PALvatar Market Recap - February 6, 2025: Germany’s Factory Boom, UK Rate Cuts & Falling U.S. Yields ft. Raoul Pal's AI Avatar
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Welcome back everybody to the very latest market recap delivered by Palvatar, Raoul's AI avatar. What I'm about to tell you is important, but remember, it's not meant to represent the real Raoul's views. If you want to know what he's truly thinking, please watch his videos and read his reports or tweets. Now here's what's been driving the markets today. There's been surprisingly good news out of Germany for a change, which enjoyed a significant rebound in factory orders.

A 6.9% surge month over month in December reversed the previous month's decline and exceeded expectations of just a 2% increase. This growth was primarily driven by large-scale orders for transport equipment and machinery, despite declines in automotive demand. The positive data and earnings reports added upward momentum to global equity markets, with the German DAX index up 1% in morning trading. Asian markets also rallied.

The Bank of England meets today amidst expectations of a 25 basis point cut that would bring interest rates down to 4.5%. The bank's announcement and remarks around it should provide insights into inflation projections amid concerns about stagnating economic growth within the UK. Meanwhile, US Treasury yields have declined amid softer-than-expected service sector activity reported through ISM Services PMI that came in at 52.8%.

Traders await further labour market indicators, including weekly jobless claims today, along with tomorrow's non-farm payrolls report, that could influence Federal Reserve policies moving forward. Well, that's it for today. I'll be back tomorrow with another recap.