Monday

January steel PMI shows: Seasonal factors have emerged, and the steel industry is running weakly.

According to the PMI of the steel industry released by the Steel Logistics Professional Committee of the China Federation of Logistics and Purchasing, the PMI for January 2025 is 43.3%, a decrease of 4.2 percentage points from the previous month, indicating that the steel industry continues to operate weakly. Changes in sub-indices show that due to seasonal factors, demand in the steel market has further contracted, steel production continues to slow, raw material prices remain downward, and steel prices have slightly fluctuated downward. It is expected that in February, demand in the steel market will operate weakly. In early February, due to the Spring Festival, a large number of construction projects will be suspended for a period of time, and after the holiday, some projects in southern regions will gradually resume work, but the overall construction scale and progress in February are unlikely to return to normal levels. In addition, the resumption of work in northern regions will be slower due to weather conditions, leading to overall low demand for construction steel.

U.S. prices rose in December, while consumer spending surged, indicating that the Fed may delay interest rate cuts for a while this year.

Data released on Friday showed that the Fed's 'preferred' inflation measure - the annual rate of the core PCE price index for December was 2.8%, stabilizing at that level for the third consecutive month, in line with market expectations and unchanged from the previous value; the monthly rate was 0.2%, in line with expectations and higher than the previous value of 0.10%.

The annual rate of the overall PCE price index for December was 2.6%, in line with expectations and higher than the previous value of 2.40%; the monthly rate was 0.3%, in line with expectations and higher than the previous value of 0.10%.

Traders still expect the Fed to make its next rate cut in June.

On Friday, spot gold prices hit $2,807, a record high, after Trump threatened to impose tariffs again, prompting investors to turn to safe-haven assets.

Trump reiterated plans to impose 25% tariffs on imports from Mexico and Canada and is considering additional taxes on Chinese goods.

“This rally is likely to continue as long as there is uncertainty in the market,” said Nitesh Shah, commodity strategist at WisdomTree. “A lot of the uncertainty today is due to uncertainty about whether and how tariffs will be implemented.”

In addition, Paul Williams, managing director of Solomon Global, said in a report that gold's rise to record highs was not just driven by the president's controversial policies. He noted that global geopolitical uncertainty remains high.

On Friday, the latest reading of the Fed's preferred inflation gauge will be released. According to market consensus, the December Personal Consumption Expenditures (PCE) report will show that core inflation continues to slow, although rising gasoline prices are putting upward pressure on overall PCE.

As the latest PCE report is released, the Fed is entering a wait-and-see mode, with the market generally expecting the Fed to keep rates stable in the coming months.

While price pressures in the U.S. have steadily eased from peaks two years ago, investors are now grappling with a series of unresolved issues. These issues involve the impact of Trump's policies and the possibility that the Fed will keep rates elevated for a longer period than initially expected.

Bitcoin may be just days away from its next historical high.

Standard Chartered analyst Geoff Kendrick stated that this largest cryptocurrency in the world seems likely to surpass its record of around $109,000 next week, potentially reaching as high as $130,000 between February and March.

After Trump's inauguration, cryptocurrency prices experienced volatility, and investors had hoped for a series of cryptocurrency-friendly announcements on that day. Excessively bullish market sentiment prompted Kendrick to warn that a correction was imminent. Although Trump did sign a cryptocurrency executive order last week, Kendrick believes it did not meet industry expectations.

Shortly after the Federal Reserve announced its latest interest rate decision, renowned economist and Chief Market Strategist at Euro Pacific Asset Management, Peter Schiff, provided an in-depth interpretation of the meeting.

He criticized the Federal Reserve's decision to keep rates stable, providing a different perspective on Powell's press conference remarks, and attacked the view that the Federal Reserve 'does not care about politics.' Peter also talked about Trump's comments on oil prices and interest rate cuts amid increasing economic challenges in 2025.

Starting first with the rumors surrounding Trump possibly pushing the Federal Reserve to cut interest rates, Peter clarified Trump's actual thoughts.

