Japanese (Up) and German (Down) Economies Head in Opposite Directions

Fortunes diverge for the yen (bullish) and euro (bearish)

Highlights

• Fortunes diverge for the yen (bullish) and euro (bearish)

• Price pressures remain notably absent from labor and commodity markets

• Multiple crosscurrents to impact today’s nonfarm payroll report

• Elevated fund flows into U.S. equities even as 2025 earnings estimates peaked last year

Key Takeaways

Amazon’s Weak Forecast, Small Impact

• Amazon’s projection of lower-than-expected sales and profits, along with its plan to boost its AI-related capex budget, have exerted little broad impact even though the company’s share price slipped by -4% in the aftermath of its quarterly results. Bonds have a slight bid here and across the Atlantic, though the JGB market paid heed to the fresh hawkish tone out of the BoJ.

S&P 500 Flat, Optimism High

• The fact that the S&P 500 has done very little since the immediate aftermath of last November’s election and the fact that the likes of Nvidia, Google, Apple, and Microsoft are basically no higher today than last summer have not dented enthusiasm one iota among the bushy-tailed general public. Fund flows remain elevated (momentum funds absorbed the most), and 2025 EPS estimates have peaked and rolled over.