US yields retreat after weak retail sales data

NEW YORK – US Treasury yields fell on Friday after data showed retail sales in the world’s largest economy tumbled in January, keeping the Federal Reserve on track to cut interest rates later this year.

The benchmark 10-year yield slid 5.6 basis points to 4.469%, declining for a third straight week. Over the last two days, the 10-year yield has fallen nearly 17 bps. US 30-year yields also eased, down 3.4 bps at 4.693%.

The two-year yield, which reflects interest rate expectations, declined 5.4 bps to 4.257%. On the week, however, it was up 3.2 bps.

US yields retreated after data showed retail sales dropped 0.9% last month after an upwardly revised 0.7% increase in December. Economists polled by Reuters had forecast retail sales, which are mostly goods and not adjusted for inflation, would dip 0.1%.

US import prices also showed a favorable inflation trend, rising 0.3% in January, which was slightly less than expected after an upwardly revised 0.2% gain in December. The surge in the cost of fuels was partially offset by declines in the prices of motor vehicles and consumer goods.

Overall, Andy Wells, chief investment officer of investment management firm SanJac Alpha LP in Houston believes the secular inflation environment will remain elevated although growth will slow a little bit.

“We’re kind of having a stagflation backdrop, not scary stagflation, just saying that growth is going to be slower, and the lower end of inflation will be a little higher than what we’re accustomed to,” said Wells.

“What that means is that rates will drift a little bit higher on the long end of the curve, but on the short end, it will be rangebound. The two-year we see that as rangebound.”

Earlier this week, data showed both consumer prices and producer price indexes both exceeded estimates, reinforcing expectations of one rate cut this year.

Following the retail sales data, US rate futures priced in 41 bps of easing this year, compared with 33 bps late Thursday, according to LSEG calculations. The next rate reduction is expected either at the Fed’s September or October policy meeting.

The yield curve, meanwhile, slightly reduced its steepness on Friday, with the spread between two-year and 10-year yields at 21.5 bps, compared with 22 late Thursday.

Analysts said this was likely a retracement of the steepening trend – in which yields on the long end of the curve are higher than those on the front end – that has been going on since the Fed launched its easing cycle in September.

Steepeners remain a popular trade in the bond market with the Fed being in a rate-cutting phase and the short end of the curve tethered to rate policy moves. The strategy involves buying short-dated Treasuries and reducing longer-dated exposure.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Alex Richardson, Nia Williams and Nick Zieminski)

Fund managers boost exposure to bitcoin ETFs, quarterly US filings show

Asset managers, ranging from wealth management companies to hedge funds and pension funds, boosted allocations to US exchange-traded funds tied to the price of bitcoin in the fourth quarter of 2024, as the price of the world’s largest cryptocurrency soared 47%, according to recent regulatory filings.

The State of Wisconsin Investment Board disclosed in its quarterly 13-F filings with the Securities and Exchange Commission that its bitcoin ETF holdings more than doubled in the final three months of last year, to 6 million shares of the iShares Bitcoin Trust ETF by December 31. The fund, which was the first fund of its kind to report investing in crypto following the debut of bitcoin ETFs, couldn’t immediately be reached for comment.

Other large investment funds also boosted their holdings in the ETFs, which launched in January 2024.

Tudor Investment Corp, a systematic hedge fund manager, reported its holdings of the iShares ETF — now the largest of the pack, with more than USD 55 billion in assets — climbed to 8 million shares, from 4.4 million shares. The value of those holdings also soared, reflecting bitcoin’s jump in value, hitting USD 426.9 million, up from USD 159.9 million at the end of September. Tudor didn’t immediately respond to a request for comment.

An Abu Dhabi sovereign wealth fund, Mubadala Investment Co, reported its first foray into bitcoin ETFs in the fourth quarter, taking a 8.2 million share stake in the iShares ETF that was worth USD 436.9 million.

Hedge fund Hunting Hill Capital had no exposure to these ETFs as of the end of the third quarter, but by December 31 had re-emerged as a significant investor, with positions valued at about USD 131 million by the end of the year.

