Global stock indexes mostly fell on Monday, January 13, 2025, while the U.S. dollar index reached a two-and-a-half-year high, influenced by last week’s employment report. Investors are concerned that the Federal Reserve might end its cycle of interest rate cuts, as reported by Reuters.
The yield on 10-year Treasuries jumped to a 14-month high before slightly retreating. Investors are also worried about the potential rise in inflation, amid expected changes in trade tariffs, immigration policies, and taxes under the Trump administration. They are particularly focused on the upcoming U.S. Consumer Price Index report, scheduled for Wednesday. If the data exceeds expectations, it could strengthen confidence in the end of the rate-cutting cycle.
Peter Cardillo, Chief Economist at Spartan Capital Securities, noted that the Fed is now adopting a tougher stance, as the U.S. economy remains resilient despite higher interest rates. Unemployment remains low, and the labor market is stable. At the same time, inflation is not declining as quickly as expected, leading investors to reassess their expectations regarding the Fed’s future policy.
In Europe, major indexes also showed declines, driven by political instability and economic challenges in the region. Additionally, investors are concerned about a potential slowdown in economic growth in China, one of Europe’s largest trading partners.
Other markets also experienced declines. For example, in Asia, some indexes fell by 2-3%. This is due to investor concerns over rising inflation and tighter monetary policies from central banks.
Thus, global stock markets reacted to the U.S. employment report by seeing a drop in key indexes. This suggests that investors are worried about the potential end of the Fed’s rate-cutting cycle and possible inflationary growth. They are closely monitoring economic indicators and the political situation worldwide to make informed investment decisions.
