James Brodie
Head of Learning & Development, Flux
Dovish Fed Speak, Record US Retail Buying, Chinese GDP & Metal Spec
Yields drop, retail piles in, narrow stock gains, China deflation deepens, metals frenzy, AI risk grows, global data ahead.
After Friday’s inflation data and dovish Fed speak the US yield curve fell 5bp with 2-year yields sitting right on the lows since August 2022. (Chart 1, Bloomberg).
Fed’s Miran: We may be underestimating how restrictive monetary policy actually is, and Fed’s Goolsbee: think interest rates can still go down fair bit more….. Now 63bp cuts prices by the US OIS by year end.
Record retail US equity buying. Retail investors just bought $48 billion in 21 days. (Chart 2, JP Morgan Equity strategy & quantitative research). While The BofA Bull & Bear Index is up to 9.6 points, a 20-year high.
Also note - Over 115 S&P 500 stocks have experienced a decline of -7% or more in a single day over the last 8 trading sessions. Meanwhile, the S&P 500 is down just -2% from its all-time high. And more US equity market stress is rising beneath the surface: The put-call skew in the Nasdaq 100 ETF, is up to 0.39, the highest since the April 2025 market sell-off.
The Kospi is now up 124% in 1-year, but 51% of gains in Korea’s world-beating stock market come from just two stocks (Samsung Electronics & SK Hynix).
CISCO falls -12.3% suffered its 5th biggest loss in 25 years.
China’s GDP deflator fell -0.7% in Q4 2025, marking the 11th consecutive quarterly decline, the longest streak in at least 30 years. China has been in deflation for 3 consecutive years now, the longest stretch since the country transitioned to a market economy in the late 1970s.
Metals speculation in China is exploding - Combined aluminium, copper, nickel and tin futures volume on the Shanghai Futures Exchange surged +86% MoM in January to 78m lots — the highest in at least a year and 5× the average of the prior 11 months. Nickel led the move (+300% MoM to 30m lots), while tin saw over 1m metric tons traded in a single day — more than twice global annual physical usage. Retail-driven momentum via social media and WeChat chatrooms is fuelling the surge, prompting Shanghai and Guangzhou exchanges to raise margins and tighten rules 38 times in two months to curb speculation. (Chart 3, SHFE)
AI Risk Is Dominating Conference Calls as Investors Dump Stocks. (Chart 4,Bloomberg). BofA’s Harnett: an AI hyperscaler announcing a capex cut will trigger the next great rotation.
Data centres now account for 7% of all US electricity demand.
BOE’s Pill: significant part of rise in UK unemployment rate likely to be structural, not cyclical.
Netherlands House of Representatives approves 36% tax on unrealized capital gains in stocks, crypto and bonds.
Data this week:
Monday – US holiday
Tuesday – German ZEW, Canada CPI,
Wednesday – RBNZ decision, UK CPI, US ind prod
Thursday – Australian employment, Japan CPI, EZ consumer confidence, US jobless claims
Friday – UK retail sales, UK & EZ flash PMIs, US GDP Q4, PCE deflator, UMich con sentiment
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