“We’ve been actively trading within the broader crypto ETF complex, and the timing of the third-quarter filing may not have aligned with when we bought and sold various ETFs,” said Adam Guren, founder and chief investment officer of the firm.

The ranks of those adding to positions included financial advisory firms whose clients have been eager buyers of bitcoin ETFs. Cetera Advisors and NewEdge Advisers were among firms that boosted holdings in several of the ETFs, including products offered by Fidelity, ARK Investments and Invesco.

Other investors were more selective, the filings showed. Cresset Asset Management boosted its exposure to ETFs carrying lower fees, said Jack Ablin, the firm’s chief investment officer.

“It’s also possible right now to get attractive options pricing for collar strategies, allowing us to protect the downside while giving away less of the upside in exchange, on these bitcoin funds,” Ablin said.

The 13F filings are one of the few ways to get insight into how institutional investors are positioned at the end of every quarter. The positions may not reflect current holdings.

(Reporting by Suzanne McGee; Editing by Leslie Adler)

Oil settles lower, supply worries ease on hopes for Ukraine peace deal

NEW YORK – Oil prices settled down on Friday on prospects for a peace deal between Russia and Ukraine that could ease global supply disruptions by ending sanctions against Moscow, but losses were limited by a delay in US immediate reciprocal tariffs.

Brent futures settled down 28 cents, or 0.37%, at USD 74.74 a barrel. US West Texas Intermediate (WTI) crude fell 55 cents, or 0.77%, to USD 70.74.

For the week, Brent gained 0.11% while WTI lost around 0.37%.

President Donald Trump ordered US officials this week to begin talks on ending the war in Ukraine after Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy expressed a desire for peace in separate phone calls with him.

Lifting sanctions on Moscow in the event of a peace deal should boost global energy supplies.

Russian oil exports could be sustained if workarounds to the latest US sanctions package are found, the International Energy Agency (IEA) said in its latest oil market report.

This week, Trump ordered commerce and economic officials to study reciprocal tariffs against countries that place tariffs on US goods and to return their recommendations by April 1.

“Positive development on the trade front in light of US tariff delays paves the way for some recovery in oil prices this morning, as the risk environment warms up to the prospects of further trade consensus being reached,” said IG market strategist Yeap Jun Rong.

Also limiting the losses, US Treasury Secretary Scott Bessent said in an interview that the US could apply maximum economic pressure on Iran.

Trump had driven Iran’s oil exports to near zero during his first term after reimposing sanctions.

Global oil demand has surged to 103.4 million barrels per day (bpd), up by 1.4 million bpd from the prior year, JPMorgan analysts said on Friday.

“Initially sluggish demand for mobility and heating fuels picked up in the second week of February, suggesting the gap between actual and projected demand will soon narrow,” the bank said.

US energy firms this week added oil and natural gas rigs for a third week in a row for the first time since December 2023, energy services firm Baker Hughes said in its closely followed report on Friday.

The oil and gas rig count, an early indicator of future output, rose by two to 588 in the week to February 14.

(Reporting by Nicole Jao, Paul Carsten, Sudarshan Varadhan and Jeslyn Lerh; Editing by David Goodman, David Evans and David Gregorio)

Goldman Sachs raises 12-month STOXX 600 forecast on Russia-Ukraine peace deal potential

Goldman Sachs raised its 12-month price forecast for Europe’s STOXX 600 index on Friday, citing the potential benefits of a peace deal between Russia and Ukraine for the region’s equities.

The brokerage raised its forecast to 580 from 540.

“For European equities, we see a number of potential benefits – lower risk premium, lower inflation, improved consumer confidence, stronger economic growth,” said Goldman Sachs strategists led by Sharon Bell.

US President Donald Trump held separate discussions on Wednesday with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy, instructing US officials to begin talks aimed at ending the nearly three-year-long conflict.

“The potential for peace in Ukraine is clearly a catalyst for reduced risk,” Bell said.

European stocks are trading at a discount to their US counterparts, with the STOXX 600’s price-to-earnings ratio at 17.52, compared with the S&P 500’s 27.38.

Since the Russia-Ukraine war, Europe has faced challenges due to its energy dependence on Russia, with sanctions from the West reducing supply and leading to price hikes across the region.

