James Brodie
Head of Learning & Development, Flux
US 2-yr Bond Yields Risk Breakout, Jobless Claims, Amazon Strikes Deal with Rio Tinto
Breakout risk in US 2y yields on data; dollar up, metals/Fed-cut trades unwind. OIS prices just 20bp cuts. Asia AI, power demand surge
The biggest risk to crowded consensus trades is a breakout higher in U.S. 2-year yields.
More strong data yesterday means bond yields are rallying on economic strength (and not debt concerns). That’s good for the dollar and bad for dollar debasement trades such as precious metals and those calling for more Fed cuts and curve steepening trades. The overnight index swap (OIS) is now pricing just 20 basis points of cuts in 1H26, that will likely get unwound. (Chart 1, Bloomberg). Dollar shorts, bond bulls, platinum and palladium longs are starting to unwind their positions.
Initial jobless claims 198k (est. 215k) layoffs are low and falling. NY Empire manufacturing index 7.7 (last -3.7), Philly Fed manufacturing index 12.6 (last -8.8), and new orders were particularly strong).
Germany's Chancellor Merz says it was a 'serious strategic mistake to phase out nuclear energy'.
Taiwan Semiconductor reported a +35% YoY increase in net profit for Q4 2025, driven by surging AI chip demand. Asia’s most valuable company has now posted YoY profit growth for 8 consecutive quarters.
AMAZON HAS STRUCK A DEAL WITH RIO TINTO TO USE COPPER FROM AN ARIZONA MINE IN US DATA CENTERS.
US data centres will consume nearly 10% of the entire US power grid by 2030 (Chart 3 IEA, The Economist.
The K-shaped economy. The top 10% of US earners now account for a record 49% of all consumer spending.
Key data today: U.S. Industrial Production
Data over weekend: China GDP, IP, Unemployment rate, house prices & retail sales
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