A look at the coming day in US and global markets by Mike Dolan
After a frenetic first three days of Donald Trump’s new presidency, buoyant Wall Street stocks hovered near new record highs, gradually turning attention to a busy season of corporate earnings and economic updates.
Wednesday’s tech-led jump in US stock indices, fueled by Trump’s plan to boost investment in artificial intelligence and Netflix’s impressive results, sent the S&P500 to a new intraday record and volatility indicators fell to lowest level of the year so far.
Stock index futures retreated slightly overnight and Treasury yields rose in the renewed “risk-on” environment, despite strong demand from the latest sale of 20-year bonds on Wednesday.
One of the antecedents of the week so far has been how strong sales of sovereign debt in developed markets have been met with strong orders from investors, easing some fears from the beginning of the year about government financing. Aside from the 20-year bond sale, bond auctions in Britain, France and elsewhere have been gobbled up by bond funds.
Benign inflation readings from the United States, Canada and Europe have helped and, at 46 basis points, the estimated “term premium” embedded in 10-year Treasuries has returned to its lowest level of the year.
Also contributing has been the drop in U.S. crude oil prices to two-week lows, in part due to Trump’s push for drilling. On Monday, the new president declared a national energy emergency, aiming to give him authority to ease environmental restrictions on energy infrastructure and projects and facilitate permitting for new transmissions and pipeline construction.
TRUMP TALKS TO DAVOS
There wasn’t much news on Trump’s new tariff push overnight. Despite statements about possible new tariffs on China, previous promises from the European Union, Canada and Mexico about “day one” increases have not materialized, leaving the issue hanging over the coming weeks.
Instead, Trump on Wednesday turned his attention to Russia, saying he would add new tariffs to his threat of sanctions against Moscow if the country does not reach a deal to end its war in Ukraine.
All eyes will be on Trump’s virtual appearance at the World Economic Forum in Davos at 11:00 a.m. ET.
On Wall Street, economic updates return on Thursday after a data-starved week so far, with weekly jobless claims numbers set to be closely watched again later, and the first round of surveys are also about to be revealed. January business.
The day’s earnings report is led by Texas Instruments and General Electric, and markets are now preparing for next week’s updates from the big tech companies of the so-called Magnificent Seven.