European equities have seen significant outflows since Russia’s full-scale invasion of Ukraine in February 2022, Goldman Sachs’ Bell said.

Goldman Sachs estimates that euro zone’s economic growth could potentially increase by 0.2% in a limited ceasefire scenario.

The brokerage also raised its 12-month forecast for UK’s benchmark FTSE 100 index to 9,000 from 8,600.

(Reporting by Kanchana Chakravarty in Bengaluru; Editing by Sherry Jacob-Phillips)

Walmart to shed light on consumer health as inflation bites, tariffs swirl

NEW YORK – Walmart’s quarterly report this week will give investors fresh insight into the health of US consumers, who are facing stronger inflation and uncertainty over whether President Donald Trump’s tariffs will push up prices.

The benchmark S&P 500 stock index was up about 1% for the week, with stocks showing resilience despite a hot report on consumer prices that led investors to push back expectations of further interest rate cuts this year.

Wall Street closely watches trends in consumer spending, which accounts for more than two-thirds of US economic activity. The extent to which inflation is weighing on shopping behavior could become more evident with Thursday’s earnings report from retailer Walmart.

“Walmart is sort of a canary in the coal mine as far as consumer spending and consumer health is concerned,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

Walmart’s report could show “how much of higher food prices and higher gasoline or energy prices is digging into the discretionary spending of consumers,” Pavlik said.

The S&P 500 has climbed more than 3% this year, with broad gains among sectors. Investors have digested a flurry of policy announcements from the Trump administration, including on tariffs and federal government cost cuts, and more recently, discouraging data on inflation.

Stocks sold off modestly on Wednesday after a report showed consumer prices in January jumped by the most in nearly 1-1/2 years, with Americans facing higher costs for a range of goods and services.

The CPI data came on the heels of a survey that revealed US consumer sentiment sank in February to a seven-month low as inflation expectations soared. Households feared it may be too late to avoid the negative effects from Trump’s threatened tariffs, according to the survey’s director.

Company executives are grappling with the potential fallout from tariffs. Since the beginning of the year, nearly 430 companies in the S&P 1500 have either mentioned tariffs or responded to a question about tariffs on earnings calls or at investor events, according to LSEG data.

WALMART IN FOCUS

Walmart, as the most important consumer company in the country along with Amazon, will be closely watched for its commentary, said Matt Maley, chief market strategist at Miller Tabak.

“It’s not just what their numbers are and their guidance, but what they say about the consumer,” Maley said.

Walmart’s comments could help address whether people are “so worried about tariffs that they’re starting to question some of their spending,” Maley said.

A Walmart spokesperson declined to comment, saying the company was in a quiet period ahead of its earnings report.

Walmart’s report will be followed by results in the next few weeks from a range of consumer companies, including home improvement company Home Depot, off-price retailer TJX Cos and Target, that will also wind down fourth-quarter reporting season for corporate America.

With nearly three-fourths of index companies having reported, S&P 500 earnings are on track to have climbed 15.2% from the year-earlier period, its strongest pace in three years, according to LSEG IBES data.

Still, expectations for S&P 500 profits in 2025 have moderated since the start of the year, which some investors said has undercut optimism from the fourth-quarter reports.

The potential impact from import tariffs – which are expected to weigh on profits and drive up inflation – is poised to remain prominent on Wall Street’s radar in the coming week. Trump has announced a 10% tariff on China and a broad duty on steel and aluminum imports, while delaying tariffs on Mexico and Canada.

“No one’s quite sure what’s a negotiation and what’s the policy,” said Rick Meckler, partner at Cherry Lane Investments. Hedge funds and other large investors, he said, “don’t want to be caught short only to see a reversal in policy that causes the market to come right back.”

(Reporting by Lewis Krauskopf; additional reporting by David Gaffen; editing by Rod Nickel)

Gold rises as concerns grow over Trump’s tariff plans

Gold prices rose on Thursday as US President Donald Trump unveiled plans to impose reciprocal tariffs on countries taxing US imports, heightening global trade concerns.

