Market wrap for the past 24 hours

With U.S. cash equity and Treasury markets closed over the weekend, the past 24 hours were defined more by positioning than by price action. Investors continued to digest Friday’s labor-market data and the first trading days of the new year, while attention shifted to the opening of Sunday evening futures and a macro-heavy calendar in the week ahead. No major U.S. economic releases were scheduled for Saturday, leaving cross-asset tone to be driven by carry, fund flows, and evolving geopolitical headlines.

Across risk assets, the focus remains on three questions that guided early-year trading: whether disinflation is continuing at a pace that allows the Federal Reserve to contemplate a lower policy rate later this year, how resilient final demand appears after the holiday season, and whether tighter financial conditions in prior months are still working their way through housing, capex, and credit formation. Market participants also remained attentive to global developments that can stir weekend repricing—energy supply risks, shipping logistics, and any notable central bank commentary from abroad.

Macro and policy backdrop

Friday’s employment data set the tone heading into the weekend by refocusing attention on wage growth, hours worked, and labor-force participation—metrics that feed directly into services inflation dynamics. While the headline jobs number attracts the initial reaction, the internals (average hourly earnings, revisions, and diffusion indexes) are likely to shape how rates traders handicap the policy path into the first quarter.

Inflation’s trajectory remains the fulcrum. Goods disinflation has largely played out, leaving services—especially shelter and non-housing services—at center stage. The next wave of price data will be analyzed for evidence that shelter inflation is continuing to cool as new-lease measures filter through, and whether core services ex-housing is settling at a pace compatible with the Fed’s target.

The Federal Reserve’s December meeting minutes are expected midweek and will be scrutinized for nuance around three issues: the Committee’s assessment of the balance of risks, tolerance for near-term inflation variability, and any early signals on balance-sheet strategy (pace and horizon of quantitative tightening). Taken together with upcoming survey data, the minutes may refine expectations for the timing and extent of any 2026 policy adjustments.

Rates and inflation-linked markets

In rates, the near-term debate centers on whether recent declines in term premiums can persist into the new year, and how much cutting risk is embedded in the front end. With liquidity thinner around the turn of the year, the curve’s shape can shift quickly on modest information—particularly around services inflation and wage prints. Treasury bill supply returns in force as weekly auctions resume, while investor appetite for duration will be tested by early-month issuance and the macro data cadence.

Inflation-linked markets continue to watch real-time indicators of shelter, used vehicles, and medical services for confirmation that the medium-term trend in core inflation is downshifting. Breakevens may toggle around incoming survey surprises and energy headlines, but the larger driver remains the path of services prices.

Equities

U.S. equities head into the first full trading week of the year with attention on earnings season, which ramps over the coming sessions. Thematically, markets are weighing multiple expansion versus earnings follow-through: can margin resilience persist if nominal growth cools, and where will pricing power hold in a slower inflation regime? Rate‑sensitive segments remain most exposed to shifts in the front end of the curve, while secular growth and select cyclicals hinge on demand indicators from PMIs and corporate guidance.

Positioning remains an important technical factor after year-end rebalancing. Flows into quality, cash-flow generative names and AI‑adjacent themes remain a feature, while small caps and high-beta cohorts are sensitive to any change in financial conditions and credit spreads.

Credit and foreign exchange

In credit, spreads enter the week near recent ranges, with gross new issuance set to pick up as the primary market reopens post-holiday. Investor appetite for higher-quality paper remains robust, while lower-quality borrowers are more sensitive to any tightening in financial conditions. Watch for signs of tiering in new deals and the concessions required to clear the market.

In FX, the U.S. dollar’s near-term path is tied to the interplay of U.S. data surprises, relative growth momentum, and rate differentials. A benign U.S. inflation backdrop and resilient domestic growth tend to support carry trades, while any hawkish readthrough from Fed communications or upside surprises in services inflation can lend the dollar support. Conversely, downside surprises in wages or demand indicators typically weigh on the dollar against higher-beta peers.

Commodities

Oil markets remain sensitive to geopolitical risk and shipping route disruptions, with weekend developments capable of shifting risk premia. Domestic inventories and refinery utilization data in the week ahead will provide additional color on balances after the holiday period. Industrial metals continue to key off global PMIs and China-sensitive growth signals, while precious metals pivot on real yields and the policy path.

The 7‑day outlook

The coming week features a dense macro calendar that can reset early‑year narratives. Exact release days may vary by agency schedules, but the following items are typically on deck in the first full week of January:

• ISM Services Index (December): A read on services momentum, order books, and price pressures. The prices‑paid component will be parsed for signals on near‑term services inflation.
• ADP Private Payrolls (December): A directional read on labor demand ahead of subsequent official labor indicators; wage metrics are particularly relevant.
• Job Openings and Labor Turnover Survey (JOLTS): Job openings, quits, and hires rates help triangulate labor-market slack and wage pressure risk.
• Weekly Initial and Continuing Jobless Claims: High‑frequency insight into labor-market conditions; an inflection here often precedes broader trends.
• Trade Balance: Signals on net exports and inventory dynamics as the quarter opens.
• FOMC Minutes (December meeting): Key for tone around the inflation outlook, the reaction function, and any discussion of balance sheet cadence.
• Consumer Credit: A window into household borrowing appetite and credit conditions after the holiday season.
• Treasury Supply: Regular bill auctions (early and midweek). Any larger‑than‑expected sizes or shifts in issuance strategy can nudge front‑end pricing.

Cross‑asset implications to monitor:

• If services price measures and wages cool, front‑end yields typically ease, the curve can steepen, and duration‑sensitive equities and credit may catch a bid.
• Conversely, upside surprises in wages or services prices would tend to firm the front end, support the dollar, and pressure long‑duration risk assets.
• Stronger‑than‑expected activity data with contained inflation supports cyclical equities and high‑yield credit; a growth scare would reverse that pattern.

Key risks to monitor

• Inflation surprise risk: Services inflation and wage prints that deviate meaningfully from trend.
• Policy communication risk: A more hawkish or dovish tilt in Fed minutes or speeches that shifts rate-path probabilities.
• Liquidity risk: Early‑year depth can be thin, amplifying moves around data releases and auctions.
• Geopolitical risk: Energy supply disruptions or shipping constraints that feed into goods prices and risk sentiment.
• Credit conditions: Signs of tightening lending standards or rising delinquency in consumer/SME credit.

Positioning and strategy implications

Into the week, many investors are balancing carry and convexity: staying constructive on high‑quality income while preserving flexibility around event risk. In rates, that often argues for selective duration exposure with an eye on auction dynamics and services inflation. In equities, earnings quality and pricing power remain paramount ahead of guidance season. In credit, discipline on structure and covenants is key as primary markets reopen. Across FX and commodities, relative growth and policy differentials—plus any energy‑related shock—are likely to dominate near‑term moves.

Bottom line: With cash markets set to reopen and a busy calendar ahead, the next seven days should provide a clearer read on whether early‑year optimism is matched by the data. Expect volatility around the midweek policy and services‑sector releases, and be prepared for swift cross‑asset repricing as liquidity normalizes.