Weekly Outlook


On Friday, we saw the Nonfarm Payrolls (NFPA) effect across all risk assets. The US saw much stronger than expected employment growth in December. 256,000 new jobs were added, while the unemployment rate fell to 4.1%. US 10-year and 2-year bond yields rose to 4.78% and 4.362%, respectively. Expectations for a greedy Fed rate cut are fading. The Dollar Index rose 0.45%, while the Euro lost 0.52%. Although inflation pressures appear to have eased, the Fed is unlikely to cut rates as long as the labor market is strong. Market expectations have shifted to the Fed not cutting rates until September. Strong employment data is increasing expectations that the US economy will regain momentum.

The second Trump term is just a few days away. When Donald Trump begins his second term on January 20, the effects of the policies that investors have been eagerly awaiting will begin to be seen. According to The Economist’s interviews with analysts, investors expect Trump to raise some tariffs. Investors also worry that Trump’s additional borrowing policies could cause volatility in US Treasury bonds, which could destabilize other asset prices. Forex markets are also expected to see a stronger dollar. Investors believe Trump’s policies will make US goods more expensive and reduce demand for exporting countries’ currencies. It should also be noted that the dollar is seen as a safe haven in times of global uncertainty.

Recently, negative news about economic activity has continued to come from China. China’s short-term bond yields have fallen below 1%, below Japan’s levels, raising concerns that the Chinese economy is at risk of a long-term recession. The stimulus packages implemented by the Beijing government to stimulate the economy and increase consumer demand have not had the expected effect. According to JP Morgan, there has been a large capital outflow from China. This picture in China brings to mind the deflation spiral that Japan experienced in the 1990s. China has recently announced many incentive packages. However, the measures announced so far have not had the effect the government hoped for. The latest announced incentive package includes subsidies of up to 6,000 yuan ($818) for purchases of home appliances, phones, tablets and smart watches, the reintroduction of a scrappage program for electric and hybrid vehicles, and the ability of factories to receive refunds on purchases of new industrial equipment. There are concerns that China is falling into an economic trap called ‘balance sheet recession’. This means that companies and households are prioritizing repaying their debts rather than spending and investing.

Brent crude oil reached its highest level in the last 3 months, exceeding $80. There is not one but several reasons behind this rise in oil. The most significant effect is the OPEC+ cuts. Saudi Arabia, which is expected to increase its production, kept its production steady, while the United Arab Emirates (UAE) saw daily production fall by 50,000 barrels due to maintenance work. This reversed the increasing OPEC production trend of the last two months. The second effect is the extremely cold weather conditions in Northern Europe and the US. This puts pressure on oil and energy stocks in the Northern Hemisphere, pushing prices up. Finally, the latest US sanctions on Russian oil are noteworthy. US President Joe Biden, whose term is about to end, announced the most comprehensive sanctions package targeting Russia's oil exports. The US Treasury Department announced that sanctions will be imposed on tankers carrying Russian oil and Russian-based marine insurance providers. News flows will continue to be important in oil. More comprehensive sanctions on Russia could affect global energy supply and cause problems especially in the energy security of Europe and Asia.

The year 2024 saw a significant leap forward in solar energy. Much of this growth came from China’s 44% increase in production. However, the sector faced some developments that shook investor confidence. While the share prices of leading solar companies fell, Sunpower’s bankruptcy highlighted the problems in the sector. The main problems were increasing competition from low-cost competitors, labor shortages and increasing financing costs. Despite this, Europe and the US remained strong in solar energy production. Europe produced 338 TWh of solar energy, while the US produced 283 TWh. China remains the leader in solar electricity. However, with local growth slowing, exports are increasing and global panel prices are being suppressed. Following Russia’s invasion of Ukraine in 2022, demand for photovoltaic panels increased significantly in Europe as energy prices rose. However, the market shrank in 2024 and many companies that could not maintain the expected growth rate were in trouble. “Many companies in the market thought that double-digit growth rates would continue. But the opposite happened. The market has shrunk and more players are fighting for a smaller share,” Dina Darshini, head of solar and battery at LCP Delta, told the Financial Times.

The Baltic Dry Index rose 79 points to 1,048. The recovery was driven by a strong increase in the capesize segment, which carries key commodities such as iron ore and coal. Daily earnings for capesize ships increased by $2,357 to $12,010, and the segment rose 5.3% on a weekly basis. The increase in the capesize segment points to China’s growing demand for iron ore and coal. But the situation is different in smaller ship segments. The Panamax index fell to its lowest level since July 2023, particularly due to weakness in grain and coal transport. The segmental divergence is striking. China’s economic stimulus efforts are accelerating recovery in some sectors. However, seasonal demand declines and uncertainties in global trade continue to leave maritime transport vulnerable.

The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.

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