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Could this be good data for the markets?

by SuperiorInvest

Traders work on the floor of the New York Stock Exchange during afternoon trading on January 17, 2024 in New York City.

Miguel M. Santiago | Getty Images News | fake images

This report is from today’s CNBC Daily Open, our new international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. You like what you see? You can subscribe here.

What you need to know today

The Dow falls for three days
The blue chip Dow Jones Industrial Average fell for the third day in a row on Wednesday. Wall Street’s two other major indexes also fell as better-than-expected retail sales data helped lift Treasury yields. In Asia, Chinese stocks hit five-year lows, while Hong Kong stocks rallied. Sectoral declines were led by mining stocks.

Strong retail sales
U.S. retail sales were higher than expected for the final month of 2023, in a sign that holiday shopping has picked up. December retail sales rose 0.6% versus the 0.4% increase expected in a Dow Jones estimate. The increase was driven by clothing, accessories and online shopping.

Dimon in Davos
JPMorgan Chase CEO Jamie Dimon was one of the most anticipated guests at the World Economic Forum in Davos, Switzerland. Dimon discussed a variety of topics ranging from financial risks to geopolitical risks. He was also seen praising former US President Donald Trump’s stance on the US economy, immigration and taxes.

Singapore minister faces corruption charges
Singapore’s Transport Minister S. Iswaran has resigned as he faces corruption charges, the first for a cabinet minister in the island country. He pleaded not guilty to 24 counts of obtaining gratification as a public servant, two counts of corruption and one count of obstructing the course of justice.

[PRO] Citi tells how to invest in the next AI boom
Citi says it’s definitely “not too late” for investors to invest in the “exponential growth” of AI technology. And after Nvidia unleashed the AI ​​boom, which soared more than 200% last year, the investment bank now names its top bets for 2024.

The bottom line

It’s only the third week of the new year and markets are slowly heading into a cycle where good data is received as bad news, at least from a stock perspective.

However, Treasury yields have risen this week buoyed by Federal Reserve Governor Christopher Waller’s comments on Tuesday. The yield on the benchmark 10-year Treasury bond continued to trade higher on Wednesday, crossing the 4% mark thanks to better-than-expected US retail sales for December.

The data showed that U.S. consumers loosened their finances a bit in the final month of 2023. But for Wall Street, that was no cause for celebration given how aggressively markets have priced in the U.S. interest rate cuts. Federal Reserve.

Waller’s comments Tuesday in Davos about the U.S. central bank taking its time cutting rates this year stood in stark contrast to markets that expected the Fed’s first rate cut in 2024 to come now. in March.

“The Federal Reserve was already hammering home its ‘no rush to cut rates’ message, and today’s stronger-than-expected retail sales won’t give them any reason to change their tune,” said Chris Larkin, director trade and investment manager. for Morgan Stanley Electronic Commerce.

About 55% of traders tracked by CME Group’s FedWatch tool expect a 25 basis point rate cut in March, up from 63% the previous day.

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