This upward momentum for the dollar was driven by stronger-than-expected U.S. economic indicators, including the ISM Non-Manufacturing Index, which rose to 54.1 from 52.1, and the JOLTS Job Openings, which increased to 8.098 million, surpassing forecasts of 7.7 million. Treasury yields moved higher in response, with the 10-year yield climbing to 4.689% (+7.3 bps), reflecting investor expectations of prolonged economic resilience.

Federal Reserve Commentary:
Fed official Thomas Barkin highlighted the need for businesses to adapt to changing tariffs and reaffirmed the central bank’s commitment to the 2% inflation target. Barkin also indicated that price pressures remain elevated, suggesting that policy tightening may need to persist.

The US Treasury auctioned $38B of 10 year notes with average demand

Equities:
U.S. stock indices tumbled after two consecutive days of gains, led by a sharp pullback in tech stocks:

• Dow Jones: -0.42%
• S&P 500: -1.11%
• NASDAQ Composite: -1.89%
• Russell 2000: -0.74%

Shares of Nvidia plunged 6.22%, reversing earlier gains after hitting a record intraday high following CEO Jensen Huang’s keynote at CES 2025. The tech sell-off also saw significant declines in other high-growth stocks, with MicroStrategy falling 9.94% and Palantir dropping 7.81%.

Pres. elect Trump held a press conference at Mar a Lago.In addition to announcing a $20B investment to build new data centers by Billionaire Hussain Sajwani the Chairman of Damac Properties, the Pres. elect commented on a number of different topics

• Interest rates are too high
• The Biden ban on offshore oil and gas drilling will be reversed
• Something will have to be done with Canada and Mexico trade. Says we don;t need cars or milk and oil
• When asked for assurance that he will not us military or economic coercion as he tries to gain control over Greenland, said he cannot assure of either of those two.
• Calls Greenland essential for national security
• Could consider tariffs on Denmark over Greenland if they don’t give up Greenland.
• Thinks Meta has come a long way
• Says he is ok with spending cuts. Wants to see an extension of the debt ceiling.

Overall Insight:
The day’s market action reflected a complex interplay of stronger U.S. economic data, rising yields, and profit-taking in tech stocks. With robust dollar strength and elevated volatility in equities, traders are keeping a close eye on upcoming economic reports and Fed guidance.

Tomorrow the lead-up to the US non-farm jobs report on Friday will continue with the ADP Non-Farm employment report due at 8:15 AM ET. The expectation is for 139K vs 146K last month. The weekly unemployment claims will be released a day early as a result of the day of mourning for Pres. Carter. The expectation is for 214K vs 211K last week. The US stock market will be closed on Thursday as well.

Fed’s Waller will speak at 8:30 AM ET, and the minutes of the Fed December meeting (bearish cut of 25 basis points) will be released at 2 PM ET.