By Business & Finance 
US equities took a tumble on Friday after December’s monthly jobs report surpassed expectations. 256,000 jobs were added in the month, and the unemployment rate dropped from 4.2% to 4.1%, writes Ian Slattery.
Ian Slattery, Zurich Investments
The strength of the labour market dented expectations for rate cuts in 2025, and major indexes reacted poorly to the news, with the S&P 500 falling by 1.5%. 10-year treasury yields were firmly in the ascendancy early in the week after manufacturing PMI surveys revealed that prices for manufacturers are on the rise, spurring inflation fears. Following the jobs report on Friday, there were spikes in both yields and the dollar. The 10-year treasury yield (which moves inversely to the price) finished above 4.7% as the market priced in fewer rate cuts, while EUR/USD dropped below the 1.025 level.
European stocks traded higher on Monday after reports suggested that Trump’s administration would look to implement targeted (rather than universal) tariffs on imports. Despite some of these gains being given back on Friday due to the hawkish mood in the US, the Euro Stoxx 50 ended the week in the green.
Eurozone inflation rose from 2.2% to 2.4% in December, while headline inflation in Germany rose from 2.4% to 2.8%, 0.2% ahead of expectations. 10-year German bund yields trended higher, rising above 2.5% to reach the highest level in six months.
The UK bond market joined the global sell-off; 10-year gilt yields pushed above 4.8% for the first time since the Global Financial Crisis in 2008, and the 30-year yield reached its highest level since 1998. The sterling also weakened further to a 14-month low against the dollar.
The Chinese yuan reached a 16-month low against the dollar on Monday. The Chinese central bank announced Friday that it would temporarily stop purchasing government bonds in an attempt to stymie the downward pressure on yields and the yuan amid deflation concerns.
Equities
Global stocks finished at -1.2% in euro terms and -1.6% in local terms last week. Year-to-date global markets are up by 0.3% in euro terms and down by -0.8% in local terms. The US market, the largest in the world, finished at -1.6% in euro terms and -1.9% local terms.
Fixed Income & FX
The US 10-year yield finished at 4.8% last week. The German equivalent finished at 2.6%. The Irish 10-year bond yield finished at 2.9%. The Euro/US Dollar exchange rate finished at 1.02, whilst Euro/GBP finished at 0.84.
Commodities
Oil finished the week at $77 per barrel and is up 7.9% year-to-date in euro terms. Gold finished the week at $2,689 per troy ounce and is up 3.6% year-to-date in euro terms. Copper finished the week at $8,992 per tonne.
The week ahead
Wednesday 15th January
US and UK CPI go to print.
Thursday 16th January
UK GDP is reported.
Friday 17th January
China Quarterly GDP is released.
About: Zurich Investments
The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €39.6bn in investments of which pension assets amount to €34.3bn. Find out more about Zurich Life’s funds and investments here.
The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €39.6bn in investment of which pension assets amount to €34.3bn. To find out more about Zurich Life’s funds and investments, w: zurichlife.ie/funds, Twitter: @ZurichLife, LinkedIn: linkedin.com/company/zurich-life-assurance-plc
