Reuters – US and global markets on the eve of the deadline, by Samuel Indyk
2025 started like 2024 ended: Stocks are faltering and the dollar remains ahead as investors bet that Fed rate cuts will be few and far between this year.
Data released Thursday supported that view, as the number of Americans filing new claims for unemployment benefits fell to an eight-month low last week.
A strong jobs market should eliminate any expectations of a short-term rate cut from the Fed, with lower borrowing costs now contingent on a deterioration in the employment situation and a slowdown in inflation.
The chances of a cut at the January Fed meeting stand at around 11%.
As US rates are expected to remain high for longer, the dollar reigns supreme.
The Dollar Index, although slightly weaker on Friday, remains near its highest level in more than two years, pushing the pound to multi-month lows and the euro ever closer to parity.
On Thursday, the single currency fell to its lowest level in more than two years, at $1.0225.
Europe remains unloved, for the moment, and the threat of American customs duties is weighing on sentiment.
The fourth quarter of 2024 was the worst quarter in more than two years for the pan-European STOXX 600 index.
Europe is not the only one showing signs of tension. Wall Street is also faltering.
The S&P 500 index was unable to maintain its gains on Thursday and fell for the fifth straight session, its longest streak of declines since mid-April. The Nasdaq Composite also fell for the fifth consecutive day.
Wall Street futures are higher before the bell on Friday, as they look to end the disruptive week in the green ahead of a big week next week, which includes the December nonfarm payrolls report and fast data on inflation in the euro zone.
Key developments expected to provide more direction to U.S. markets later on Friday:
* ISM Manufacturing PMI
* Changes in EIA natural gas inventories
