Today's events are shaping up to be rather unexciting, particularly in the European session, where there’s not much on the agenda aside from a few central bank officials likely reiterating their usual messages. For instance, ECB's de Guindos has been consistently emphasizing the central bank's neutral position and highlighting the risks that exist on both sides of the economic spectrum. Similarly, BoE's Taylor, known for his dovish stance, is expected to maintain his perspective, especially since January lacks any significant economic data from the UK.
As we transition into the American session, there's a bit more action anticipated. Key reports on November's US retail sales and Producer Price Index (PPI) are set to be released, alongside a potential ruling from the US Supreme Court regarding Donald Trump's tariffs. In terms of retail sales, month-over-month figures are projected to rise by 0.4%, compared to last month’s stagnant growth of 0.0%. When excluding automobile sales, the expected increase remains the same at 0.4%. A particularly noteworthy figure is the Control Group, which serves as a crucial indicator that the Bureau of Economic Analysis uses to gauge consumer spending trends in its quarterly GDP assessments; this is expected to show a growth of 0.4%, down from 0.8% previously. Consumer spending has shown remarkable resilience, and just yesterday, JPMorgan’s CEO, Jamie Dimon, confirmed that American consumers continue to spend actively.
Regarding the PPI, analysts expect the year-over-year figure to hold steady at 2.7%, with the month-over-month estimation slightly lower at 0.2% compared to last month’s 0.3%. The Core PPI is also anticipated to remain stable at 2.7% year-over-year, with a month-over-month increase of 0.2%, up from 0.1%. These PPI figures are vital as they allow economists to assess the Federal Reserve's preferred inflation measure—the Personal Consumption Expenditures (PCE) price index.
However, it’s worth noting that the market may not react significantly to these reports since they pertain to older data from November, especially following the more impactful Non-Farm Payroll (NFP) and Consumer Price Index (CPI) reports that were recently released.
The most significant event could very well be the US Supreme Court's decision regarding Trump's tariffs. Generally, there’s a 1-3 day notice leading up to such a ruling, yet today’s cases lack clear indications of what will be decided. Interestingly, despite having scheduled an "opinion day" last Friday, the Supreme Court did not issue a ruling on the tariff case then. Thus, today becomes another critical day where a ruling could emerge, typically announced around 10 am ET.
For those considering trades based on the outcome, Adam has outlined potential scenarios depending on the court's decision (you can check that out here: https://investinglive.com/news/the-supreme-court-scheduled-friday-as-an-opinion-day-whats-the-trade-20260106/). If the tariffs are overturned, we might see an immediate positive response in the markets, likely boosting risk assets like stocks or commodities such as copper. Conversely, precious metals might decline as concerns over stagflation lessen. However, it remains uncertain whether such reactions would be sustainable, especially since the Trump administration has alternative plans in mind to impose tariffs through other channels. On the flip side, if the Supreme Court decides to uphold the tariffs, it may not significantly alter the landscape but could contribute positively to market sentiment by alleviating some uncertainty.
In terms of central bank speakers today, the schedule includes:
* 08:00 GMT / 03:00 ET - BoE's Taylor (dove - voter)
* 08:20 GMT / 03:20 ET - ECB's de Guindos (neutral - voter)
* 09:15 GMT / 04:15 ET - BoE's Taylor (dove - voter)
* 14:50 GMT / 09:50 ET - Fed's Paulson (neutral - voter)
* 15:00 GMT / 10:00 ET - Fed's Miran (uber dove - voter)
* 15:30 GMT / 10:30 ET - BoE's Ramsden (dovish - voter)
* 17:00 GMT / 12:00 ET - Fed's Bostic (hawkish - non voter)
* 17:00 GMT / 12:00 ET - Fed's Kashkari (hawkish - non voter)
* 19:10 GMT / 14:10 ET - Fed's Williams (neutral - voter)
What are your thoughts on the impact of the Supreme Court’s ruling? Do you think the potential changes in tariffs could significantly affect the market? Feel free to share your opinions in the comments!
