What happened in the markets?

Jan 30th 2023

Risk-off session as the month ends, with S&P 500 finishing 53pts lower after backing off the key resistance level of ~4,100pts on Friday. Weakness spurred after Spain's January inflation rate surprised to the upside this morning, which we note is a continuation of Tokyo/Aus CPI beats last week. The weakness in tech stocks was notable, ahead of key earnings due from Spotify, SNAP, Meta, Amazon, and Apple this week. In today's session, energy was also a notable laggard, as crude oil prices slipped 2.3% to $77.8/bbl, and nat gas prices fell by 5.25%. Automakers stock prices fell after Ford joined TSLA in cutting its Mustang electric crossover sticker price and boosting production. Deep price cuts across the company's U.S. lineup this month sparked a backlash from customers, many of whom paid thousands of dollars more for their vehicles just weeks earlier. Credit markets also widened on a broader pullback, with CDX IG widening back over 73bps. In treasuries, the yield on the benchmark 10-year Treasury note climbed to 3.550% from Friday's 3.517%. The focus for tomorrow will be on the Employment Cost Index (ECI) data, and economists are forecasting a step down to 1.1% QoQ from 1.2% in Q3 but still indicating around 4.5% annualized wage growth.