Because of the minor delays from the partial government shutdown, this week’s main headlines will be a rare double feature of the January employment report on Wednesday and the January CPI report on Friday. Ahead of those releases, market participants will also have to process December retail sales and the Q4 employment cost index (ECI) on Tuesday, as well as large amounts of Fedspeak through the week, much of which comes from voters. For Jan'26 NFP, we estimate 80k increase and unemployment rate coming at 4.3%. For Jan'26 CPI, we estimate a .4% MoM increase in core CPI. Both these estimates if correct, should lead to bear flattening of the US yield curve. In dated supply, we have $58 BN of 3 yr auction on Tuesday, $42 BN of 10 yr auction on Wednesday & $25 BN of 30 yr auction on Thursday. On US equities we are moderately bullish and expecting 7015 levels as per long S&P recommendation on 8th Nov’25. In RoW data, ECB meeting last week was a non event. We see the euro area recovering gradually in the near term due to soft consumption and structural weakness. The euro area has proved resilient to last year’s tariffs, and fiscal announcements from the EU and Germany should be tailwinds further ahead. At 2%, we believe the ECB is done cutting rates and see the next move as a tightening in 2028. The surprise came in last week's BOE meeting where the hold was 5/4 which has led us to bring our next cut to March and add another in June. That would take Bank Rate down to a terminal level of 3.25%, which we think is close to neutral. We have recommended being long on 10yr UK gilts on 16th Nov and it is currently performing well.
