Mixed risk tone as CPI looms and yields soften while equities consolidate
Today’s Market Mood, Key Events, Market Moving News.
📈 Market Mood:
⚪ Neutral – Equity indices are mixed, yields ease slightly, and volatility rises ahead of key US inflation data.
🗓 Key Events:
10:00 London / 05:00 New York – BOE Gov Bailey Speaks – Signals on UK policy outlook and GBP sensitivity.
13:30 London / 08:30 New York – US Core CPI m/m – Key driver for Fed rate expectations and risk assets.
13:30 London / 08:30 New York – US CPI m/m and y/y – Measures inflation pressure impacting rates and USD.
15:00 London / 10:00 New York – US New Home Sales – Read on housing demand and growth momentum.
🌐 Market Moving News:
Asia stocks climb as Nikkei hits record highs, supported by tech and AI optimism.
Dollar wobbles as markets focus on Fed independence concerns.
Oil edges higher on Iran supply disruption headlines, while gold holds near highs.
Asset Snapshots:
⚪ S&P 500: Neutral – Flat to slightly lower with CPI risk keeping traders cautious.
🟢 USD (DXY): Bullish – Dollar firms modestly amid higher short-end yields and policy uncertainty.
⚪ Gold: Neutral – Slight pullback but supported by macro and political uncertainty.
⚪ Oil: Neutral – Small losses despite supply headlines, price action remains range-bound.
⚪ Bitcoin: Neutral – Holding gains with limited momentum ahead of macro data.
Non-US Indices:
🟢 Nikkei: Bullish – New record highs driven by tech strength and yen weakness.
🟢 DAX: Bullish – Reaching all-time highs.
🔴 HK50: Bearish – Lagging amid China growth and credit concerns.
Volatility S&P 500 Index (VIX): 15.11 – Rising, signaling increased caution ahead of CPI.
Fed Watch (Jan 2026): Markets price a 95% chance of a hold at 3.50–3.75%, with 5% expecting a cut to 3.25–3.50%.
Credit Markets: HYG edges higher while LQD slips, pointing to mixed credit signals and a cautious equity tone.
Bond Curve: The 2Y ticks up while 5Y and 10Y ease slightly, suggesting near-term rate sensitivity but softer growth expectations.
FX Flows: USD/CNH and EUR/USD both edge higher, indicating mild USD strength with contained global risk stress.
Macro Bias:
Shows overall bullish, bearish, or neutral trends across major markets based on key economic data. It reflects how indicators like GDP, inflation, employment, retail sales, and PMIs are performing. When data improves, the bias turns bullish; when it weakens, bearish; when mixed, neutral.
Indices:
⚪ S&P 500: Neutral
⚪ Nasdaq 100: Neutral
Currencies:
🟢 USD: Bullish
🔴 EUR: Bearish
🔴 JPY: Bearish
⚪ GBP: Neutral
⚪ AUD: Neutral
🔴 CAD: Bearish
Commodities:
🟢 Gold: Bullish
⚪ Oil: Neutral
Crypto:
⚪ Bitcoin: Neutral
🪙 Price Action Notes:
Volatility likely to stay elevated into CPI release.
Watch USD and short-term yields for post-data direction.
Nikkei strength contrasts with weaker European and China-linked assets.
Disclaimer:
This newsletter is for information only and not financial advice. Markets carry risk, and past performance does not guarantee future results. Always do your own research or consult a qualified advisor before making investment decisions.
Thank you.
For anyone interested, here are my Dec CPI estimates, which have been better than Wall Street 70% of the time:
https://arkominaresearch.substack.com/p/dec-2025-cpi-forecast
This breakdown of the bond curve telling diffrent stories at different maturities is really insightful. The way you captured the 2Y ticking up while the longer end eases shows that exact tension between near-term rate sensitivity and softer growth expecations. I've noticed in my own trading that these divergences often signal the most interesting entry points, especially when volatility starts creeping up before major data. The CPI setup you outlined here is spot on for how I'm positioning today.