STIR: Midday SOFR Option Update

The Bundesbank’s estimate of seasonally-adjusted German CPI suggests sequential core and services inflation accelerated in December. Respective mid-term momentum measures were mixed and did not see a major shift this month, however. The December data overall points towards some inflation stickiness at an elevated level.

• Overall core inflation accelerated to 0.26% M/M SA (0.17% in Nov, 3.1% annualized) on a seasonally adjusted basis per Buba, as services inflation accelerated to 0.26% M/M (0.09% in Nov, 3.2% annualized). Even so, the rate of sequential services CPI remained below its 2024 average of 0.34%.
• Manufactured goods ex-energy inflation meanwhile remained broadly unchanged, at 0.25% M/M (vs 0.26% in Nov, 3.1% annualized).
• 3M/3M measures were mixed: core 0.78% (0.75% prior), services 0.73% (0.79% prior), and manufactured goods ex-energy was 0.88% (0.71% prior).

• US Data/Speaker Calendar (prior, estimate)
• 7-Jan 0800 Richmond Fed Barkin economic outlook, (text, Q&A)
• 7-Jan 0830 Trade Balance (-$73.8B, -$78.3B)
• 7-Jan 1000 JOLTS Job Openings (7.744M, 7.750M)
• 7-Jan 1000 JOLTS Job Openings Rate (4.6%, --)
• 7-Jan 1000 JOLTS Quits Level (3.326M, --), Rate (2.1%, --)
• 7-Jan 1000 JOLTS Layoffs Level (1.633M, --), Rate (1.0%, --)
• 7-Jan 1000 ISM Services Index (52.1, 53.5)
• 7-Jan 1000 ISM Services Prices Paid (58.2, 57.5)
• 7-Jan 1000 ISM Services Employment (51.5, 51.1)
• 7-Jan 1000 ISM Services New Orders (53.7, 54.0)
• 7-Jan 1130 US Tsy $85B 42D CMB auction
• 7-Jan 1300 US Tsy $39B 10Y Note re-open (91282CLW9)

Stocks are trading higher early Monday, tech sector strength helping SPX Eminis rise to the best levels since December 27. Currently, the DJIA trades 353.54 points (0.83%) at 43082.63, S&P E-Minis up 76.5 points (1.28%) at 6065, Nasdaq up 351.3 points (1.8%) at 19971.12.

Semiconductor makers continued to benefit from news announced late Friday that Microsoft plans to invest $80B in AI-enabled data centers - at least of which are expected to be in the US. Leading gainers included Micron Technology +10.98%, Super Micro Compute +10.17%, Teradyne +6.40% while First Solar, Nvidia, KLA Corp, Applied Materials ad Lam Research all gained 5-6% in the first half.

Meanwhile, interactive media and entertainment shares buoyed the Communication Services sector with Alphabet +3.18%, Meta +2.99% and Paramount +2.44%.

On the flipside, Utility and Real Estate sectors underperformed early Monday, multi-energy providers weighing on the former: Eversource -1.88%, Sempra -1.63%, Ameren -1.60%. Office and Residential investment trusts weighed on the Real Estate sector with BXP Inc -2.34%, Camden Property -1.90%, Kimco -1.64%.

Reminder, the next round of quarterly earnings kicks off mid-January with Blackrock, Bank of NY Melon, Wells Fargo, JP Morgan, Goldman Sachs, Citigroup, US Bancorp, M&T Bank and PNC all reporting between January 13-16.