Earnings Roll in Ahead of Fed

STOCK INDEX FUTURES

The indexes are mixed, with the S&P and Nasdaq taking some gains while the Dow slipped as shares of UnitedHealth tumbled before the bell following a disappointing earnings report. On the other hand, General Motors posted a fourth quarter earnings beat before the bell, as it raised its dividend and announced a $6 billion share buyback plan. Reports from American Airlines and Boeing are also due today. On the trade front, President Trump threatened to raise tariffs on South Korea from 15% to 25% after saying the country had not held up their end of the trade deal. The move comes after Trump threatened 100% levies on Canada over the weekend.

Microsoft, Meta, Tesla, and Apple will all report fourth-quarter results this week, with the first three names reporting tomorrow 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 weekly jobless claims, November trade balance, and PPI data will round out the week that also brings a Fed meeting. 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 continued its descent lower as geopolitical risks and Trump administration policies weigh on the greenback ahead of the Fed’s meeting on Wednesday. Traders are scaling down dollar positions in response to the recent rise in geopolitical tensions following President Trump’s threats of increased tariffs on Canada and South Korea. Additionally, government shutdown fears are weighing on the currency after Chuck Schumer, said Democrats would vote against funding legislation that includes money for the Homeland Security Department. The deadline for a temporary funding bill is January 30. The Fed meeting on Wednesday is likely to stand pat and issue guidance in line with previous remarks that policy moves will depend on how economic data evolves.

EURO: The euro touched its highest level since mid-2021 against the dollar as US policy and shutdown fears led traders to sell dollars. Assets managers have been diversifying away from the dollar in recent months as a rise in global equities, which have outperformed major US benchmarks, have made other major foreign currencies more desirable. Also favorable to the euro was the recently completed EU–India landmark trade agreement. The deal, covering a quarter of global GDP, establishes a free trade zone spanning two billion people after nearly two decades of negotiations. On the data front, 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 higher and approaching highs last seen in July 2025 as a weaker dollar helped support the sterling, while data showed that retail inflation picked up steam in January. Figures from the British Retail Consortium on Tuesday showed that prices at major British retailers rose at the fastest pace in almost two years in January. Strong data out last week also continued to lend strength to the sterling; PMI data showed UK businesses recorded their fastest growth in business since April of 2024. The 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. The data could make things difficult for members at the Bank of England, which is set to meet next week, though markets are expecting the bank to hold rates steady. Previous meetings have seen tight 5-4 vote splits, but given recent data, February’s vote is likely to be less contested. Inflation in the country is among the highest out of all G7 countries, though it is expectd to fall in the coming months as wage growth eases and unemployment creeps up. However, there is not enough evidence of these dynamics playing out in the economy to support the case for another rate cut just yet, supporting the case for a hold. 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 higher, marking a 3% gain over the past two sessions as talk of US-Japan rate checks and a possible intervention by authorities supported the currency. Rate checks are often seen as a precursor to official intervention, but there is no time table for when an actual intervention could occur. On Monday, 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 tomorrow, 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 higher across the curve ahead of the Fed’s meeting tomorrow, where rates are expected to be left on hold. Traders are bracing for an extended pause in the Fed’s rate cutting cycle as 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. US Fed Funds futures have priced in about 44 bps of easing, or less than two 25 bp cuts, for 2026. That is down from about 53 bps two weeks ago.

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. BlackRock bond chief Rick Rieder has become the odds‑on favorite, with Polymarket giving him a 49% chance of taking the top job.

The spread between the two- and 10-year yields is 64.20 bps, while the two-year yield, which reflects short-term interest rate expectations, is 3.595%.

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