OPENING CALL
Stock futures dipped on Monday, with highly valued tech companies such as Nvidia and Tesla driving losses, as investors lose hope of the Federal Reserve lowering interest rates anytime soon.
Treasury yields rose, extending gains sparked by Friday's blockbuster jobs report, as the global bond selloff rolls on.
Investors are worried the strong labor market may prevent the Fed from cutting interest rates as fast as they'd hoped this year, if at all.
Adding to the angst, new U.S. sanctions on Russia's oil industry have pushed up crude prices in recent days.
The next big test for stocks and bonds could arrive Wednesday, when consumer-price inflation data is due.
Stocks to Watch
Calumet closed a $1.44 billion loan facility from the Energy Department. Shares went up 8.1%.
Constellation Brands fell 0.6%, following a 17% decline on Friday, after reporting fiscal third-quarter earnings and sales that missed analysts' forecasts.
Constellation Energy closed Friday with a gain of 25% after reaching an agreement to acquire privately held Calpine.
Hershey rose 0.3% after its CEO and President Michele Buck said she would be stepping down effective June 30, 2026.
Nordstrom said it expects fiscal-year sales to increase 1.5% to 2.5%, higher than a prior forecast. The stock fell 0.2%.
Nvidia fell 2.9% after analysts at HSBC reduced the price target on its shares to $185 from $195 but maintained a Buy rating, the Fly reported.
Rexford Industrial Realty said wildfires raging in Southern California haven't damaged its properties. Shares rose 1%.
Tesla declined 3% after Axios reported over the weekend that its regulatory credit sales were at risk from President-elect Donald Trump's policies.
Walgreens Boots Alliance was down 1.2% after shares soared nearly 28% on Friday following adjusted fiscal first-quarter earnings that topped Wall Street estimates.
WD-40 reported fiscal first-quarter earnings and sales that rose from a year earlier. Shares rose 2.2%.
Economic Insight
China's exports face mounting challenges this year amid external uncertainty over trade policies under Trump, Pantheon Macroeconomics said.
Pantheon is watching to see how China responds should Trump follow through on tariff threats.
With the yuan under pressure, it thinks Beijing will prioritize currency stability.
Watch For:
Employment Trends Index for Dec
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MARKET WRAPS
Forex:
Stronger-than-expected jobs data Friday helped drive the dollar close to its highest level in more than two years against a basket of currencies, with the euro and pound hitting their lowest since November 2022 against the U.S. currency.
The jobs data has contributed to lower expectations for Fed interest-rate cuts.
"The Fed could be on hold for longer than we had anticipated," MUFG said. "There is a compelling case for further dollar strength."
The euro's downward momentum against the dollar is accelerating, according to the weekly chart, UOB's Global Economics & Markets Research said.
It is likely to keep declining against the dollar, potentially toward the round-number support level of 1.0000, according to UOB.
ING said sterling could fall even further this week against the dollar as Wednesday's U.K. inflation data is likely to be negative for the currency.
The PBOC's ramped-up efforts to defend the yuan may have limited impact, Mizuho Securities Asia said, noting the central bank's latest FX-supportive measures aimed at making it easier for Chinese companies to raise money from overseas.
Bonds:
Ten-year Treasury yields rose to their highest levels since November 2023, extending recent gains after Friday's nonfarm payrolls data.
"The 10-year U.S. Treasury yield has risen by nearly 40bps since the U.S. election," Generali Investments said.
About a third of this rise is due to the upward revision of the Fed funds rate path and the rest to a higher term premium, according to Generali Investments.
Morgan Stanley Research is staying patient and neutral on Treasury duration.
"The upside surprise on nonfarm payroll prompts us to no longer suggest playing for a rate cut at the January FOMC meeting."
The heightened risk of post-election better-than-expected economic data suggested a cautious, neutral stance toward government bond market duration, according to Morgan Stanley.
Commerzbank Research said bond markets were struggling to stabilize with the rally in oil, upbeat payrolls and the government supply wave taking its toll.
"A change of dynamics seems unlikely this week."
Energy:
Oil jumped in early trade, with Brent breaking above $80 a barrel on expectations that wider U.S. sanctions against Russia will curb supplies to buyers in China and India.
