Today's Update 05-13-2025

Key Points and Metrics

Key Points and Metrics:

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Economic Data

United States:

• Consumer Price Index (CPI) - April 2025:

  • CPI YoY: Actual 2.3% (Forecast 2.4%, Previous 2.4%)

  • CPI MoM: Actual 0.2% (Forecast 0.3%, Previous -0.1%)

  • Core CPI YoY: Actual 2.8% (Forecast 2.8%, Previous 2.8%)

  • Core CPI MoM: Actual 0.2% (Forecast 0.3%, Previous 0.1%)

• Redbook Retail Sales YoY:

  • Actual 5.8% (Previous 6.9%)

• NFIB Business Optimism Index:

  • Actual 95.8 (Forecast 95, Previous 97.4)

United Kingdom:

• Employment Data - April 2025:

  • Unemployment Rate: Actual 4.5% (Forecast 4.5%, Previous 4.4%)

  • Average Earnings (Excluding Bonus) YoY: Actual 5.6% (Forecast 5.7%, Previous 5.9%)

  • Employment Change 3M/3M: Actual 112k (Forecast 115k, Previous 206k)

Germany:

• ZEW Economic Sentiment:

  • Actual 25.2 (Forecast 11.3, Previous -14.0)

• ZEW Current Conditions:

  • Actual -82.0 (Forecast -77, Previous -81.2)

Eurozone:

• ZEW Survey Expectations:

  • Actual 11.6 (Previous -18.5)

Financial Institution Forecasts

• Goldman Sachs:

  • Expects the Bank of England to cut interest rates to 3% in February 2026 (previously forecasted 2.75% in March).

  • Raises the UK's growth forecast, expecting cumulative real GDP growth of 0.6% for Q2 to Q4 (up from 0.4%).

  • Lifts Euro Area growth forecast following the US-China trade deal, expecting real GDP growth of 0.1% in Q3 and Q4 (previously forecasted stagnation).

  • Reduces 12-month US recession odds to 35% (down from 45%).

  • Predicts the US Federal Reserve will deliver one interest rate cut in 2025 (down from a previous prediction of three cuts).

• Barclays:

  • Does not expect the US to fall into a recession in H2 2025 (earlier anticipated a mild recession).

  • Expects the US Federal Reserve to deliver three 25 basis point rate cuts in March, June, and September 2026.

Market Movements

• US Stock Futures: Rose after US inflation figures came in lower than expected.

• US Dollar: Weakened following the CPI data.

• Treasury Yields: Fell as investors anticipate potential rate cuts.

• S&P 500 Futures: Indicated a potential drop of 0.3%.

• Nasdaq 100 Futures: Indicated a potential decline of 0.2%.

Trade and International Relations

• US-China Trade Relations:

  • Announced a de-escalation in tariffs.

  • The US reduced duties on Chinese products to 30% from 145% for a 90-day period.

  • China lowered its levy on most goods to 10%.

• Russia-Ukraine Talks:

  • Russian officials expressed readiness for serious talks in Istanbul.

  • German Chancellor emphasized potential increased sanctions on Russia if no progress is made.

  • US Envoy to Ukraine stated that compromises will be necessary from all parties.

Corporate Earnings and News

• Upcoming Earnings Estimates:

  • May 14th:

    • Cisco Systems (CSCO):

      • Earnings Release Time: 16:05 ET

      • Expected EPS: $0.91

      • Expected Revenue: $14.05 billion

  • May 15th:

    • Alibaba Group (BABA):

      • Earnings Release Time: 05:35 ET

      • Expected EPS: $1.70

      • Expected Revenue: $32.93 billion

    • Walmart (WMT):

      • Earnings Release Time: 06:55 ET

      • Expected EPS: $0.59

      • Expected Revenue: $165.94 billion

• Apple Inc.:

  • Exploring technology to enable iPhone control using neural signals.

Central Bank Activities and Statements

• European Central Bank (ECB):

  • Bond Holdings under PEPP: €1.53 trillion as of last week.

  • Several officials commented on the economic outlook and potential risks.

• Bank of England (BoE):

  • Officials expressed concerns about inflation risks and wage-setting behaviors.

  • Emphasized that recent inflation forecasts may not directly indicate future policy decisions.

Other Notable Points

• Energy Sector:

  • Aramco CEO: Announced plans to spend $3.4 billion to expand a US refinery.

  • US and Saudi Arabia: Agreements signed between the two nations, witnessed by leaders.

• Global Outlook:

  • Fund Managers: Increasingly optimistic about a soft landing for the economy.

  • Trade Discussions: US officials engaged in discussions with multiple countries to advance trade deals.

• Interest Rates and Yields:

  • US 10-Year Treasury Yield: Expected to fluctuate, with forecasts indicating slight changes over the next year.

  • Federal Reserve Rate Cuts: Market anticipates potential rate cuts later in the year.

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Upcoming Events:

• Trump at Saudi-US Investment Forum (09:45 ET)

• BoE's Gov. Bailey speaks (10:10 ET)

• ECB's Knot speaks (10:10 ET)

• US 52-Week Bill auction (11:30 ET)

• Trump at Saudi State Dinner (13:15 ET)

• API crude oil inventory data (16:30 ET)

Earnings Watch:

• CSCO: May 14th, 16:05 ET (EPS est: $0.91, Rev est: $14.05B)

• BABA: May 15th, 05:35 ET (EPS est: $1.70, Rev est: $32.93B)

• WMT: May 15th, 06:55 ET (EPS est: $0.59, Rev est: $165.94B)

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Final Thoughts

Today's lower-than-expected CPI print marks the smallest annual inflation increase since February 2021, providing the Federal Reserve with more confidence that inflation is moving toward its 2% target. Markets are responding positively to both this data and yesterday's US-China trade truce, which has dramatically reduced immediate tariff concerns. The S&P 500 has now recovered beyond where it was when Trump announced his "Liberation Day" tariffs on April 2nd, and the Nasdaq 100 has returned to bull market territory. While economic optimism is growing, investors should remain vigilant about upcoming trade negotiations, Fed policy decisions, and potential geopolitical developments, particularly regarding Russia-Ukraine talks and Middle East tensions.

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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.

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Harry