Global Markets Brace for Key U.S. Data Amid Geopolitical Tensions and Private Credit Concerns

Index Update:  Investor attention shifted to the private credit market after Blue Owl Capital announced it would limit quarterly investor redemptions at its discretion, rather than allowing fixed withdrawals. The move triggered declines in shares of Blue Owl and peers such as Ares and Blackstone, fueling concerns about potential stress within the rapidly expanding and opaque private credit sector. Additional worries emerged over lenders’ exposure to pressured software stocks amid uncertainty surrounding AI-driven disruptions. Upcoming data is projected to show resilient economic growth, with Q4 GDP estimated at a 3% annualized pace and steady consumer spending despite persistent inflation. Rising oil prices and cautious Federal Reserve commentary have led many traders to scale back rate-cut expectations, weighing on AI-linked stocks and financials in pre-market trade.

Market Movers:  On Thursday, the top gainers were KNOREX LTD.(+165.32%), followed by Namib Minerals (+37.12%). On the contrary, Moleculin Biotech, Inc. (-44.28%), and Klarna Group plc (-26.91%) declined the most the same day.

Commodities Update:  Oil prices steadied and were on track for their first weekly gain in three weeks, supported by rising U.S.–Iran tensions that heightened concerns over potential supply disruptions in the Middle East. Although Brent and WTI crude futures dipped 0.3% to $71.48 and $66.22 per barrel respectively, both remained near early August highs and were poised to advance over 6% for the week. Markets reacted to warnings of possible military action if Iran fails to reach a nuclear agreement, with fears that any escalation could disrupt oil flows through the Strait of Hormuz, a key global supply route. Gold rose modestly toward $5,010 per ounce while silver held above $78, as investors weighed escalating U.S.–Iran tensions and a significant U.S. military presence in the Middle East against a more cautious Federal Reserve outlook. Stronger-than-expected U.S. data, including lower jobless claims, and divided FOMC minutes signaling the possibility of sustained higher rates tempered expectations for rate cuts, limiting bullion’s upside. While silver remained on track for its first weekly gain in four weeks amid thin Lunar New Year trading volumes, gold was poised for a slight weekly decline as markets awaited key PCE and GDP data.

Macro Updates:  U.S. Inflation Expected to Show Sticky Price Pressures in December

The December 2025 PCE price index, the Federal Reserve’s preferred inflation gauge, is projected to rise 0.3% month over month, with the core PCE index also expected to increase by 0.3%, up from 0.2% gains in November. On an annual basis, headline PCE inflation is likely to hold steady at 2.8%, while core inflation is forecast to edge up to 2.9% from 2.8%. The data is anticipated to indicate that progress in easing inflation has slowed, with price pressures remaining persistently above the Fed’s 2% target.

U.S. GDP Growth Seen Moderating in Q4 Amid Mixed Demand Trends

The U.S. economy is projected to expand at an annualized rate of 3.0% in Q4 2025, slowing from 4.4% in Q3. Consumer spending is expected to remain resilient, supported by healthcare outlays and asset market gains, though moderating to 2.5%. Business investment presents a mixed picture, with subdued spending on structures and housing, while equipment investment continues to benefit from AI-driven demand. Inventories are likely to remain stable, providing a positive contribution after prior declines, while government spending is expected to decelerate, particularly at the federal level following the extended shutdown. Trade activity is forecast to rise modestly, offering a slight boost to overall growth.

Bonds Commentary:  The U.S. 10-year Treasury yield eased to around 4.07%, retreating from earlier weekly gains as rising U.S.–Iran tensions increased safe-haven demand for government bonds. Geopolitical uncertainty coincided with mixed economic data, including lower jobless claims, a wider trade deficit, and softer pending home sales. Investors are now focused on upcoming Q4 GDP and PCE inflation reports for further policy cues. While FOMC minutes revealed divisions over the rate outlook and the possibility of additional hikes if inflation persists, markets have reduced expectations for aggressive easing and currently anticipate two 25-basis-point rate cuts by year-end.

Futures Update:  U.S. stock futures edged higher on Friday, with Dow futures up 0.1%, S&P 500 futures rising 0.2%, and Nasdaq 100 futures gaining 0.2%, as investors prepared for key economic data releases while monitoring renewed concerns surrounding the private credit market.

Stocks moved mostly lower during Thursday’s trading session, giving back ground after posting strong gains in the previous session. The major averages all closed in negative territory, although selling pressure remained relatively modest. The S&P 500 declined 19.44 points, or 0.28%, to finish at 6,861.88. From a technical perspective, the index is currently hovering near its declining 20-period EMA, which may act as a resistance level and limit further upside in the near term. A sustained move above this level, however, could pave the way for another attempt at the 7,000 mark. Meanwhile, the 14-day Relative Strength Index (RSI) remains below the midpoint, reflecting lingering bearish sentiment. Immediate support is seen around 6,760, which could serve as a potential bounce zone, while resistance is positioned near 6,970.