Friday's Markets Update (February 14, 2025)

14 Feb 2025 by rate3

On Friday, markets closed mixed as retail sales plummeted due to cold weather and LA fires, while manufacturing continued to decline on Fed rates. The dollar and oil fell on prospects of EU peace talks and delayed reciprocal tariffs. Europe's GDP rose, though the German economy remained stagnant. Chinese banks issued a record amount of new loans as the PBoC pledged economic stimulus. Argentina's inflation fell tenfold compared to a year ago due to Milei's reforms. BTC, ETH, and SOL showed technical gains.

Details

Retail sales fell 0.9% in January, the largest drop since March 2023, missing forecasts of a 0.1% decline. Severe weather and LA fires impacted spending, with notable declines in sporting goods (-4.6%) and autos (-2.8%). Source: U.S. Census Bureau. 1Y trend: "Down" (Census)
Manufacturing production (78% of industrial production) rose 1% YoY in January, the largest increase since December 2023, rebounding from a 0.1% decline. Historically, it averaged 3.55% from 1920 to 2025, peaking at 67.9% in July 1933. At the same time, industrial production rose 0.5% MoM, beating forecasts of 0.3%, driven by a 0.2% boost from aircraft production. Utilities surged 7.2% but mining dropped 1.2%. 1Y trend: "Side" (Fed)

Crypto

El Salvador is reducing BTC role in its economy under pressure from the IMF, despite President Nayib Bukele's support for BTC. The government has amended laws, removing BTC's ability to pay taxes, sparking debates about its legal tender status. (source)

World Markets

In January, Chinese banks issued a record CNY 5.13T in new loans, surpassing December's CNY 990B and forecasts of CNY 800B, driven by policy stimulus. Money supply grew 7% YoY, while total social financing hit a record CNY 7.0T. 1Y trend: "Up" The PBoC plans to adjust policies to support China's economy amid external challenges and weak domestic demand. It will use tools like interest rates and reserve requirements, maintain liquidity, stabilize the yuan, and expects steady 2025 growth after 2023's 5.0% expansion. (PBC)
The Eurozone's GDP grew 0.9% annually in Q4 2024, matching earlier estimates and marking the fastest expansion since early 2023. Spain grew 3.5%, while Germany contracted by 0.2%. Lower borrowing costs and easing inflation supported growth. 1Y trend: "Up" (Eurostat)
Argentina's consumer prices rose 2.2% monthly in January, the lowest since July 2020 and down from 20.8% a year ago, below forecasts of 2.3%. Annual inflation slowed to 84.5%, the ninth straight decline and the lowest since September 2022. 1Y trend: "Down" (Indec)

Currencies

The dollar index dropped to 106.6 as weak retail sales, down 0.9%, raised concerns about consumer spending. Harsh weather and wildfires likely impacted spending. CPI and PPI exceeded forecasts, but PPI components for the PCE index showed cooling. Powell reiterated a cautious stance on rate cuts. Meanwhile, Trump's new tariff directive sparked investor uncertainty, though hopes remain for negotiated solutions. 1Y trend: "Up"

On Week 8, investors will focus on FOMC minutes, Fed speeches, and housing data, alongside S&P Global PMI and, of course, on new Trump's levies initiatives. Global highlights include rate decisions in Australia, New Zealand, and China; inflation data from Canada, UK, South Africa, and Japan; and PMI figures for major economies.