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Week in Review: 13-17 January 2025

Financial Markets

The week started weak on the equity markets, but quickly turned around and the main stock market indices ended in the green - the S&P500 and the NASDAQ 100 gained 2.9% and 2.8%, respectively. The small cap index (Russel 2000) recovered 4.1%. Trading volumes were average.

The metals were volatile but closed the week without much change relative to the previous week - gold gained 0.4% and silver lost 0.2%. Gold is looking more bullish, but will encounter resistance at ~2750$/oz. Silver will likely trade in the range of 28-31$/oz during the next weeks.

WTI traded higher, but retraced after hitting 80$, and ended the week at ~77$/bbl. Oil can trade in any direction from here.

Bitcoin is at an all-time high of 104500$, which is naturally a resistance level, but nothing is impossible at this point. If crypto momentum and optimism with the new US presidency continues, bitcoin will charge on.

The relative strength of the US dollar (DXY) moderated only so slightly this week (~109). The EUR/USD is around 1.027$, the GBP/USD is at 1.216$, and the USD/JPY is at 156.26 JPY.

US M2 money supply at the date of 25th November 2024 was up by 0.64%.

The national financial conditions index (NFCI) for the week of 6th January 2025 loosened by 2.44%, which shows a continuous loosening of financial conditions. Note that this indicator is delayed by a week.

US bond yields were down this week, and now sit at 4.283% for the 2-year and 4.623% for the 10-year.

With the stock market rally, the VIX returned to ~16, indicating a moderation in fear and less search for put options from the part of investors/speculators.


Comment Section

Recent economic data coming from the US indicates that inflation is moderating (PPI and inflation came in at the expected values, and core inflation actually below expectations!), which increased expectations for interest rate cuts - a net positive for the stock markets.

Next week, the president elect Donald Trump will start his term, and the expectations are mounting regarding his first decisions, executive orders, and policies. Let's calm down, and see what the new government actually does!



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