Week ahead: Banks bonanza; retail wrap; global energy data on tap

(Partial Video Transcript)

US banks kickstart earnings season

Hello, welcome to IGTV. I'm Angeline Ong, and this is your special look ahead to the week starting 8 January 2024. Before we begin, it's going to be a huge week in terms of data and also the start of the earnings season with, of course, the US banks.

First, I want to look at the economic side of things for you: the German trade balance and factory orders. Also, the economic sentiment across the euro zone and retail sales will be one to watch if you trade euros versus the dollar.

Further on during the week, it will really become a retail picture because we've got the BRC-KPMG Retail Sales Monitor from the UK, retail sales figures from Australia, and also not forgetting industrial production out of Germany, unemployment numbers from the euro zone and trade numbers out of the US too.

Oil prices lift ahead of Blinken’s Middle East visit

Watch out for API crude oil inventories as well as oil prices slightly higher as Blinken is set to visit the Middle East.

On Wednesday, we've got industrial production figures out of France and wholesale inventories out of the United States, including numbers from the EIA as well in terms of crude oil inventories.

And, a little later in the week, there'll be trade numbers from Australia and the consumer price index (CPI) out of the US after those non-farm payroll numbers. We also get the latest reading on US initial jobless claims.

And last but not least, we've got the China CPI, multi gross domestic product (GDP) numbers out of the UK along with industrial data and the producer price index and the Baker Hughes oil rig count out of the United States.

Joining me now from Chicago all the way very early, here is yours truly, Tom Sosnoff, from Tasty Live, part of the IG Group.

AO: Tom, thank you so much for joining us. Markets, especially in the US, have shown five days of five sessions rather than four now. What does this indicate to you?

Market is very overbought currently

TS: Well, the first thing I think of is that we didn't have a down move for almost two months, since the beginning of November. So, we were really overbought.

And it shows that the markets remain cyclical, which is good for traders. It shows that the markets can normalise, which is good for traders. And it also shows that when things get a little too complacent and we get too one-dimensional or one-directional, you have to be very careful.

There was there was a lot of risk after that almost two-month rally. And I think that some people are paying a small price for right now, not too big, but a small price. And I think this is a healthy correction. I think it's good for business. I think it's good for trading. I think it's good for business.

AO: Where do you think this is headed then in 2024? And many traders that I've been speaking to and also the flows desk here at IG, they're all saying that one of the big things that they're looking out for is whether the US rate cut comes in March or whether that timing changes. How does that feed into your sort of trade?

Keep on watching the bonds

TS: Well, the US rate cut... there's no way when you're trading options or futures that in January you're looking at a March rate cut or a nothing or rise, whatever it is. I think you just have to watch the bonds.

So, the bonds are the long bond is ZB. That's the symbol. And the notes are ZN. And those are, you know, obviously both the listed futures products. And I think you just have to watch those.

They've sold off hard this past week. And, as long as the bonds continue to sell off or as long as they don't really go much over 124, 125, 126 range, I don't think there's much chance that you're going to see a rate cut.

I think if bonds were to get over 125 or 126, there's a chance of them seeing a rate cut. I think the Fed will react to wherever the bond market is trading. I don't think it's going to be the other way around. But I think the bonds will be very predictive of, you know, what the Federal Reserve (Fed) will do.

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