A daily market update from FS Insight — what you need to know ahead of opening bell.
“I am a tariff man, standing on a tariff platform.” — William McKinley
Overnight
China hits back at Donald Trump with tariffs on U.S. FT
Inside the Chaotic Run-Up to Trump’s Tariff U-Turn WSJ
What Does Trump Really Want From Canada and Mexico? NYT
Senators warn Trump and Musk on government shutdown AX
Trump signs order establishing a sovereign wealth fund that he says could buy TikTok CNBC
Amazon, King of Online Retail, Can’t Seem to Make Its Physical Stores Work WSJ
Citi bucks back-to-office trend and embraces hybrid working FT
Palantir is surging after a big earnings beat. Here’s what analysts had to say CNBC
Exclusive: Syria’s Sharaa to discuss defense pact with Turkey’s Erdogan, sources say RT
El Salvador Offers to Take U.S. Deportees of Any Nationality Including Imprisoned Americans WSJ
Renter affordability has improved — here’s what’s behind the trend CNBC
PepsiCo earnings beat estimates, but demand for drinks and snacks drops in North America CNBC
Blake Lively and Justin Baldoni lawyers spar during first court hearing BBC
Chart of the Day
| Overnight |
| S&P Futures +2
point(s) (+0.0%
) overnight range: -35 to +47 point(s) |
| APAC |
| Nikkei +0.72%
Topix +0.65% China SHCOMP -0.06% Hang Seng +2.83% Korea +1.13% Singapore -0.09% Australia -0.06% India +1.62% Taiwan +0.44% |
| Europe |
| Stoxx 50 +0.44%
Stoxx 600 +0.11% FTSE 100 -0.03% DAX +0.14% CAC 40 +0.36% Italy +0.21% IBEX +0.87% |
| FX |
| Dollar Index (DXY) -0.35%
to 108.60 EUR/USD -0.18% to 1.0325 GBP/USD -0.28% to 1.2415 USD/JPY -0.36% to 155.29 USD/CNY -0.05% to 7.2446 USD/CNH +0.21% to 7.2959 USD/CHF +0.08% to 0.9096 USD/CAD +0.05% to 1.4421 AUD/USD -0.24% to 0.6212 |
| UST Term Structure |
| 2Y-3
M Spread narrowed -1.4bps
to -6.6bps
10Y-2 Y Spread widened 1.8bps to 32.2bps 30Y-10 Y Spread widened 0.2bps to 23.4bps |
| Yesterday's Recap |
| SPX -0.76%
SPX Eq Wt -0.55% NASDAQ 100 -0.84% NASDAQ Comp -1.20% Russell Midcap -0.73% R2k -1.28% R1k Value -0.43% R1k Growth -1.04% R2k Value -1.53% R2k Growth -1.05% FANG+ -0.80% Semis -1.99% Software -0.39% Biotech -1.35% Regional Banks -2.07% SPX GICS1 Sorted: Tech -1.80% Cons Disc -1.35% Indu -1.03% SPX -0.76% Fin -0.43% REITs -0.21% Comm Srvcs -0.06% Materials +0.05% Healthcare +0.40% Energy +0.42% Utes +0.46% Cons Staples +0.68% |
| USD HY OaS |
| All Sectors +2.5bps
to 303bps All Sectors ex-Energy +0.4bps 286bps Cons Disc +6.9bps 245bps Indu +3.2bps 229bps Tech +2.4bps 314bps Comm Srvcs +2.7bps 495bps Materials +4.0bps 278bps Energy +2.6bps 285bps Fin Snr +2.2bps 261bps Fin Sub -1.0bps 186bps Cons Staples -19.4bps 262bps Healthcare +1.7bps 361bps Utes -0.5bps 227bps * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 2/4 | 10:00 AM | Dec JOLTS | 8000 | 8098 |
| 2/4 | 10:00 AM | Dec F Durable Gds Orders | -2.2 | -2.2 |
| 2/5 | 8:30 AM | Dec Trade Balance | -96.8 | -78.193 |
| 2/5 | 9:45 AM | Jan F S&P Srvcs PMI | 52.9 | 52.8 |
| 2/5 | 10:00 AM | Jan ISM Srvcs PMI | 54 | 54 |
| 2/6 | 8:30 AM | 4Q P Nonfarm Productivity | 1.2 | 2.2 |
| 2/6 | 8:30 AM | 4Q P Unit Labor Costs | 3.4 | 0.8 |
| 2/7 | 8:30 AM | Jan AHE m/m | 0.3 | 0.3 |
| 2/7 | 8:30 AM | Jan Unemployment Rate | 4.1 | 4.1 |
| 2/7 | 8:30 AM | Jan Non-farm Payrolls | 170 | 256 |
