Aerospace stocks take off

In a social media post on Wednesday, US President Trump proposed that the US military budget should be increased from $1 trillion to $1.5 trillion. This came following the US military operation in Venezuela, which added volatility to gold and oil prices last week before ultimately finishing up 4.8% and 3.9% respectively in EUR terms.

There was a string of US labour market releases to report. Kicking off the proceedings, JOLTS job opening figures – which indicate labour demand – fell from 7.45m to 7.15m in November, their lowest since September 2024.

The ADP employment report showed that private sector employment grew by 41,000 in December, missing projections for 47,000. Finally, the non-farm payrolls report showed that 50,000 jobs were added in December, below the 60,000 anticipated. However, the unemployment rate fell unexpectedly to 4.4% from 4.5%.

In Europe, flash estimates of German and French inflation for December both came in below projections. The German rate dropped to 2.0% while the French rate dropped to 0.8%, having been expected to come in at 2.2% and 0.9% respectively. Flash estimates of the inflation rate for the Eurozone as a whole were in-line with the consensus, falling from 2.1% to 2.0%. The November unemployment rate for the currency bloc unexpectedly eased to 6.3% from 6.4% in October.

Meanwhile, after 25 years of negotiation, EU countries approved the EUMercosur trade agreement despite widespread protests. The deal will create a free trade zone that spans 700 million people across Europe and South America.

Bond yields across the major economies declined significantly as the market digested the slew of softer economic reports and priced in their expectations for additional rate cuts in 2026. The 10-year UK gilt yield notably fell from 4.54% to 4.37%.

Equities

Global stocks finished up 2.5% in euro terms and up 1.5% in local terms last week. Year-to-date global markets are up by 2.7% in euro terms and up by 1.8% in local terms. The US market, the largest in the world, finished up at 2.5% in euro terms and up at 1.5% in local terms.

Fixed Income and FX

The US 10-year yield finished at 4.2% last week. The German equivalent finished at 2.9%. The Irish 10-year bond yield finished at 3.0%. The Euro/US Dollar exchange rate finished at 1.16, whilst Euro/GBP finished at 0.87.

Commodities

Oil finished the week at $59 per barrel and is up 3.9% year-to-date in euro terms. Gold finished the week at $4,510 per troy ounce and is up 5.4% year-to-date in euro terms. Copper finished the week at $13,040 per tonne and is up 5.7% year-to-date in euro terms.

The week ahead

Tuesday 13^th January

US CPI inflation data for December goes to print.

Wednesday 14^th January

US PPI data for October and November is reported.

Thursday 15^th January

Germany full-year GDP figures are released.