HG MARKETS:

Ahead of critical reports on inflation and national output, U.S. stock index futures saw a modest uptick on Friday morning. This follows a downturn in the previous session, where Wall Street indices retreated due to geopolitical instability in the Middle East and mixed corporate earnings results. On a weekly basis, performance has been inconsistent: while the S&P 500 and the Nasdaq Composite are both tracking for a 0.6% gain—breaking a five-week slump for the tech-heavy Nasdaq the Dow Jones Industrial Average is currently facing a 0.2% decline for the period.

Market participants are currently maintaining a defensive posture as they await two pivotal economic data points: the December Personal Consumption Expenditures (PCE) price index and the initial Gross Domestic Product (GDP) estimate for the fourth quarter. As the Federal Reserve’s prioritized metric for inflation, the PCE report is expected to show core inflation still hovering above the 2% target. These results will be instrumental in determining the central bank’s interest rate trajectory for the early months of 2026.

Current forecasts suggest that while U.S. economic growth likely moderated compared to the previous quarter, the country finished 2025 with respectable momentum. Despite the headwinds of persistent inflation, a struggling real estate sector, and diminishing consumer demand, GDP has been bolstered significantly by heavy investment in Artificial Intelligence. This “AI hyperscaler” spending trend—involving hundreds of billions in capital commitments—is anticipated to remain a primary driver of economic resilience throughout 2026.

In the private credit sector, liquidity concerns have surfaced following Blue Owl Capital’s announcement to divest $1.4 billion in assets and halt withdrawals from a major fund. This move has raised red flags regarding overall credit health and the potential impact of recent equity volatility. Additionally, lenders are scrutinizing exposure to software firms, which are currently facing pressure due to the disruptive nature of new AI models.

Finally, the financial community is closely watching the Supreme Court for a ruling regarding President Trump’s authority to implement tariffs under the International Emergency Economic Powers Act, a decision that could have wide-ranging implications for international trade.