Markets Mixed as Weak US Consumer Data Sets the Stage for Key Economic Reports
European markets closed on an uncertain note, with the FTSE 100 edging lower and major continental indices finishing mixed. Across the Atlantic, however, US stocks pushed higher, even as fresh economic data pointed to a slowing US consumer.
The key release came from US retail sales, which showed consumer spending was virtually unchanged month-on-month. This marks a notable slowdown from November’s 0.6% growth and came in well below economists’ expectations.
For traders, this data matters. Consumer spending is a major driver of economic growth, and the flat reading suggests momentum may be fading as the US moves deeper into the new year.
All Eyes on the US Jobs Report and Inflation Data
This softer retail data now sets the tone for a crucial run of US economic releases.
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Wednesday: The January US jobs report, already in sharp focus after recent signs of labour market cooling
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Friday: The latest Consumer Price Index (CPI), offering insight into inflationary pressures
Together, these reports are likely to shape expectations around Federal Reserve policy and could inject volatility into equities, indices, and FX markets.
For traders, this combination of slowing consumption, labour market uncertainty, and inflation data creates both risk and opportunity—particularly in US indices and dollar-related pairs.
UK Political Turbulence Eases Pressure on Bond Markets
In the UK, government bond markets steadied as Prime Minister Keir Starmer moved to contain the most serious internal challenge of his premiership to date.
Following a closed-door cabinet meeting on Tuesday, Starmer publicly stressed that his leadership team remained “strong and united,” after several days of political turbulence weighed on sentiment.
The unrest stems from growing discontent among Labour MPs over senior appointments and leadership decisions, which intensified following renewed public scrutiny around past political relationships and disclosures.
In recent days, two senior aides resigned, paving the way for changes at the top of the Prime Minister’s inner circle. Starmer has remained defiant throughout, reportedly telling MPs that he has overcome every major political challenge he has faced and reaffirming his commitment to leading the country.
From a market perspective, the key takeaway is stability. As immediate political risks eased, UK bond yields calmed, helping limit further volatility in sterling-linked assets.
What This Means for Traders
Markets are currently balancing slowing economic signals against the hope that central banks may soon have room to ease policy. With major data releases imminent on both sides of the Atlantic, traders should expect:
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Increased volatility around US indices and FX pairs
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Heightened sensitivity to labour market and inflation data
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Short-term opportunities driven by sentiment shifts rather than long-term conviction
As always, the key is preparation. Understanding how macro data feeds into price action allows traders to stay one step ahead—rather than reacting after the move has already happened.
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