Spot gold added 0.4% to USD 2,915.76 per ounce as of 01:41 p.m. ET (1841 GMT), moving back towards its record peak of USD 2,942.70 hit on Tuesday. US gold futures settled 0.6% higher at USD 2,945.40.

Trump unveiled a roadmap on Thursday for charging reciprocal tariffs on every country that imposes duties on US imports.

US producer prices in January increased solidly, providing further evidence of rising inflation and bolstering financial market expectations that the Federal Reserve will hold off on any rate cuts until the second half of the year.

“The major factor is political uncertainty and the economic consequences … the PPI was pretty much neutral and it didn’t really have much of an effect on gold, investors around the world are worried about what the Trump policies will do to the overall economy,” said Jeffrey Christian, managing partner of CPM Group.

Federal Reserve Chair Jerome Powell, at his second congressional hearing this week, reiterated that the central bank was in no rush to cut interest rates.

Despite expectations of a market selloff due to recent PPI data, Powell’s testimony, and Trump’s talk about possible Russia-Ukraine peace, the market remains positive due to a flight to safety and traders buying the dip, contradicting these bearish signals, said Bob Haberkorn, senior market strategist at RJO Futures.

Bullion is seen as a hedge against inflation and economic uncertainties, but higher interest rates tarnish the non-yielding asset’s allure.

The dollar index fell 0.5%, making greenback-priced gold less expensive for foreign buyers.

Gold is rising across all major currencies, and the dollar’s slight decline today is providing more room for its strength, Haberkorn said.

A stellar rally that has lifted global gold prices to all-time highs has cast a shadow on jewellery purchases for India’s wedding season, while dealers in China offered discounts to lure buyers.

Spot silver fell 0.2% to USD 32.15 per ounce. Platinum was down 0.1% to USD 991.25 and palladium was up 1.6% to USD 989.50.

(Reporting by Anmol Choubey in Bengaluru; Editing by Rod Nickel and Mohammed Safi Shamsi)

Oil settles flat, pares early losses as tariffs delayed

HOUSTON – Oil prices settled flat on Thursday, paring early losses of more than 1% as US tariff announcements were delayed until at least April, feeding hope that the world could avoid a trade war that would pressure economies and energy demand.

Brent crude futures settled at USD 75.02 a barrel, down 16 cents, or 0.21%. US West Texas Intermediate crude (WTI) finished down 8 cents, or 0.11%, at USD 71.29 a barrel.

Prices had tumbled earlier as a potential peace deal between Russia and Ukraine kept traders concerned that an end of sanctions on Moscow could boost global energy supplies.

US President Donald Trump ordered commerce and economics officials to study reciprocal tariffs against countries that place tariffs on US goods. Their recommendations are not due until April 1, allowing more time for negotiations with trading partners, market participants said.

“We saw a big recovery in prices on tariffs not going into effect until April,” said Phil Flynn, senior analyst with Price Futures Group. “That will allow time for negotiation.”

On Wednesday, Brent and WTI fell more than 2% after Trump said Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy expressed a desire for peace in separate phone calls with him. Trump ordered US officials to begin talks on ending the war in Ukraine.

The oil price decline over the past 24 hours looks to be driven by a change from worries about tight supplies to concern about sufficient supply, said UBS analyst Giovanni Staunovo, adding that some expect an increase in Russian energy exports.

Russian oil exports could be sustained if workarounds to the latest US sanctions package are found, after Russian crude production rose slightly last month, the International Energy Agency (IEA) said in its latest oil market report.

The Ukraine news and Wednesday’s US oil inventories data offset higher US inflation numbers that could drive the Federal Reserve to take a cautious approach to interest rate cuts in 2025, said PVM analyst John Evans.

Russia is the world’s third-largest oil producer and sanctions imposed on its crude exports after its invasion of Ukraine nearly three years ago have supported higher prices.

ANZ analysts said on Thursday that oil prices declined on news of the potential peace talks because of “optimism that risks to crude oil supplies would ease”, pointing to the US and EU sanctions.

A build in crude oil inventories in the United States, the world’s biggest crude consumer, also weighed on the market. US crude stocks rose more than expected last week, data from the Energy Information Administration (EIA) showed on Wednesday.

