James Brodie
Head of Learning & Development, Flux
Fed Officials Signal Renewed Worries over Inflation, Klarna Down 27%
Yields pare back rate cut expectations; US equities dump, homes for sale; Walmart slower earnings growth; Cuban oil
Yields continue to pare back rate cut expectations after Fed officials signalled renewed worries over inflation, with “several” policymakers suggesting the central bank may need to raise interest rates again.
The OIS now prices 56bp cuts by year end (was 65bp last week), though equity and housing risks continue to rise, along with geopolitical tensions in the Middle East.
While retail investors have bought stocks at a record pace so far in 2026, BofA Institutional clients sold stocks at near-historic levels “Clients dumped US equities last week, with outflows reaching near-historic levels.” “Outflows were the *third highest* since records began in 2008.” [$8.3 billion]. (Chart 1, BofA Global Research)
January pending home sales -0.84% m/m vs. -7.38% in prior month … another monthly decline that brings level to an all-time low. (Chart 2, Bloomberg)
Meanwhile the number of unsold completed homes for sale in US hits the highest levels since 2009. (Chart 3, Lance Lambert)
"Shares of the biggest private investment managers on Wall Street tumbled on Thursday after Blue Owl permanently restricted investors from exiting a debt fund for retail investors, sending shivers through the industry." – FT (Chart 4, FT)
Walmart inc. warned of slower earnings growth, with CFO john David Rainey citing signs of a “hiring recession,” rising consumer debt delinquencies, and trade volatility tied to policies under Donald Trump.
Japan inflation slows to 1.5% in January, core measures ease.
Buy now pay later firm Klarna plummets 27% after reporting a loss, softening guidance and outlook amid a weaker consumer environment.
Cuban Oil in storage may last fewer than 20 days. The government unveiled contingencies including reducing public transportation, shortening the work week, shutting down resorts & limiting gasoline sales.
David Tepper’s top bet remains Alibaba, with nearly 20% of his portfolio tied to Chinese stocks.
Data today - UK & EZ flash PMIs, US GDP Q4, PCE deflator, UMich con sentiment
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