US Close: A busy Tuesday (China’s GDP, Goldman, Morgan Stanley, Empire, ECB),  Commodities mixed, Cryptos soften

US stocks are wavered as traders digest mixed bank earnings, a disheartening Empire manufacturing report, and as Treasuries rally at the front-end of the curve. The Dow’s decline is mostly thanks to Goldman Sachs massive earnings miss. 

China’s GDP

The good outweighs the bad with the outlook for China’s economic future.  China’s latest swathe of economic data points provide significant optimism that their reopening momentum could impress throughout the year.  China’s GDP growth of 3.0% was below their government’s target and second worst reading since the 1970s, but it did come in above the consensus estimate of 2.7%.  The December industrial production and retail sales data also provided a lot of optimism that 2023 should see a robust return of growth near or possibly above the 5.0% level. 

While China’s consumption market will progress as does their COVID reopening, Chinese stock might hit a wall as markets close before the January 23-27th Lunar New Year holiday. 

Bank Earnings

Morgan Stanley

This round goes to Morgan Stanley, as they appear to be one of the standout bank earnings.  The New York-based firm saw record wealth management revenue, dealmaking took a hit, and trading revenues (FICC Sales & Trading Revenue and Equities Sales & Trading Revenue) came in mostly below consensus. Morgan already started to acknowledge the high expense problem all the banks are having last month.  Their strategic update saw Morgan Stanley affirm their long-term ROTCE, Efficiency, Wealth Management Margin and new assets goals. 

CEO Gorman expressed his confidence that dealmaking will improve once the Fed stops hiking interest rates. 

Goldman Sachs

Goldman Sachs shares tumbled after delivering its worst earnings miss in a decade as total operating expenses surged 11% in the fourth quarter.  A miss with both the top and bottom line was also accompanied with an uncertain outlook given the signs of widespread distress.  Goldman saw profit fall 66% from a year ago to $1.33 billion. 


The Empire State manufacturing index collapsed to the lowest levels since May 2020.  This report is known to be volatile and let’s hope that this one overshot to the downside.  Prices paid and prices received significantly softened, while inventories rose.  The impact of Fed tightening and a weakening economy are showing up in this report. Hirings are slowing down, which is also good news for disinflation trends to continue.   


The euro pared gains after reports that the ECB is debating slowing their rate hiking pace after  delivering one last half-point rate increase in February.  The end of ECB tightening appears to be around the corner as the ECB looks poised to deliver a total of 75 basis points, bringing the deposit rate to 3.25%.  ECB’s Lane however is emphasizing flexibility and that ‘policy is adjusted in a timely manner.’

Disinflation trends are here, but core inflation remains worrying for ECB officials.  The euro appears to have massive resistance around the 1.10 level against the dollar, so it might stay rangebound until the next policy meeting. 

BOJ Preview

The Bank of Japan is watching the bond market take the 10-year JGB above the upper boundaries of their target range. It is clear that some traders believe the BOJ could end Yield Curve Control (YCC), which would be somewhat of a surprise given they just widened their range just less than a month ago.

The BOJ has been welcoming yen strength (near 14% gain against the dollar) but they are not too happy with movement in JGBs.

The BOJ will most likely keep rates on hold and traders should not be surprised if they abandon yield curve control. Japanese stocks would get crushed if the BOJ abandons YCC, while if they decide to widen the band again that might be the best-case scenario for Japanese stocks. 


Crude prices continue to get a boost on China’s reopening optimism. The US manufacturing sector is softening quickly and that might put a wrench in this current oil rally. 

OPEC Secretary General Al-Ghais noted that he’s cautiously optimistic about the global economy.  Adding that he saw oil demand rising in China by 500K bpd in 2023.

The China reopening optimism induced oil rally might have a little more in it, but it should stall out soon. Energy traders are probably a couple dollars away from massive technical resistance. 


Gold prices are consolidating below eight-month highs as the dollar musters up a small rebound.  The Fed’s tightening path remains a clear driver for the precious metal but the bond market could get shaken up by the BOJ. 

Gold seems poised to consolidate around the $1900 level until we see confirmation that producer prices continue to decline. 


Bitcoin is rallying as central banks all around the world show signs they are close to the end of their respective tightening cycles.  Investors are slowly getting back into crypto as the global crypto market eyes the $1 trillion level again.  Contagion fears have eased and the focus for many crypto traders is to ride this breakout. 

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.