(Reporting by Erwin Seba, Enes Tunagur, Anna Hirtenstein, Emily Chow; Editing by David Goodman, Kirsten Donovan, Marguerita Choy, and David Gregorio)

Dollar dips as inflation data points to lower core PCE

NEW YORK – The dollar slipped on Thursday after components of January’s producer price report pointed to lower inflation, and fell further after the White House said that reciprocal tariffs on other nations would not be implemented immediately.

Producer price data on Thursday indicated that core PCE inflation, the Federal Reserve’s preferred measure, is likely to be lower than previously expected for January when it is released later this month.

It came despite producer prices rising more than economists expected.

“There were some subcomponents in there that show that PCE might not be as hot as CPI suggested,” said Noel Dixon, global macro strategist at State Street Global Markets.

The producer price report came after Wednesday’s Consumer Price Index for January was much higher than expected, leading traders to price in fewer rate cuts this year.

Futures traders are now pricing in around 33 basis points of cuts by December, up from 29 basis points before Thursday’s data, but down from 37 basis points before the CPI data was released on Wednesday.

The Personal Consumption Expenditures Price Index is due on February 28. Economists at Morgan Stanley revised their core PCE inflation expectation for January to 0.3%, from 0.4%, after Thursday’s data.

The dollar index was last down 0.61% on the day at 107.25, the lowest since January 27. The euro rose 0.58% to USD 1.0442 and earlier reached USD 1.0446, the highest since January 30.

The Japanese yen strengthened 1.05% against the greenback to 152.8 per dollar.

The greenback briefly pared losses before falling to lower levels after US President Donald Trump said he would levy reciprocal tariffs on every country that charges duties on US imports.

The tariffs were not going into effect on Thursday but could begin to be imposed
within weeks as Trump’s trade and economic team study bilateral tariff and trade relationships, a White House official told reporters.

The announcement appeared designed at least in part to trigger talks with other countries. The official said Trump would be more than happy to lower tariffs if other nations lowered theirs.

“The message from Trump seems to be that – we’re going to get you, but not today. And the market seems to take comfort from that,” said Steve Englander, Head, Global G10 FX Research and North America Macro Strategy at Standard Chartered Bank’s NY Branch.

The euro and other European currencies including the Swiss franc, Swedish krona, and Norwegian krone were also boosted on optimism that Russia and Ukraine could reach a peace deal.

“It’s telling you that geopolitics in that part of the world is calming down a little bit,” said Englander.

Trump discussed the war in Ukraine on Wednesday in phone calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy, the new US president’s first big step towards diplomacy over a war he has promised to end.

Meanwhile, the US dollar remains attractive with the US economy still growing well above trend, said State Street’s Dixon, adding that US tariffs and immigration restrictions in the US are also likely to add to inflation, while tariffs could further dent growth in the eurozone.

“The overarching trend for the dollar is higher,” Dixon said.

Sterling gained after data showed that Britain’s economy unexpectedly grew by 0.1% in the final quarter of last year. It was last up 0.8% at USD 1.2541.

In cryptocurrencies, bitcoin fell 2.01% to USD 95,716.98.

(Reporting by Karen Brettell; Editing by Ros Russell and Andrea Ricci)

Wall Street rallies as hot PPI looks cooler under surface

A rally in US stocks and bonds looked counterintuitive after PPI headlines appeared to be the second hot inflation read this week, but, under the hood, key components looked more like they were moving the direction the Fed and Wall Street want.

But even while investors in New York markets lifted the S&P 500 a percent and the Nasdaq more than that on Thursday, continued gains on Asia bourses Friday are hardly assured, given the challenge of navigating the twists and turns from President Donald Trump as he pushes for a peace deal in Ukraine while setting up for a global trade war.

The prospect of Russia-Ukraine peace talks helped foster the risk-on mood in stocks, while the inflation news with potential dovish implications for Fed officials reversed Wednesday’s bond slump and the yield on the 10-year Treasury note fell almost 10 basis points to around 4.53%.

The bigger-than-forecast 0.4% rise in January’s Producer Price Index followed Wednesday’s news that consumer prices accelerated by the most in nearly 1-1/2 years in January. But some details suggested a more moderate increase in January in the PCE price index that is closely tracked by the US central bank for its 2% target.

