Financial markets underwent increased volatility following mixed quarterly results from JP Morgan Chase and an uptick in US CPI data. Overall risk sentiment seems to be softening as Traders and Investors take defensive positions ahead of additional earnings announcements next week. The Yen also benefited from the migration away from risk, we may be seeing a reversion to the flight to quality trade which dominated markets at the height of the crisis. Central banks are looking for opportunities to tighten monetary policy to counter inflationary risks, which has served as an additional factor in determining price action.
JP Morgan Corporate Earnings mixed as EPS beat estimates at .74 cents a share vs. .60 cents a share, but failed to meet expectations on the revenue side at $25.2bln vs. $26.8bln
CPI ticks higher by 0.1% vs. 0.2% expected, a rise in inflation may cause increased pressure on Fed to raise rates sooner than expected
US consumer sentiment improves to 72.8 from 72.5 in December, this data was dollar supportive
Eurozone inflation data came met expectations of 0.30%, following very bearish comments regarding the region’s economy from ECB President Jean-Claude Trichet
Treasury prices also rose as the 10yr yield fell 4 bps to 3.71%, in addition the spread between 2’s and 10’s narrowed to 2.80 percentage points from a record high of 2.90 percentage points as noted from Bloomberg
US equity markets sank at the open with the Dow weaker by 0.80% and the S&P 500 lower by 0.86%.
US – Monday, National Holiday in observance of Martin Luther King Jr
CAN - No major economic data is due for release today from Canada
Michael J. Malpede is Chief Market Analyst with Easy-Forex and has previously been featured on Bloomberg TV, Bloomberg radio, Reuters, MarketWatch, Wall Street Journal, Chicago Tribune, Chicago Sun Times, Toronto Star and Nikkei press.
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