Market Wrap 2026-01-08

Core-Brief

08 Jan 2026 — 11 min read

Market Wrap 2026-01-08

0:00

Today's US Market Wrap — Key Points

Mixed equity performance amid strong US data, dollar strength.
Tech underperformed; Energy & Staples led. Focus on Friday's jobs report.
Treasury yields rose. Oil gained on geopolitical tensions.
China expected to approve some NVDA H200 purchases this quarter.

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SNAPSHOT: Equities showed mixed performance, Treasuries declined, Crude oil advanced, the Dollar strengthened, and Gold increased.
REAR VIEW: US Initial jobless claims are at the lower end of 2025 levels, while continued claims edged up. The NY Fed SCE indicated that 1-year inflation expectations rose, but 3- and 5-year expectations remained unchanged. The trade deficit narrowed in October. The Atlanta Fed GDP forecast saw a substantial upgrade. China is expected to approve some NVDA H200 purchases as early as this quarter. There was a larger-than-expected EIA natural gas draw. RevelioLabs and Challenger layoffs data were encouraging. MRK is reportedly in discussions to acquire RVMD, and GLEN and RIO are in merger talks again.
COMING UP: Data releases include Chinese CPI/PPI, German Industrial Output (Nov), Norwegian CPI (Dec), US Jobs Report (Dec), University of Michigan Sentiment Prelim (Jan), and Canadian Jobs Report (Dec). Speakers include the ECB's Lane and the Fed's Kashkari and Barkin.

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MARKET WRAP

US stock performance was mixed on Thursday. NVDA underperformed its Mag7 counterparts, and other AI-related stocks also declined, seemingly driven by profit-taking despite a lack of significant negative news. Micron (MU) fell by -3.7%, and Sandisk (SNDK) decreased by over 5%. Consequently, the Technology sector was the weakest performer, while Energy and Staples outperformed. The Russell index outperformed, boosted by strong gains in Bloom Energy (BE, +13%) following a deal with AEP. Kratos (KTOS) also contributed to index gains after Trump suggested increasing military spending by USD 500 billion to 1.5 trillion in 2027, sparking a rally in defence stocks. The dollar and US Treasury yields rose following a series of US data releases. The data generally came in strong. Claims data continue to suggest a stable labor market, and trade data revealed an unexpected decrease in the trade deficit due to lower imports and higher exports. Following the data and the ISM Services beat on Wednesday, the Atlanta Fed increased its Q4 real GDP growth forecast to 5.4% from 2.7%. The NY Fed SCE showed an increase in consumer's 1-year inflation expectations, but no change in the 3- and 5-year outlooks. Unit Labor Costs saw consecutive quarterly declines, despite expectations of a rebound. Productivity also increased. Ahead of the NFP report on Friday, RevelioLabs estimates that 71,000 jobs will be added to the US economy. In commodities, metals were mixed, with gold posting gains and silver experiencing losses. Oil prices rose throughout the day, reversing Wednesday's declines. Before settlement, US President Trump stated he would strongly respond to Iran if they killed rioters, providing another boost to the complex. Treasury Secretary Bessent stated that they have not yet interviewed Rick Rieder for the Fed Chair position and anticipates Trump will announce his decision either before or after his trip to Davos in two weeks.

US DATA

CLAIMS: Initial jobless claims (week ending January 3rd) increased to 208,000 from a revised 200,000 (previous 199,000), below the expected 210,000. The 4-week average was 211,750, down from the previous 218,750, marking its lowest level since April 2024. Seasonal factors had anticipated an increase of 17,786, or +6.6% week-over-week. Continued claims rose to 1.914 million, above the expected 1.9 million, from a revised 1.858 million (previous 1.866 million). Oxford Economics believes there is still some risk that recent layoffs translate into a bump up in claims, but "we think the risk will fade as more time passes without seeing a shift higher in claims". The firm adds that there is nothing in the claims data to warrant a change in our view that the "Fed will be comfortable keeping rates unchanged until well in 2026".

INTL. TRADE: The October trade balance showed a deficit of USD 29.4 billion, narrowing from USD 48.1 billion, compared to the forecast deficit of USD 58.9 billion. Exports increased by 2.6% to USD 302 billion, while imports decreased by 3.2% to USD 331.4 billion. Regarding the trade of goods, October figures indicate that the US had the largest surplus with Switzerland, the UK, South and Central America, and the largest deficits with Mexico, Taiwan, Vietnam, China, and the EU. Following the data, the Atlanta Fed GDPNow model is tracking growth in Q4 25 of 5.4%, well up from the 2.7% prior. It noted that the nowcast of the contribution of net exports to fourth-quarter real GDP growth increased from -0.30% to 1.97%.

