Daily Market Color January 23, 2025Markets React to Trump’s Calls for Lower Rates and Oil Prices Longer-term rates rise after President Trump’s Davos comments. The long end of the yield curve rose 2-4 bps, with the ten-year yield ending at ~4.64%, as markets digested President Trump’s calls for lower rates and oil prices at Davos today. WTI crude fell ~1.1% to $74.62 per barrel, while Brent crude fell ~0.8% to $78.29 on the day, which helped push the policy-sensitive two-year yield ~1bp lower to ~4.29%. Equities rallied on President Trump’s comments, with the S&P 500 and NASDAQ ending the day 0.53% and 0.22% higher, respectively. President Trump talks oil and rates at Davos. At the World Economic Forum in Davos today, President Trump said that he would ask OPEC countries to “bring down the cost of oil” through greater output, and said that if oil prices fell, it could lead to the end of conflict in Ukraine. He furthered by saying that if oil prices decline, he’ll “demand that interest rates drop immediately.” President Trump’s comments come ahead of the Fed’s January policy meeting next week, where futures markets overwhelmingly expect the Fed to keep rates unchanged. Recurring unemployment claims hit a multi-year high. Per data released today, recurring claims for unemployment benefits rose to 1.899 million during the week ending on January 11th, above expectations of 1.866 million and rising to the highest level since November 2021. While new jobless claims remain near pre-pandemic levels, recurring claims data indicate that unemployed workers are having a harder time finding new jobs. On-balance, however, recent data continues to point to strong labor market conditions.