The emergence of DeepSeek disrupted the market earlier this week — the market capitalization of the S&P 500 index (SPX) evaporated by $784 billion on Monday, but the latest survey from Bloomberg Markets Live Pulse shows that investors believe the Chinese AI startup has limited capacity to weaken the performance of the seven giants.

Among 260 respondents, 88% said that the debut of this startup's latest product had little impact on the stock prices of U.S. tech giants in the coming weeks. Few have reduced their exposure to the S&P 500 index, which is dominated by large tech companies. Instead, according to 59% of respondents from a survey conducted between January 28 and 30, the volatility in this year's stock market is driven by Trump's policies.

Trump threatened again on Thursday to impose new tariffs on Canada and Mexico. The latter has already developed a plan for retaliatory tariffs, increasing the likelihood of a destructive trade war breaking out.

Trump repeatedly promised during his campaign to use tariffs to revitalize the U.S. economy, ignoring many economists' concerns that higher tariffs on foreign goods would exacerbate inflation rather than quickly lowering prices as the president promised.

Although Trump’s campaign team proposed imposing universal tariffs on all imported goods, the Trump administration has so far chosen to target specific U.S. trade partners. Trump has made it clear that China and the EU are on his radar, but so far he has focused on neighboring countries.

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Macro News

1. On January 29 local time, the Federal Aviation Administration (FAA) stated that the aircraft that crashed near Ronald Reagan Washington National Airport was a Bombardier jet operated by PSA Airlines, which collided mid-air with a Sikorsky H-60 (i.e., 'Black Hawk' helicopter) while approaching the runway.

2. The relevant person in charge of the Pension Insurance Department of the Ministry of Human Resources and Social Security of China stated that they will work with relevant departments to expedite the research and formulation of support policies related to personal pensions, further enhance the attractiveness of the personal pension system, guide more eligible citizens to participate, and increase savings to better secure elderly life.

Spot gold touched a record high on Thursday, nearing $2,800 per ounce, as investors worried that the upcoming broad tariffs in the U.S. would apply to gold, while the increasing gold reserves in New York caused a shortage in London.

Traders have been hoarding gold at the New York Mercantile Exchange (Comex), whose inventory has surged by 75% since the U.S. election. According to Comex data, its gold inventory exceeded 3.04 million ounces on Thursday, with a value rising to $85 billion.

The massive influx of gold into New York has depleted London's gold inventory. The Financial Times recently reported on the rare gold shortage in London. It is said that participants in the London gold market need to queue for 4 to 8 weeks to withdraw gold from the Bank of England, whereas normally it would take a few days to a week.

On Thursday, the European Central Bank cut rates by 25 basis points as expected, lowering the deposit facility rate by 25 basis points to 2.75%, in line with market expectations, marking the fourth consecutive meeting with a rate cut of 2 basis points. The main refinancing rate and marginal lending rate were lowered from 3.15% and 3.40% to 2.90% and 3.15%, respectively.

The European Central Bank noted that inflation continues to align closely with staff forecasts and is expected to return to its 2% medium-term target within this year. The European Central Bank did not make any prior commitments to a specific interest rate path but expressed determination to ensure inflation stabilizes around the 2% medium-term target. The European Central Bank will adopt a data-dependent approach, making decisions at successive meetings.

Two investors known for shorting the real estate market in 2008 stated that investments in the AI sector have become too crowded, and they are looking in more distant areas for substantial returns.

One of the traders and investors who shorted the real estate market in The Big Short, Porter Collins and Vincent Daniel, stated that they are focusing on a more low-key corner of the market.

The two co-founders of Seawolf Capital stated that opportunities can be found in emerging markets, a sector that helped their firm achieve a 66% return in 2024.

Collins stated: "We are sitting here, searching globally, while everyone is losing their mind over artificial intelligence." Although he admitted that they would increase their exposure to AI "a little bit" when it aligns with their overall goal of finding the cheapest global winners.

