Tariff suspense unresolved, geopolitical tensions escalate, US stocks hit new highs, and gold reaches the $4,500 level

US financial markets continued their strength before the weekend, but undercurrents are swirling beneath the surface. On one side is the exuberance of the stock market— the Dow Jones and S&P 500 both hitting record highs, rising 0.48% and 0.65% respectively; on the other side, concerns about policy risks are gradually surfacing.

“Moderate” Employment Report Provides More Reasons for the Fed to Stay on the Sidelines

December’s employment data became the market’s focus. The US added only 50,000 non-farm jobs, well below the market expectation of 60,000, marking the second-lowest growth rate of the year. However, the unemployment rate slightly decreased to 4.4%, and hourly wages rebounded. This “moderate but not pessimistic” contradiction was interpreted by Fed officials as ample reason to continue holding a wait-and-see stance.

Fed’s Barkin stated that current employment growth is moderate, and the hiring environment remains subdued. The “slow hiring and slow firing” situation persists. This data directly supports market expectations that the Federal Reserve will continue to hold steady at its January 27-28 meeting. Meanwhile, the interest rate swap market shows the probability of rate cuts in January has fallen to zero, with traders expecting the first cut of the year no earlier than June.

As a result, the US 2-year Treasury yield rose 5 basis points to 3.538%, while the 10-year Treasury yield surged and then retreated. However, US mortgage rates hit a multi-year high— the average rate for a 30-year fixed mortgage fell to 5.99%, the lowest since February 2023, a result of the Trump administration’s push to purchase $200 billion worth of mortgage-backed securities.

Tariff Uncertainty Remains, US Dollar and Gold Rise Together

Regarding the legality of Trump’s large-scale global tariffs, the US Supreme Court was scheduled to rule last Friday but ultimately did not issue a decision. The “pending case” will be announced during the routine hearing on January 14. During the proceedings, conservative and liberal justices both questioned the legality of Trump’s invocation of the 1977 Emergency Powers Act to impose tariffs.

While the tariff case remains unresolved, geopolitical tensions are heating up. Trump has recently spoken multiple times, hinting that military action against Mexican drug cartels could start “soon,” and expressing that Greenland must be obtained regardless of difficulty. He also threatened to interfere in Iran, injecting uncertainty into the market. These signals have boosted risk aversion.

The US dollar index broke above 99.0, rising 0.3% to 99.1; gold recaptured the $4,500 level, closing at $4,509 per ounce, up 0.7%. USD/JPY rose 0.67%, while EUR/USD fell slightly by 0.19%. In the crypto space, Bitcoin increased 0.19% over 24 hours to $90,551; Ethereum rose 0.25% to $3,090. Notably, USD/CNY exchange rates across major exchanges continued to fluctuate, reflecting complex changes in international liquidity.

US Stocks Rise Across the Board, Tech Leads, Bank Earnings Set to Unfold

The three major US stock indices all gained, with the Nasdaq jumping 0.81%, while the China Golden Dragon Index retreated 1.3%. On individual stocks, Intel surged over 10%, its largest single-day gain since September; Tesla rose over 2%; Meta increased more than 1%; Apple ended a seven-day losing streak.

European markets also rose, with France’s CAC 40 up as much as 1.44%, and the UK’s FTSE 100 and Germany’s DAX 30 rising 0.8% and 0.53%, respectively.

This week will see the release of major bank earnings, with profit growth being the core belief among bulls. According to LSEG data, analysts expect the S&P 500 component stocks to see overall earnings growth of about 13% in 2025, with further acceleration to over 15% in 2026. Of particular note, TSMC will release its earnings on Thursday (January 15), providing important insights into the chip industry outlook.

Other Market and Industry Trends

Bond and Commodities: The US 10-year benchmark Treasury yield is around 4.17%, unchanged from the previous trading day. WTI crude oil rose 0.65% to $58.8 per barrel.

Japan Political Developments: Japanese Prime Minister Sanae Takaichi is reportedly considering dissolving the House of Representatives during the regular session on January 23, with a general election possibly held in early or mid-February. This news is bearish for the yen, which fell to nearly a one-year low of 157.96 in intraday trading.

Hong Kong Futures: The Hang Seng Index night session futures closed at 26,408 points, up 176 points from the previous session’s 26,231; the China Enterprises Index night session futures closed at 9,119 points.

Corporate Updates

Chevron may see an annual increase of $700 million in revenue from its Venezuela oil operations, becoming the only US oil giant currently operating in Venezuela.

In AI infrastructure, OpenAI and SoftBank Group announced a joint $1 billion investment in SB Energy (each investing $500 million) to support the construction and operation of OpenAI’s 1.2 GW data center in Texas. This is a key part of OpenAI’s “Stargate” plan—aiming to invest $500 billion over four years in AI data centers and infrastructure across the US.