GGMA Morning Brief: Russia rejects peace plan, Fed’s Miran wants 150 points of cuts, Japan’s household outlays rise, US labour market and court ruling in focus
Good morning,
I hope all is well.
Here are the main overnight news and market movers:
Markets: Commodities and the US Dollar rally ahead of the US non-farm payroll report
The Nikkei and USDJPY both rallied overnight, while US and European equity/bond futures were only slightly changed. Oil, precious metals, and industrial metals prices rose, while Bitcoin is essentially unchanged. The US dollar is firmer across the board.
Russia rejects Trump’s 20-point peace plan for Ukraine: ‘Forming a true axis of war’
The Russian Foreign Ministry on Thursday rejected the latest US-backed offering to end the Russia-Ukraine war, issuing a blistering rebuff that threatens to blow up President Trump’s peace plan. A terse statement from Moscow’s Ministry of Foreign Affairs slammed the US-European proposal for security assurances for Ukraine, saying the protection plan amounts to “a true axis of war.” “The document turned out to be extremely far from a peace settlement. The declaration is not aimed at achieving a lasting peace and security but rather at continuing the militarisation, escalation and further conflict aggravation,” the ministry claimed. “Its core element is the deployment of ‘a multinational force’ on Ukrainian territory that the coalition will have to form to contribute to the ‘rebuilding’ of the Ukrainian armed forces and ‘support deterrence’ following the cessation of the hostilities,” it added. (Herald Sun)
Fed’s Miran wants 150 points of cuts in 2026 to boost jobs
Federal Reserve Governor Stephen Miran is looking for 150 basis points of interest-rate cuts this year to boost the labour market. Miran said underlying inflation is likely running at 2.3%, which means Fed officials have room to cut further. Miran believes there are about a million Americans who are unemployed but could be employed without causing unwanted inflation. Bond futures hardly moved during his interview with Bloomberg TV, though.
Japan’s household outlays rose ahead of Takaichi’s stimulus plan
Household outlays, adjusted for inflation, rose 2.9% from a year earlier, driven by spending on cars and communications. Household spending accounts for more than half of Japan’s economy. It serves as a key barometer of domestic demand, with consumer prices staying at or above the Bank of Japan’s 2% target. Spending on transportation and communications rose by an adjusted 20.4% from a year earlier, while outlays for education rose 10.2%, and the share of food spending in overall household consumption was 28.9%, according to Bloomberg. This should reassure the BOJ as it continues its gradual tightening path. Japanese bond yields are up a basis point this morning, but USDJPY is higher as we head into the US non-farm payroll report.
China CPI hits fastest pace since February 2023, in line with estimates
China’s consumer inflation accelerated in December to the fastest pace in more than two years, while factory-gate deflation extended for over three years, signalling that underlying demand in the economy remained weak. Consumer prices rose 0.8% from a year earlier, their highest level since February 2023, according to data from the National Bureau of Statistics on Friday. The improvement followed a 0.7% increase in November and matched the economists’ expectations in a Reuters poll. Factory-gate prices dipped 1.9% in December from a year earlier, better than the forecast 2% decline, extending the deflationary streak beyond three years. The drop followed a 2.2% fall in November. (CNBC – Continue Reading) Ten- and two-year bond yields are down a basis point overnight, while USDCNH is only slightly changed.
Today’s Macro Roadmap: Swiss, US & Canada labour market reports, UoM consumer confidence, Supreme Court tariff decision in focus
Of the three labour market reports to be released today, Switzerland’s is likely the least impactful, with the unemployment rate expected to remain stable at 3% in December.
However, leading indicators point to a softer labour market ahead.
The most important data release today will be the December US labour market report at 14:30 CET. The latest analysts’ poll forecasts nonfarm payrolls growth of 70,000, building on November’s 64,000 increase. The unemployment rate and wage data will likely attract the most attention. The consensus is looking for a downtick in the unemployment rate to 4.5% from 4.6% in November. Wages are expected to increase to 3.6% compared to last year, up from 3.5% previously. Also worth noting that cuts to the federal workforce in 2025 hit every major agency last year — with cabinet departments including Education, Housing, and Treasury taking the brunt of the downsizing, according to government data released Thursday. More than 322,000 employees have left agencies since Trump took office, with departures outpacing new hires by more than three-to-one, Bloomberg reports.
Here are the consensus estimates collected by my friends at LiveSquawk:
Bank of America’s internal data shows that year-over-year (YoY) payroll growth rebounded in December to 0.6% YoY, up from 0.2% YoY in November. Meanwhile, the increase in the number of households receiving unemployment benefits remained around 10% YoY in December. So, while the labour market appears to still be in a “low-hire, low-fire” mode, the apparent rebound in jobs growth may suggest the worst of the slowdown is behind us, the bank says. After-tax wage growth eased in December across income cohorts, most notably for middle-income households (1.5% YoY vs. 2.3% in November) and higher-income households (3.0% YoY vs. 3.7%). While this may be temporary, it bears watching given potential implications for consumer spending.
Also important will be the release of the University of Michigan's preliminary consumer confidence report. Sentiment is expected to improve to 53.5 in January, up from 52.9 in December.
Of interest will be the report breakdown, as current economic conditions are more linked to developments in the labour market.
Fed policymakers Kashkari and Barkin are also scheduled to speak. In his last speech, Kashkari stated that he believes monetary policy is "pretty close to neutral right now," suggesting interest rates don't need to be cut much more. Richmond Fed President Tom Barkin emphasised in his last speech that monetary policy now requires "finely tuned judgments" as unemployment has ticked up to 4.6 per cent while inflation remains at 2.8 per cent, above the Fed's 2 per cent target. After 175 basis points of rate cuts bringing rates "within the range of its estimates of neutral," he highlighted the economy's resilience with 4.3 per cent third-quarter GDP growth, though businesses operated cautiously in 2025 amid policy uncertainty. Looking to 2026, Barkin presented competing scenarios: a pessimistic view of narrow growth concentrated in AI and healthcare, versus an optimistic outlook in which diminishing uncertainty and stimulus from tax cuts, lower gas prices, and deregulation allow businesses to resume hiring and investment.
At 16:00 CET, we might get a decision on IEEPA tariffs from the US Supreme Court. Here is some more background from Wells Fargo.
In Canada, the unemployment rate is expected to rise to 6.6% in December, compared to 6.5% in the previous month.
Good luck today!