UNIT LABOUR COSTS/PRODUCTIVITY: The preliminary Q3 report showed productivity rising by 4.9%, above the 3.0% forecast (although some forecasts were at 5%), increasing from the prior upwardly revised 4.1% from 3.3%. Oxford Economics suggests that the latest figures suggest firms are successfully doing more with less labour, giving more credence to a jobless expansion. Within the report, the annual revisions were also strong, which pushed up the prior read. Unit Labor Costs fell by 1.9%, with the prior revised to -2.9% from +1%. Oxford Economics highlights that the trend in unit labour costs is consistent with a moderate pace of services inflation. The desk highlights that "If productivity growth continues to accelerate due to tax cuts, deregulation, and technological advancements, including AI, economic growth can pick up without causing unwanted inflation."

NY FED: The NY Fed Survey of Consumer Expectations found that the median inflation expectations for the 1-year ahead increased by 0.2% to 3.4% in December, while the 3- and 5-year forecasts were unchanged at 3%. The mean perceived probability of finding a job if one’s current job were lost fell by 4.2% to 43.1%, reaching a new series low. The decline was driven by respondents with annual household incomes below USD 100k and was most pronounced for those above age 60 and those with a high school degree or less. The mean perceived probability of losing one’s job in the next twelve months increased by 1.4% to 15.2%. The reading is above the series’ 12-month trailing average of 14.3%. The mean probability of leaving one’s job voluntarily, or the expected quit rate, in the next twelve months fell by 0.2% to 17.5%. Households’ perceptions about their current financial situation compared to a year ago improved, with a smaller share of households reporting a worse financial situation and a larger share reporting a better financial situation. Year-ahead expectations about households’ financial situation improved as well.

FIXED INCOME

T-NOTE FUTURES (H6) SETTLED 10+ TICKS LOWER AT 112-08

Yields increased across the curve, supported by US data and gains in oil prices. At settlement, the 2-year yield was +1.0bps at 3.488%, the 3-year yield was +2.3bps at 3.556%, the 5-year yield was +3.0bps at 3.736%, the 7-year yield was +3.4bps at 3.950%, the 10-year yield was +3.1bps at 4.183%, the 20-year yield was +2.4bps at 4.798%, and the 30-year yield was +2.5bps at 4.858%.

THE DAY: T-notes experienced a sell-off across the curve on Thursday, with pressure observed throughout the European morning, US morning, and heading into settlement. The downside appeared to correlate with gains in oil prices, which recovered some recent losses, with WTI settling almost 3% higher. There was also a significant amount of US data released. Initial jobless claims remained low, while productivity increased and unit labor costs decreased in Q3. Trade data showed a narrowing of the deficit in October due to rising exports and falling imports, which had positive growth implications for Q4 - the Atlanta Fed GDP estimate was revised up to 5.4% from 2.7%. The NY Fed SCE indicated that inflation expectations rose to 3.4% from 3.2% in the 1-year ahead horizon, with 3- and 5-year forecasts maintained at 3.0%, while perceived labor market conditions worsened, but expectations about the year-ahead financial situation improved. Elsewhere, Fed's Miran spoke - reiterating his dovish tone, noting he would like to see 150bps of easing this year. Meanwhile, Treasury Secretary Bessent said that they have yet to interview Rick Rieder for the Fed Chair role, and thinks Trump will announce his decision in January, either before or after his trip to Davos in two weeks. Attention now largely turns to the NFP report on Friday - the RevelioLabs employment report released today was strong, showing 71k jobs added - we will see if this translates in the official report tomorrow.

SUPPLY

Notes

The US Treasury will sell USD 58 billion of 3-year notes on January 12th, USD 39 billion of 10-year notes on January 12th, and USD 22 billion of 30-year bonds on January 13th (as expected); all to settle on January 15th.

Bills

The US sold 4-week bills at a high rate of 3.550%, with a bid-to-cover ratio of 3.18x; it sold 8-week bills at a high rate of 3.540%, with a bid-to-cover ratio of 2.85x.
The US will sell USD 86 billion of 13-week bills and USD 77 billion of 26-week bills on January 12th.
The US will sell USD 75 billion of 6-week bills on January 13th.

STIRS/OPERATIONS

Market Implied Fed Rate Cut Pricing: January 2bps (previous 1bps), March 10bps (previous 10bps), April 16bps (previous 16bp), December 58bps (previous 58bps)
NY Fed RRP operation demand was at USD 3.1 billion (previous 4.6 billion) across 7 counterparties (previous 8).
EFFR was at 3.64% (previous 3.64%), with volumes at USD 83 billion (previous 88 billion) on January 7th.
SOFR was at 3.65% (previous 3.66%), with volumes at USD 3.267 trillion (previous 3.390 trillion) on January 7th.
Treasury Buyback (Liquidity Support): Accepted USD 2 billion of 28.65 billion offers, accepting 1 issue of the 35 eligible Offer-to-cover 14.33x
NY Fed T-bill purchases (reserve management): Accepted USD 8.165 billion of USD 65.033 billion submitted; offer to cover 8.13x

