ((iii)). A corrective phase then emerged in wave ((iv)), unfolding as a zigzag Elliott Wave structure. In this decline, wave (a) ended at 6888.76, wave (b) rebounded to 6913.71, and wave (c) dropped to 6824.31, thereby completing wave ((iv)). The S&P 500 has since resumed higher in wave ((v)). From wave ((iv)), wave (i) advanced to 6965.69. A pullback in wave (ii) is anticipated, with buyers expected to emerge in three, seven, or eleven swings, supporting further upside potential.

S&P 500 (SPX) 45 minute chart from 01.07.2026 update

SPX Elliott Wave video:

https://www.youtube.com/watch?v=SioE0hPIFwI

Key Highlights

• Bitcoin climbed toward $95,000 before correcting some gains.
• BTC/USD is well above a bullish trend line with support at $89,000 on the 4-hour chart.
• Ethereum started a decent increase above $3,000 and $3,120.
• XRP price rallied toward $2.50 before it faced heavy resistance.

Bitcoin Price Technical Analysis

Bitcoin price found support near $86,800 and started a fresh increase against the US Dollar. BTC climbed above $89,500 and $90,000 to enter a short-term positive zone.

Looking at the 4-hour chart, the price even surpassed $92,000 before it faced sellers near $94,800. A high was formed at $94,794, and the price settled above the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour).

Recently, there was a downside correction below the 23.6% Fib retracement level of the upward move from the $84,384 swing low to the $94,794 high.

However, BTC is well above a bullish trend line with support at $89,000. Immediate support sits at $90,800. A downside break below $90,800 might start another decline. The next major support is $89,200, the 100 simple moving average (red, 4-hour), and the trend line at $89,000.

If there is another increase, the price could face resistance at $93,500. The first key hurdle is $94,200. The main hurdle could be $95,000. A successful close above $95,000 might start another steady increase. In the stated case, the price may perhaps rise toward the $96,500 level. Any more gains might call for a test of $98,000.

Looking at Ethereum, the price moved into a short-term positive zone and might soon aim for a move above $3,300.

Today’s Key Economic Releases

• US Initial Jobless Claims - Forecast 210K, versus 199K previous.
• US Goods and Services Trade Balance for Oct 2025 - Forecast $-58.9B, versus $-52.8B previous.

Gold was down as much as 1.2% before recovering to trade above the $4450/oz. The precious metal is still finding significant buying support on dips but does remain vulnerable if it does not breach the $4500/oz level.

Geopolitics and US Data

Geopolitical risk rears its head again as news came through earlier today that the US were going to seize another tanker out of Venezuela which was sporting a Russian flag. This has caused some concern about an escalation between the US and Venezuela as well as potentially Russia.

The White House separately confirmed discussions about acquiring Greenland, including potential military involvement which is likely to keep safe haven demand in play as well.

Further underpinning the precious metal was softer than expected employment data which continues to support further Federal Reserve interest rate cuts. US job openings fell more than expected in November after rising marginally in October, while a separate ADP report showed that private payrolls increased less than expected in December.

What Comes Next for Gold Prices?

Investors are closely watching for the release of the NFP data on Friday, January 9. This will likely have a major impact on rate cut expectations and thus could serve as a catalyst for gold's next big move.

Gold does appear to still be volatile given the price action we saw today. So I would not rule out significant movement overnight in the Asian session.

Tomorrow brings a batch of mid-tier US economic data that could spark some volatility. The key releases to watch include the initial jobless claims and the trade balance for goods and services.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Technical Outlook - Gold (XAU/USD)

Looking at the four-hour chart below, the technical picture is intriguing to say the least..

The rally since the start of the week has failed to gain acceptance above the crucial $4500/oz level.

The selloff today however, has run into a key area of support provided by the 50-day MA which rests at $4419/oz.

Price has bounced and is now resting just around the $4450/oz handle, with the period-14 RSI also having bounced off the 50 level which hints at bullish momentum remaining in play.

As things stand buyers remain in control with significant support to the downside. The ongoing geopolitical drama is also underpinning prices.

This could all change with Friday's jobs data where a strong NFP print and a significant improvement in the unemployment rate could lead to a selloff which may threaten the $4400/oz handle.

A move lower may look to retest the weekend gap which rests between the $4332-$4354/oz handles.

Meanwhile, a move higher from here needs acceptance above the $4500/oz handle before a sustainable break of the current all-time high around $4550/oz becomes a possibility.

Gold (XAU/USD) Four-Hour Chart, January 7, 2025

Source: TradingView (click to enlarge)