Equities rose to record highs yesterday, with the Dow Jones Industrial Average closing above 18,000 for the first time ever, and the US dollar bullish trend continued with EUR/USD posting yet another year to date low, as did GBP/USD. Meanwhile energy prices have been consolidating close to the year to date lows, with the price of Brent crude hovering just above $61 – it really looks like there could be a minor recovery with $67.50 capping any move, before a new test of the recent lows. As I’ve mentioned before the bearish oil move looks very mature and I wouldn’t be surprised to see a larger recovery in the weeks ahead. It’s clear that the positive surprise from better than expected US GDP numbers were a factor in the festive risk sentiment last night – GDP growth was much higher than expected at 5% vs 3.9% previously and a forecast of 4.3%. When you factor in the solid Michigan sentiment data, and stable core PCE price data, it was a clear goldilocks scenario for the United States. You might actually say that it’s better than goldilocks… those are the best GDP growth numbers for a decade. Markets might celebrate right now, but in such seasonal news, are the seeds of future market turmoil. The Federal Reserve will have to take notice of such growth, they may be forced to act earlier than the market anticipates!

On the other hand, UK GDP numbers were slightly disappointing, with no change to the original estimate. Economists had expected an upward revision but this failed to materialise. Still… 2.6% growth is still decent. Not so much that UK citizens should concern themselves with rate normalisation concerns, but if the retail numbers for the Christmas period are anything to go by the UK consumer is quite buoyant. We may yet see continuing improvements in UK data.

I guess econometricians go on holiday early, because there really isn’t much data to speak of today. We don’t expect much excitement with even the Russian rouble virtually flat on the day, indeed over the last few sessions the rouble has been able to follow a recovery path and is now trading around the 54.50 level. A quite stunning 55% recovery from the panic lows of 84.30.

There’s not much else to report, so I’ll take this opportunity to wish all of you a wonderful and Merry Christmas.

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