CRUDE

WTI (G6) SETTLED USD 1.77 HIGHER AT USD 57.76/BBL; BRENT (H6) SETTLED USD 2.03 HIGHER AT USD 61.99/BBL

Crude oil prices increased after two sessions of losses, recovering from the weakness observed on Wednesday. Market-moving headlines were largely absent, with news flow primarily concerning the US methodology for bringing Venezuelan crude online. US Energy Secretary Wright estimates that Venezuela's oil production could increase by 50% in the next 18 months. Overnight, the WSJ reported that US President Trump believes his efforts could help lower oil prices to his preferred level of USD 50/bbl. Before the settlement, Trump stated he would strongly respond to Iran if they kill rioters amid a nationwide internet blackout in the country. Crude oil prices continued to rise following these remarks, with WTI and Brent reaching highs of USD 57.82 and 62.02/bbl, respectively.

Goldman Sachs survey (via Bloomberg):

More than 59% of over 1,100 Goldman clients across asset classes are bearish or slightly bearish on crude oil.
A record number of institutional investors indicated that oil was their favorite short position.
The survey was conducted between January 5th and 7th.

EQUITIES

CLOSES: SPX +0.01% at 6,921, NDX -0.57% at 25,507, DJI +0.55% at 49,266, RUT +1.11% at 2,604

SECTORS: Energy +3.20%, Consumer Staples +2.26%, Consumer Discretionary +1.72%, Materials +1.38%, Real Estate +0.79%, Industrials +0.78%, Communication Services +0.59%, Financials +0.57%, Utilities +0.32%, Health -0.91%, Technology -1.54%

EUROPEAN CLOSES: Euro Stoxx 50 -0.33% at 5,904, Dax 40 +0.01% at 25,126, FTSE 100 -0.04% at 10,045, CAC 40 +0.12% at 8,243, FTSE MIB +0.25% at 45,672, IBEX 35 +0.33% at 17,655, PSI +0.09% at 8,487, SMI +0.10% at 13,337, AEX -1.44% at 965

STOCK SPECIFICS

NVIDIA (NVDA): China is expected to approve some NVDA H200 chip purchases as soon as this quarter.
Jefferies (JEF): Investors are focused on a loss linked to First Brands exposure despite an earnings beat.
Constellation Brands (STZ): Delivered an earnings beat.
Applied Digital (APLD): Adjusted EPS and revenue exceeded expectations.
RTX (RTX), Lockheed Martin (LMT), Northrop Grumman (NOC): Trump stated that the military budget should be increased to USD 1.5 trillion from USD 1.0 trillion.
AbbVie (ABBV): Lowered its FY adjusted EPS outlook; rejected reports it's to acquire Revolution Medicines (RVMD), -8.2%.
Alphabet (GOOGL): Was upgraded at Cantor Fitzgerald to 'Overweight' from 'Neutral'.
Marqeta (MQ): Was downgraded at Mizuho to 'Neutral' from 'Outperform'.
Alcoa (AA): Was downgraded at JPMorgan to 'Underweight' from 'Neutral'.
Nike (NKE): Was downgraded at Needham to 'Hold' from 'Buy'.
Glencore (GLEN LN) confirms it is in preliminary talks with Rio Tinto (RIO LN) about a possible combination, but cannot confirm a deal will be agreed; expectation is that any merger would be effected via the acquisition of GLEN by RIO.
Merck (MRK) is reportedly in talks to buy Revolution Medicines (RVMD), according to FT; deal not finalized

FX

The dollar strengthened, supported by US data indicating a stable labor market. The 4-week initial claims average reached its lowest level since April 2024, while continued claims remain at a level consistent with a slow pace of hiring, according to Oxford Economics. Ahead of the NFP December report on Friday (expected +60,000), Revelio published estimates of 71,000, suggesting that the unemployment rate could face downward pressure, considering the widely discussed 0-50,000 breakeven range cited by Fed officials. Oxford expects “a solid increase in payroll employment and the unemployment rate to tick lower”. Following the data, the dollar moved higher alongside US yields. Separately, the NY Fed SCE showed short-term inflation expectations increasing but remaining stable in the medium and longer term. Regarding trade, the reduction in the trade deficit, driven by a larger-than-expected increase in exports and a bigger-than-expected drop in imports, resulted in a substantial upward revision to the Atlanta Fed's real GDP growth estimate, from 2.7% to 5.4%. The beat in ISM Services on Wednesday also contributed. The DXY is currently trading at approximately 98.30, up from earlier lows of 98.679.

G10 FX were lower across the board amid broad USD strength. Antipodean currencies underperformed amid continued pressure in the metals complex. In overnight trading, the RBA Deputy Governor stated in an ABC interview that they have likely seen the last rate cut in the cycle and that the likelihood of near-term rate cuts is very low. In Europe, the EUR also faced pressure despite resilience in the morning; EZ data had little bearing on price action. At the time of writing, EUR/USD hovers just off 1.1643 lows and AUD/USD has also come slightly off lows, trading around 0.6695.