DeepSeek fallout.

Happy Friday!

US stock futures tick higher.

US stock futures are ticking higher, indicating the S&P 500 will add to an almost 2% weekly performance, its strongest since November’s election. The pound weakened after a surprise drop in UK retail sales. 

Risk mood sours with the US dollar gaining against most major peers. Asian stocks edge down despite data showing China’s economy had a somewhat strong finish to 2024. Treasuries steady as Fed Governor Waller said officials could cut rates again in the first half of 2025.

China’s economy grew 5% in 2024, hitting the government’s growth goal, although looming US tariffs threaten to take away a key driver of expansion.

Wall Street’s biggest banks paid out the most in three years to shareholders in the form of dividends and buybacks.

Bond yields dropped after Federal Reserve Governor Christopher Waller said that officials could lower rates again in the first half of 2025. While most companies rose, a slide in tech megacaps dragged down the stock market.

Almost three quarters of Bank of Japan watchers predict an interest rate hike next week, according to the latest Bloomberg survey. That’s a jump in expectations after Governor Kazuo Ueda said his board will discuss the move.

Jobs report to set tone for trading.

The jobs report at 8:30 a.m. New York time will set the tone for trading today. A stronger-than-expected reading would add to concerns that the Federal Reserve may not cut interest rates much further given the risk of resurgent inflation. 

The pound is slipping further against the dollar, and UK bond yields are rising anew as investors show their skepticism about Chancellor Rachel Reeves’ budget plans. 

Wall Street executives are locking in plans to award traders and dealmakers their biggest bonus increases since the pandemic, with 10% hikes — or more — coming for many desks.

Asian stocks fall in a sign of caution ahead of US jobs data. European equity futures are largely steady while US peers edge lower. Chinese yields rose as the PBOC said it will temporarily halt its buying of government bonds. The offshore yuan gained.

Treasuries stabilized after a rout that drove 30-year yields to the highest since 2023.

Equity futures climb.

US equity futures climb, signaling another attempt by the S&P 500 to end a losing streak that stretched to five sessions. The index is on pace for a 1.7% drop since Friday.

Asian stocks bucked the dour global mood that dragged US shares lower, with gains in South Korea, Australia and Hong Kong. US equity futures also rose. Chinese stocks fell, while the nation’s 10-year government bond yield slipped below 1.6% for the first time.

The US banking system’s reserves, a key factor in the Federal Reserve’s decision to keep shrinking its balance sheet, tumbled below $3 trillion to the lowest since October 2020. Bank reserves fell by about $326 billion in the week through Jan. 1 to $2.89 trillion, according to Fed data.

US stocks extended a selloff for a fifth day. Tesla’s post-Christmas slump swelled to nearly 20% after its annual vehicle sales dropped, dragging on the indexes. The Cboe Volatility Index climbed for the fourth time in five days. Treasury yields steadied following a choppy session.

Multistrategy funds of all sizes produced mostly double-digit gains in 2024, in what was generally an upbeat year for the hedge fund industry. Citadel invited clients to cash out profits after a roughly 15% gain in its flagship strategy, but the vast majority opted to stay put.