| 2/7 | 10:00 AM | Feb P UMich 1yr Inf Exp | 3.3 | 3.3 |
| 2/7 | 10:00 AM | Feb P UMich Sentiment | 71.8 | 71.1 |
| 2/10 | 11:00 AM | Jan NYFed 1yr Inf Exp | n/a | 3 |
MORNING INSIGHT
Good morning!
Border concessions by Mexico and Canada suggest this is a “drug war. The creation of a sovereign wealth fund is now a “third put” on markets.
Click HERE for more.
TECHNICAL
- Short-term break of support looks bearish for possible test of January lows before rally.
- The U.S. Dollar index might strengthen temporarily given tariff threats before peaking.
- Seasonality studies show the 1st quarter of post-election years can normally be weak.
Click HERE for more.
CRYPTO
We discuss crypto’s bounce, highlight several assets that demonstrated impressive rebounds, analyze potential tariff risks, and discuss the creation of a sovereign wealth fund.
Click HERE for more.
First News
President Donald Trump has long touted that America holds all the chips, especially when it comes to tariffs. The market’s reaction Monday signals that investors sure seem to believe him.
Markets have held onto most of their gains since Trump took office partially because it seemed like the president seemingly forgot all about the much-feared tariffs in a flurry of executive orders signed during the first few days in the office.
Then he remembered them last week.
Tariffs of 25% on Canada and Mexico and of 10% on China were initially set to begin today. Mexico was able to escape that fate for now. On Monday morning, not long after they were announced, the Mexican president said tariffs would be paused for 30 days and that the nation would supply soldiers to curtail the spread of illicit drugs.
Trump confirmed the news soon after and said he would negotiate on the tariffs. After market close, it was announced that tariffs on Canada, too, would be paused for 30 days.
While it’s unclear, in some ways, why Trump imposed tariffs, most investors seem to agree that they would be short-lived, with Fundstrat Head of Research Tom Lee among those. Perhaps that’s why it can be argued that the S&P 500 only fell as much as 1.9% yesterday, which doesn’t really seem like a bloodbath. In fact, major indexes pared losses after the pause on Mexico was announced. The S&P 500 ultimately ended Monday down 0.76%.
The bond market sentiment was all over the place. The 10-year Treasury yield fell to 4.542%, its third lowest level of the year, whereas the 2-year Treasury yield, an indicator of market’s near-term inflation expectations, finished up at 4.263%.
In a way, the quick reversal in outlook is investors’ way of saying it’s going to take a lot more than that to dampen animal spirits. And the sentiment is arguably an even stronger display of the resolve of the bulls when considering that investors were already on edge since last week due to DeepSeek threatening to rearrange the chips industry’s winners and losers.
Of course, fear mongers have a valid point in cautioning that using tariffs as an economic tactic could push up prices for everyday goods at the grocery stores and push other nations to challenge America’s dominant position as a world leader. After all, Canada, Mexico, and China are the U.S.’s largest trading partners. Almost half of America’s imports comes from those three countries.
Strap in, it’s gonna be a wild 2025.