Trump trades dominate proceedings; the Hang Seng is down 3% as speculation builds that President Trump is poised to pick two individuals, Marco Rubio and Mike Waltz, with track records of criticizing China, for key positions in his new administration. Bitcoin is also making headlines as its record-breaking rally took the digital asset to $89,599, lifting the overall value of the crypto market above its pandemic-era peak, with the Republican Party tightening its grip on Congress and enabling less regulation.
Outside the U.S., the German economy continues to struggle with stagnation. It’s on course to have the weakest economy in the G7 again in 2024 for the second consecutive year. Germany’s structural problems were exposed by the surge in energy prices following Russia’s invasion of Ukraine in 2022. The country is also grappling with weak demand from China, which is increasingly becoming a systemic rival in some markets. Additionally, an aging demographic and reduced labour availability are constraining German producers. The ECB has indicated it is more confident that inflation is falling sustainably back toward the 2% target and is widely expected to cut rates next month for the third consecutive meeting. Interest rate differentials suggest further downside pressure for EUR/USD.
In other markets, Ether rose 1.8% to $3,388.68, the yield on 10-year Treasuries advanced three basis points to 4.33%, West Texas Intermediate crude fell 0.2% to $67.93 a barrel, and spot gold fell 0.4% to $2,607.19 an ounce. Data-wise, we have the ZEW survey and will hear from the Fed’s Christopher Waller, Patrick Harker, and Neel Kashkari.
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