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MORNING quote EUROPE-Forget the soft landing, simply keep flying

A take a look at the day ahead in European and worldwide markets from Wayne Cole.

Why bother engineering a soft landing, when you can simply keep flying?

That's the message from the U.S. payrolls report, which is likely to raise the Atlanta Fed GDP Now approximate from its already above-trend pace of 2.7%.

With the labour market so resistant and inflation receding just gradually, markets may be wondering why the Federal Reserve is alleviating policy at all. A reading above +0.2% for core customer prices on Wednesday could convince futures to begin giving up on even one cut this year.

The Treasury market is plainly stressing that cuts are done and the next move may be up, especially if President-elect Donald Trump goes through with universal tariffs, mass migrant deportations and tax cuts.

China's reveal of a massive $105 billion trade surplus with the United States in December just includes ammo to those arguing for swingeing tariffs.

Add in an ever-expanding budget deficit and it would be no surprise to see 10-year Treasury yields check the 5% barrier.

That raises the bar for marking down business incomes, simply as the earnings season starts with the huge rely on Wednesday. It likewise makes risk-free debt relatively more attractive compared with other investments consisting of equities, money, property and commodities.

So it's been basically a sea of red in Asian stocks so far on Monday. Japan is on holiday however Nikkei futures are down around 1.2%. S&P 500 and Nasdaq futures are both down around 0.5%, and European stock futures have lost 0.1% to 0.3%. There's. no trading of cash Treasuries but futures are down 5 ticks or. so.

The ascent of yields is stoking the dollar's bull run and. triggering tension throughout Asia, where reserve banks need to. regularly intervene to prop up their currencies.

China's reserve bank is increasingly rummaging through its. policy tool kit to support the yuan, revealing on Monday an. boost in the cap on what local business can borrow abroad. If they can borrow the dollars they require, then there is less. require to buy dollars for yuan in the area market.

Another currency under fire is sterling, which hit a fresh. 14-month low at $1.2138 as markets stress about the. Labour federal government's monetary reliability. On a journey to China,. finance minister Rachel Reeves needed to assure the media she. would act to ensure the federal government's financial rules are fulfilled.

Oh, and oil is up another 1.5% as financiers contemplate the full. implications of the current round of U.S. and UK sanctions on. Russian producers.

This relocation could really bite given that it sanctions another 160. tankers of Russia's shadow fleet, taking the overall to 270. Previous tankers so hit were severely curtailed in where they. could travel and some wound up being ditched.

Secret developments that might affect markets on Monday:

- U.S. Federal budget balance

(source: Reuters)