Fed, Corporate Earnings, and Data on the Calendar

STOCK INDEX FUTURES

The S&P and Dow traded flat, while the Nasdaq led the downside as markets prepare for one of the busiest weeks of the year regarding economic data and corporate earnings. Last week’s geopolitical headlines created sharp volatility that led to a wave of selling in American assets. President Trump and Europe’s leaders agreed on the “framework” of a deal over Greenland, but the events revealed a growing divide between the US and some of its major Western allies.

Attention will be back on the corporate calendar this week, with Microsoft, Meta, Tesla, and Apple all ready to report fourth-quarter results, with the first three names reporting Wednesday after the bell. Attention is likely to be placed on AI spending plans and overall strategy regarding the new technology landscape. Investors will be watching for two things: how much these companies are planning to spend and how they are planning to fund the spending. The tech space has been diving further into the world of corporate bond issuance, issuing nearly $700 billion in debt over the past quarter, close to the over $800 billion by the financial sector.

On the economic calendar, durable goods orders posted a 5.3% gain from October to November, while core goods orders rose 0.5%; both figures beat out forecasts. The gain was driven by a sharp rebound in transportation equipment orders, which surged 14.7% after a 6.3% fall in October, led by a 97.6% spike in civilian aircraft bookings. Elsewhere, orders also rose for electrical equipment, appliances and components, fabricated metal products, machinery, and computers and electronic products. Looking ahead, consumer confidence surveys, weekly jobless claims, November trade balance, and PPI data will fill out the week that also brings a Fed meeting. However, the central bank is expected to hold on rates and refrain from issuing strong guidance on further policy moves.

CURRENCY FUTURES

US DOLLAR: The USD index is lower as traders sell the dollar ahead of the Fed’s meeting on Wednesday, where the bank is likely to stand pat and issue guidance in line with previous remarks that policy moves will depend on how economic data evolves. The dollar is falling strongest against the yen, as speculation that a joint US-Japan currency intervention move could happen in the coming days following Friday’s spike in the currency and recent comments from several Japanese government officials. Elsewhere, easing geopolitical tensions was put on hold after President Trump threatened to impose a 100% tariff on Canada if it signs a trade deal with China.

EURO: The euro is higher as markets sell the dollar in what is set to be a busy week of data for the eurozone as focus shifts back to economic data after being dominated by geopolitical headlines last week. Germany’s Ifo Business Climate Index for January was unchanged at 87.6, holding near May 2025 lows after seeing a local peak in sentiment around August. Looking ahead, fourth-quarter GDP and CPI figures for some of the eurozone’s major economies will be out following releases of several domestic pieces of data throughout the week.

BRITISH POUND: The pound is little changed against the dollar. Consumer credit, mortgage lending, and mortgage approval data for December out later in the week will be the highlight of the week in terms of data out of the country. November’s lending data suggested the UK’s housing market was fairly resilient in the second half of 2025, a trend that is expected to be reflected in the upcoming data. On Friday, PMI data showed UK businesses recorded their fastest growth in business since April of 2024, with S&P Global’s Composite PMI reaching 53.9, up from 51.4 in December. In GDP terms, S&P Global data pointed to a quarterly growth rate of 0.4% in December. However, the PMI data also revealed rising inflationary pressures on businesses and a drop in employment. Employment in the services sector contracted at a faster rate in January, while output price inflation picked up to a nine-month high. Currently, money markets are priced for a rate cut from the Bank of England in June or July, with July’s meeting being fully priced in.

JAPANESE YEN: The yen is up over 1% against the dollar as market focus shifts to a possible government intervention on the currency. On Friday, a possible rate check happened after the currency spiked during trading, with the New York Federal Reserve reportedly conducting the checks. On Sunday, Prime Minister Takaichi said the government would take “necessary steps” to counter speculative market moves, reinforcing official resolve to stabilize the yen. Additionally, this morning, Japan’s currency minister said the government is working with US authorities regarding ongoing currency developments. Elsewhere, focus will also center around Tokyo area CPI data out at the end of the week and meeting minutes from the Bank of Japan’s December meeting out on Wednesday. CPI data is expected to show that inflation held above the BoJ’s 2% target in December, though falling energy prices do present some downside risk regarding the headline reading. Japan’s ministry of finance will also be conducting several bond auctions during the week, which could impact yen moves after a Japan-led bond sell-off triggered global markets last week. Japanese bonds, just like the yen, have been under pressure in recent months over concerns of the country’s ability to finance its debt (double its GDP) because of Taikichi’s planned stimulus measures and tax cuts.

AUSTRALIAN DOLLAR: The Aussie is higher against the dollar as markets look ahead to fourth-quarter inflation data out on Wednesday, which could shape the interest rate landscape for the Reserve Bank of Australia come February. Wednesday’s data is likely to help settle debate about the need for a February rate hike from the central bank, as concerns over a pickup in inflation have been reignited in recent data. Capacity utilization in the economy is stronger than expected, growth remains robust, thanks in part to strong consumer spending, unemployment is low, and upbeat PMI figures point to strong growth in the economy across most sectors. Unemployment dropped to 4.1% in December from 4.3%, a welcome sign for policymakers at the RBA who have been debating whether the current policy rate is neutral and likely to dissuade fears that a hike in rates will lead to a meaningful uptick in unemployment.

INTEREST RATE MARKET FUTURES

Yields are lower across the curve to start the week ahead of the Fed’s policy decision on Wednesday. The bank is likely to hold on any rate moves. Recent data has suggested that labor conditions are stable, with no meaningful uptrends in unemployment figures in both the nonfarm payrolls and JOLTS reports. Additionally, weekly initial claims data has been rather bland, with no indications of any major uptick in joblessness or layoffs, as the four-week MA of continued claims has continued its downtrend since early November. With inflation continuing to rest above the Fed’s 2% target, the bank has more room to hold rates steady in an effort to combat the rise in prices. Given the dynamics, focus will center around how many dissenting votes there are, likely the best gauge to help determine the timing of the next rate cut.

The bigger news for the Fed will be any developments regarding President Trump’s next pick for Fed Chair after Powell finishes his term for the position in May. According to odds on Polymarket as of Friday afternoon, BlackRock’s global CIO for fixed income, Rick Rieder, has been rising quickly as a prospect and has become the favorite to earn the nod from Trump.

The spread between the two- and 10-year yields is 62.00 bps, while the two-year yield, which reflects short-term interest rate expectations, is 3.603%.

Interested in more futures markets?  Explore our Market Dashboards here.