Decent U.K. GDP Print and a Possible End to the Russia-Ukraine War Bolster the Case for European Assets

European equities, euro, and sterling get a lift as optimism builds

Highlights

• European equities, euro, and sterling get a lift as optimism builds

• Lots of pessimism embedded in Treasuries after current correction

• January CPI surprises as service sector resets

• Tariff threats to weigh on capex plans

Key Takeaways

S&P 500 Struggles Amid Inflation Fears

• Despite all the angst over the CPI, the inflation-centric segments of the S&P 500 got pounded yesterday, the economic-sensitive Transports fell by -0.4% and the Russell 2000 by -0.9% — both are down by roughly -8.0% from their nearby highs. The market is definitely telling you something about the macro-outlook when the only sector in the green was Consumer Staples (+0.2%).