Bonds & Stocks
Bond yields remained lower after the Treasury increased its quarterly debt sale — but suggested no more boosts are coming. Tech giants weighed on stock futures as earnings failed to live up to high expectations around artificial intelligence. Just hours away from the Fed decision, a relief from further boosts to auction sizes for longer-term securities is seen helping support demand for Treasuries. Bonds also gained as a broad gauge of US labor costs cooled by more than forecast and data showed US companies added fewer jobs than forecast at the start of the year.
Economy
Even as Fed officials convene for the January meeting, all eyes are on March — when markets have priced in about a 40% chance of a rate cut as of the time of writing. Our new natural language processing (NLP) Fedspeak Index flags that the threshold hasn’t yet been met to signal a high probability of a March cut. What needs to change for the threshold to be met? Quite a lot.
World
Emerging-market stocks are set to end January with their steepest losses in five months, dragged down by a $1.1 trillion decline in market value for shares listed on the Chinese mainland, as concern builds that authorities in Beijing aren’t doing enough to support the world’s biggest developing economy. The MSCI China index fell another 1.4% on Wednesday, a fourth day of declines, after data showed factory activity contracted again in January, dealing another blow to investors looking for signs that government stimulus measures are working.