Global markets have gained some traction following a turbulent week marked by sticky inflation readouts, dashed hopes for interest rates, and reduced new year bets.

The US’s domestic inflation picture is still relatively benign, but retail, manufacturing, and housing data exceeded expectations, leaving investors questioning whether the Fed’s lackadaisical approach will result in the magnitude of rate reduction expected for this year.

The picture is balanced due to the likelihood of a recession-free US economy in 2024 and ongoing disinflationary pressures from struggling Germany and China.

The Fed’s recent “Beige Book” indicates that not much has changed in the weeks after its shocking December meeting prediction of several rate cuts this year.

Longer-term bond yields have shown more resilience, with 10-year yields reaching their highest level in a month at 4.12%.