Israeli and Turkish media reported that Trump is planning to ultimately withdraw U.S. troops from Syria, with this information stemming from a report by Israel's official public broadcaster Kan this week. Although the Trump administration has not officially confirmed this, it is believed to be consulting with regional countries—especially Turkey and its close ally, Israel—about this potential action.

Kan reported on Tuesday: 'Senior White House officials conveyed to Israel that President Trump intends to withdraw thousands of U.S. troops from Syria.' The report further noted: 'The withdrawal of U.S. troops from Syria will raise significant concerns in Tel Aviv.' Israeli leaders view the U.S. military presence in northeastern Syria as a key factor for regional stability. Among the approximately 2,000 U.S. troops are special forces who have been advising and supporting the Syrian Kurdish forces (SDF/YPG) for years.

The market broadly expects the ECB to cut rates again on Thursday, with traders hoping to gauge how far the central bank is willing to diverge from the stalled Federal Reserve at its first policy meeting this year.

On Wednesday, pricing in the money markets showed that traders expect the ECB to cut rates by 35 basis points at its January meeting, indicating at least a 25 basis point cut, bringing the key rate to 2.75%. This would be the fifth rate cut by the ECB since it began easing monetary policy in June 2024.

Market pricing also indicates that the ECB will further cut rates at its meetings in March and June, with this year's fourth and final cut bringing the deposit rate to 2% by the end of the year.

Kazakhstan stated on Wednesday that the OPEC+ group, composed of major oil-producing countries, will discuss U.S. President Trump's efforts to increase U.S. oil production and take a united stance on the matter.

Kazakhstan's Energy Minister Almasadam Satkaliyev said at a briefing, "In the near future, we plan to hold a meeting at the representative level of OPEC+, where policies regarding the current situation will be discussed, including the U.S. plans to increase production, and a coordinated position will be taken."

Trump called last week for Saudi Arabia and OPEC to lower oil prices. OPEC+ has yet to respond, but five OPEC+ representatives indicated that the joint ministerial monitoring committee meeting scheduled for February 3 is unlikely to adjust its current plan to increase production starting in April. Two others stated that it is too early to draw conclusions.

Technical indicators are currently sending positive signals, and ICE raw sugar prices are expected to rise further to 19.41

Analysts at Economies.com latest views today: ICE raw sugar prices rose yesterday, reaching the expected target of 18.42. This price level is the 23.6% Fibonacci retracement level (from 23.61 to 16.82). If this level is broken, prices are expected to rise further to 19.41. Technical indicators are currently sending positive signals, supporting ICE raw sugar prices to continue the bullish trend in the coming trading days. Note that if it falls below 17.85, it will terminate the bullish trend and push prices to turn bearish. Today's expected trading range: Support level: 17.90. Resistance level: 18.65. Trend forecast: Bullish.

Some economists stated on Wednesday that the Fed's rate-cutting cycle has ended, while others believe the Fed will not relax policy again until 2026.

Following the latest policy meeting, Fed officials stabilized the interest rate in the range of 4.25%-4.5%. In December last year, the median forecast of the Fed's 'dot plot' indicated two rate cuts in 2025, each by 25 basis points.

When asked about the Fed's plans at a press conference, Powell said, 'No rush.' He added that the Fed wants to see further progress in inflation or the labor market before cutting rates further.

The dilemma facing bond traders has not changed one bit after the Federal Reserve meeting: amid the uncertainty that Trump brings to the economic direction, they have almost no grip on the direction of interest rates.

Due to the Fed's policy statement seeming to indicate it would maintain stable interest rates, U.S. Treasury yields briefly rose, as concerns grew that progress in curbing inflation had weakened. However, Powell quickly alleviated those worries, stating that he expects consumer price increases to continue slowing, after which U.S. Treasury yields fell back, closing nearly flat.

The stock market's reaction is similar to that of the bond market. The S&P 500 fell after the Fed announced its interest rate decision but rebounded after Powell's speech, closing slightly lower on the day, as the market remains concerned about Trump's still unclear tariff policy and the potential threat posed by low-cost AI products from Chinese AI startups to tech stocks.