For instance, physician’s office and hospital prices were either broadly unchanged or rose just slightly. Healthcare, with a nearly 20% weighting in the core PCE, declined 0.06%. Portfolio management prices, another important item on core PCE, posted a modest 0.4% increase.

Following the PPI data, US rate futures priced in 31 bps of easing this year, compared with 27 bps late on Wednesday, according to LSEG calculations. The next rate reduction is expected either at the October or December meeting.

Russia said on Thursday that Ukraine would “of course” be involved in talks to end the war, but there would be a separate US-Russian strand to the negotiations. Ukraine and its European allies meanwhile demanded that they be included in any peace negotiations.

The markets took in stride Trump’s oft-promised roadmap for charging reciprocal tariffs on every country that puts duties on US imports, his latest trade salvo directed at American friends and foes.

The dollar pared losses a tad on the tariff headlines and against the yen it was trading at 152.97 yen late in the day, down about 0.9%. The stronger yen in recent weeks has been a negative for the Nikkei but weakness in Asia Thursday was cited as a reason for the index’s 1.28% gain.

Meanwhile, Indian Prime Minister Narendra Modi will meet Trump on Thursday, hoping concessions on tariffs, fresh business deals and the prospect of cooperation on China will win the US president’s favor.

Here are key developments that could provide more direction to markets on Friday:

– South Korea unemployment (Jan)

– Malaysia GDP (Q4)

– US Retail Sales (Jan)

(Editing by Diane Craft)

Ukraine ceasefire hopes soften US inflation blow

Investors banking on the recent decline in US bond yields and the dollar underpinning a rally across risk assets got a stark reminder in the shape of punchy US inflation on Wednesday that interest rates won’t be coming down any time soon.

In fact, they got a few reminders – Fed Chair Jerome Powell repeated his view that monetary policy must remain restrictive for now, and House Republicans unveiled a fiscal plan that would cut taxes by about USD 4.5 trillion over a decade and raise the federal debt ceiling by USD 4 trillion.

Faced with sticky inflation, fiscal largesse, and Powell’s confidence in the US economy, rates markets are now only pricing in one Fed rate cut this year, which would leave the Fed funds rate above 4.00%.

The 10-year yield rose 10 basis points, the yield curve steepened, the dollar jumped, and stocks fell.

But risk assets have been resilient this year, not only in the US where Wall Street and corporate bonds are hugging record highs, but globally. Many emerging market stocks and currencies are up year-to-date, also quite impressive considering the dark cloud of US tariffs hanging over them.

This resilience got a boost on Wednesday after US President Donald Trump spoke with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy about starting negotiations “immediately” to end the war in Ukraine.

That was enough to take the wind out of the dollar’s sails, slam oil down 2.5%, cut Wall Street’s losses, and push Asian equity futures into the green.

While many money managers will have factored a potential Russia-Ukraine ceasefire into their investment allocations this year, it’s unlikely it has been fully priced across markets. All else equal, further progress towards peace should support risk appetite, and keep a lid on oil and the dollar.

In Asia on Thursday, the main events will be an interest rate decision from the central bank of the Philippines and the latest wholesale inflation figures from Japan.

The Bangko Sentral ng Pilipinas (BSP) is widely expected to cut its key policy rate by a quarter-point to 5.50%. Inflation appears to be under control, in the central bank’s 2-4% target range since October, but growth is slowing.

The Philippine peso has been among the weaker emerging market currencies, and is down slightly against the dollar year-to-date.

The yen, meanwhile, had its worst day this year against the dollar on Wednesday but could rebound on Thursday if Japanese wholesale inflation figures come in on the strong side.

Economists are expecting a rise in the annual rate to 4.0% in January. That would be the highest since June 2023 and strengthen the argument for further rate hikes.

Here are key developments that could provide more direction to Asian markets on Thursday:

– Philippines central bank policy decision

– Japan wholesale inflation (January)

– Thai finance minister Pichai Chunhavajira speaks

(By Jamie McGeever, editing by Deepa Babington)

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