Weak retail data strengthens rate cut expectations, market focuses on reports for direction

1. On Wednesday, risk sentiment in the Asian markets was relatively positive, with Sydney and Hong Kong stock indices suggesting that the market may continue its upward trend. The retail sales data for December, released overnight, unexpectedly stagnated, indicating weakened consumer momentum and further strengthening market expectations for interest rate cuts within the year.2. In terms of interest rate expectations, the probability priced in by the money market for three rate cuts this year has increased, with two rate cuts already fully priced in by the market. Weak retail data pushed up US Treasury prices and caused yields to fall.3. The market's current focus has shifted to the upcoming employment report. Analysts pointed out that if employment data is weak, it may intensify risk aversion and reinforce expectations of rate cuts; conversely, if the data is strong, it will help ease concerns about economic momentum. Investors remain cautious ahead of the report's release, and volatility across multiple asset classes may persist.