The day began with an unsurprising increase in the Bank of Japan's key rate from 0.25% to 0.50%, while inflation in Japan reached +3% in December.
US bond markets, meanwhile, turned upwards in the afternoon following disappointing figures (S&P-Global and U-Mich PMIs), with yields easing on '10-year' T-Bonds from 4.66% to 4.6130% (-2.5pts) and on '30-year' from 4,8700% to 4.857%

Growth in the US private sector slowed markedly in January (-3Pts), according to S&P Global, whose composite PMI index came in at 52.4 in flash estimates, compared with 55.4 in final data for December.
The slowdown was concentrated in the services sector, where output grew at the slowest pace since last April, while manufacturing output returned marginally to growth after five months of decline.
The second disappointment was the fall in US consumer confidence to 71.1 in the final version, compared with 74 in December, after a first estimate of 73.2 and economists' expectations of 73.

Joanne Hsu, the report's author, explains this first drop in the index in six months by the deterioration in the propensity of households to buy durable goods and the prospect of rising unemployment.

In parallel, one-year inflation expectations have risen from 2.8% to 3.3%, moving back above the 2.3%-3% range within which they had evolved in the two years preceding the pandemic.
According to the UMich, some 47% of survey participants say they expect the unemployment rate to rise in the coming year, a figure at its highest since the Covid-related recession.

Finally, sales of existing homes in the U.S. rose 2.2% in December 2024 from the previous month, to a seasonally adjusted annual rate of 4.24 million, according to the National Federation of Realtors (NAR).
'Consumers clearly understand the long-term benefits of homeownership. Job and wage gains, as well as rising inventories, are having a positive impact on the market', according to Lawrence Yun, chief economist at the NAR.
The median sales price of existing homes rose 6% from December 2023 to $404.400, and the stock of unsold existing homes stood at 1.15 million, representing 3.3 months of inventory at the current clearance rate.

There were also figures in Europe, and they were more positive: the preliminary PMI HOCB index measuring private sector activity in France came out slightly up above 48.3, but remains well below 50.
And activity remains sluggish in the eurozone: the HCOB flash composite PMI index of overall activity in the eurozone edged up to 50.2 in January, signalling the first rise in economic activity in the region since August 2024.
"The improvement in economic conditions across the zone was largely driven by the performance of Germany, which saw its overall activity pick up", points out Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.
The UK private sector also picked up pace slightly in January, despite the recent reawakening of inflation: the UK composite PMI rose to 50.9 this month, compared with 50.4 the previous month (Gilts added +5pts to 4.683%, or +3pts weekly).

These figures confirm what we already know, namely that the eurozone economy is stagnating, the UK is mired in stagflation and the US economy continues to outperform its peers by a wide margin", points out Michael Brown, market strategist at Pepperstone.

The analyst points out, however, that many uncertainties remain, mainly linked to developments in US trade policy, which could derail the current stock market rally.

The trend remains heavy in Europe, with Bunds at 2.543% (+3Pts) and OATs at 3.304% (+1Pt)... note that the OAT/Bund spread has contracted to 76.5 basis points.

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