As the U.S. celebrated Martin Luther King Jr. Day yesterday, markets have a holiday-shortened week. Another key event of yesterday was President Trump’s inauguration. In terms of markets, stocks rallied higher last week in a similar fashion to the pre- and post-election enthusiasm for President Trump back in November.1 The main drivers along with optimism around Trump 2.0, were solid earnings, upside growth potential following strong economic data from both the U.S. and China as well as 10-year Treasuries continuing to hold their gains from Wednesday and Thursday.2 The rate move was even more impressive given relatively hawkish comments from Cleveland Federal Reserve (Fed) President Beth Hammack.3
In the short week ahead, investors will likely keep an eye on the Bank of Japan decision on Thursday night, where a rate hike is expected,4 and the January flash purchasing managers’ index (PMI) reports on Friday morning.5 This will also be a busy week with earnings well underway. In addition, the Davos World Economic Forum and annual meeting runs this week,6 and the Fed is in a blackout period ahead of its January 29 policy decision.7,8
Sources:
1CNBC – Dow surges more than 300 points, S&P 500 posts best week since period following Trump's election: Live updates; 1/17/25
2Bloomberg
3WSJ – ‘We Still Have an Inflation Problem.’ A Fed Newcomer Wants to Go Slow on Rate Cuts; 1/17/25
4Yahoo! Finance – Factbox-How likely is a Bank of Japan rate hike next week; 1/16/25
5MarketWatch – U.S. Economic Calendar; as of 1/21/25
6World Economic Forum Annual Meeting; January 2025
7FOMC Blackout Period Calendar; 2024-2026
8Board of Governors of the Federal Reserve System – Meeting Calendars; January 2025
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