The Biden administration broadened sanctions against the Kremlin's energy sector, targeting major oil producers and vessels shipping Russian oil.
According to Goldman Sachs, the targeted vessels transported 1.7 million barrels a day of oil last year, equivalent to 25% of Russia's exports.
Goldman Sachs said a temporary 1 million barrel-a-day drop in Russian output could push Brent slightly above the $70-$85 a barrel range, but added the long-term impact would be limited given OPEC+'s spare capacity and ability to raise production.
Mizuho Securities said the knee-jerk rise in Brent prices following tighter U.S. sanctions on Russian oil is likely overblown and not necessarily a trend.
It added that while there may be more upside shocks driven by fears of supply being materially crimped, the wider demand-supply dynamics still show relatively stable, not soaring, oil prices.
Metals:
Gold edged lower in early trade after the jobs data reinforced the Fed's cautious stance on rate cuts this year, boosting the dollar.
"The probability of no rate cut from the Fed in May spiked to 67% in the aftermath of the data release, and the probability of a June cut is close to a coin flip," Swissquote Bank said.
Still, prices continue to be supported by strong central-bank buying and safe-haven demand due to broader uncertainties around future U.S. policy under Donald Trump.
Phillip Nova said gold was likely to rise further in 2025.
The yellow metal surpassed the $2,700 mark last Friday after consolidating in the $2,600 range for over a month.
A sustained consolidation above the $2,700 mark would enable gold bulls to target $3,000, Phillip Nova added.
There is strong long-term support for a bullish upswing in gold, particularly with macroeconomic factors expected to play a significant role in 2025.
Base metals edged higher in early European trade, with copper and aluminum both up.
"Trump's proposed tariffs are expected to ignite another global trade war, which could hinder growth in demand at key consumers such as China, " ANZ Research said.
TODAY'S TOP HEADLINES
JPMorgan Hosts First Major Healthcare Gathering Since Death of UnitedHealthcare's CEO
Healthcare industry leaders gathering in San Francisco for an annual conference typically discuss dealmaking, bestselling drugs and how to entice their next big investor. This year another topic is foremost on their minds: Staying safe.
The J.P. Morgan Healthcare Conference on Monday is the first big industry gathering since the killing last month of UnitedHealthcare Chief Executive Brian Thompson. His death, and subsequent rage directed at insurers and online support for the man charged with Thompson's murder, have put security in the spotlight.
Burlington Sees the Future of Retail. It Looks Much Smaller
MILFORD, Conn.-A vision for the future of retail is under way at this city's Burlington clothing store.
The one-year-old shop is nearly 80% smaller than the hulking big boxes that used to be standard for the brand. At 18,000 square feet of selling space, the store is barely larger than a professional ice-hockey rink.
Nvidia Turns to Trump in Row Over Biden Chip-Export Curbs. The Stock Is Dropping.
Nvidia stock was falling early Monday as the chip maker pushed back against a last-minute rush by the Biden administration to issue new regulations over artificial-intelligence technology. The company is making an explicit appeal to President-elect Donald Trump to reject such policies.
While Nvidia's most advanced AI chips are already subject to a series of export controls-concerning China, particularly-it fears even more restrictive conditions.
Tesla Stock Is Falling as Investors Wait for Trump 2.0
Tesla stock was falling in early trading Monday as investors continued to weigh what President-elect Donald Trump would mean for the stock.
Over the weekend, Axios reported that Tesla's regulatory credit sales were at risk from Trump policies. For investors, it isn't a new issue. Wall Street has discussed it for a few months.
ECB Must Find 'Middle Path' on Rate Cuts, Chief Economist Says
The European Central Bank will continue to lower its key interest rate, but must do so at a pace that ensures inflation continues to cool, Chief Economist Philip Lane said in an interview with an Austrian newspaper.
The eurozone's central bank lowered its key rate four times between June and the end of 2024, and by a percentage point in total. Investors expect it to continue to lower borrowing costs this year.
China and the U.K. have the opposite problem. They just struck a deal.
China and the U.K. right now have the opposite problem.
For China, the issue is growth, and the market signal has been plummeting bond yields BX:AMBMKRM-30Y in spite of promises by the country's government to take steps to reinvigorate its moribund economy.
L.A. Wildfire Threat Remains 'Very High' as Death Count Rises
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