MTS Insights

In 2025, new EU car registrations increased by 1.8% compared to the same period last year. However, overall volumes remain well below pre-pandemic levels. In December alone, registrations were up 5.8% YoY.

ADP estimates that private employers added an average of 7,750 jobs in the four weeks to Jan 3rd, mostly unchanged from 8,000 in the four weeks to Dec 27th.

• This morning's ADP Pulse weekly employment print eases slightly to 7,750 but maintains the trend of the last 5 weeks.
• There were no revisions reported in the latest dataset. Next week's data point is the final weekly print before the ADP National Employment Report in the first week of February.

U.S. house prices rose +0.6% MoM (vs +0.3% MoM expected) and +1.9% YoY in November 2025, showing modest monthly gains with soft annual growth.

• The national FHFA purchase-only HPI increased +0.6% MoM from Oct–Nov 2025, up from +0.4% MoM in Sep–Oct (unrevised), indicating slightly firmer monthly price momentum.

• Regional monthly gains ranged from +0.0% in the Middle Atlantic to +1.1% in the East South Central, highlighting continued dispersion in short-term price movements.

• The West South Central division posted a +1.0% MoM increase, while the Pacific and East North Central divisions both rose +0.5% MoM, reflecting broader participation in monthly growth.

• Over the past 12 months, national prices increased +1.9% YoY in November 2025, up from +1.7 YoY in October 2025.

• Year-over-year changes varied widely by region, from -0.4% YoY in the Pacific and -0.1% YoY in the Mountain to +5.1% YoY in the East North Central and +4.3% YoY in the Middle Atlantic.

• Several regions posted moderate annual gains, including +3.7% YoY in New England and +3.0% YoY in the East South Central, while the South Atlantic was flat at 0.0% YoY.

The S&P Case-Shiller U.S. National Home Price Index rose +1.4% YoY in November 2025, unchanged from October 2025, remaining near the weakest annual pace since mid-2023.

• The 10-City Composite rose +2.0% YoY (up from +1.9%), while the 20-City Composite increased +1.4% YoY (up from +1.3%), showing slight firming in composite measures despite weak national growth.

• On a non-seasonally adjusted basis, the National Index fell -0.1% MoM, with 15 of 20 major metro areas posting monthly declines, signaling broad short-term softness.

• After seasonal adjustment, the National Index rose +0.4% MoM, while both the 10-City and 20-City Composites increased +0.5% MoM, indicating limited underlying momentum once seasonality is removed.

• Regional divergence remained pronounced, led by Chicago (+5.7% YoY), New York (+5.0%), and Cleveland (+3.4%), while Sun Belt markets declined, including Tampa (-3.9%), Phoenix (-1.4%), Dallas (-1.4%), and Miami (-1.0%).

• Mortgage rates remained in the mid-6% range during November, coinciding with muted monthly price changes and continued pressure on affordability.

Fifth District manufacturing activity was little changed in January, with the composite index at -6 (Dec: -7), indicating continued mild contraction with slight monthly improvement.

• The composite manufacturing index edged up to -6 (Dec: -7; Nov: -15), showing a slower pace of contraction than in prior months.

• Shipments rose to -5 (Dec: -11), reflecting a notable easing in the decline in outbound manufacturing activity.

• New orders improved slightly to -6 (Dec: -8), pointing to somewhat firmer demand conditions than in December.

• Employment fell to -6 (Dec: -1), indicating more firms reported declining payrolls compared with last month.

• Local business conditions held near recent levels at -8 (Dec: -9), suggesting little change in assessments of current conditions.

• Expectations for shipments increased to 34 (Dec: 28) and new orders rose to 36 (Dec: 27), signaling stronger outlooks for activity in the months ahead.

• The future local business conditions index improved to 19 (Dec: 16), while future employment slipped to 2 (Dec: 8), showing firmer sentiment on activity but softer hiring expectations.

• Prices paid growth increased slightly in January while prices received growth decreased somewhat, indicating a modest widening between input and output price trends.

The Conference Board Consumer Confidence Index fell to 84.5 in January (-9.7 pts MoM), marking a sharp pullback in household sentiment.

• The headline index dropped to 84.5 from 94.2 in December, reversing last month’s revised uptick and reaching its lowest level since May 2014.

• The Present Situation Index declined to 113.7 (-9.9 pts MoM), as views on current business and labor market conditions weakened toward neutral.

• The Expectations Index fell to 65.1 (-9.5 pts MoM), remaining well below the 80 recession-signal threshold and reflecting increasingly negative outlooks.

• The share saying jobs were plentiful slipped to 23.9% (from 27.5%), while those saying jobs were hard to get rose to 20.8% (from 19.1%), showing softer labor market perceptions.

• Consumers expecting business conditions to improve declined to 15.6% (from 18.7%), while those expecting conditions to worsen increased to 22.9% (from 21.3%), indicating rising pessimism.

• Expectations for more job availability fell to 13.9% (from 17.4%), and expectations for fewer jobs increased to 28.5% (from 26.0%), signaling weaker labor market outlooks.

• Plans for big-ticket purchases and homebuying retreated, while intentions to spend on services softened overall despite continued strength in restaurants and travel-related categories.

Fifth District non-manufacturing activity was essentially flat in January, with modest MoM improvements in revenues and demand alongside softer input cost growth.

• The revenues index increased to -3 (Dec: -6; Nov: -4), indicating a smaller contraction in current service-sector revenue conditions.

• The demand index rose to 2 (Dec: -3; Nov: 4), shifting from slight contraction back into modest expansion.

• Local business conditions improved to -6 (Dec: -11; Nov: -15), showing a gradual easing in negative assessments of the regional environment.

• Capital expenditures remained negative at -5 (Dec: -9), while equipment and software spending held positive at 2 (Dec: 0), pointing to mixed investment activity.

• The employment index was unchanged at 5 (Dec: 5; Nov: 1), and the forward-looking employment index increased to 20 (Dec: 14), reflecting firmer hiring expectations.

• The wages index rose to 20 (Dec: 17; Nov: 12), indicating continued upward pressure on compensation.

• Prices paid growth slowed to 4.29% (Dec: 6.13%), while prices received edged up to 3.36% (Dec: 3.16%), showing easing input costs alongside slightly firmer selling price growth.

Texas service sector activity improved in January, with the revenue index rising to +7.8 from 0, indicating modest growth after flat conditions in December.

• Employment edged up to +0.9 (Dec: -1.1) and hours worked rose to +1.1 (Dec: -2.6), both near zero and consistent with broadly stable labor conditions.

• Part-time employment climbed to +5.5 (Dec: -0.1), reflecting a notable pickup relative to last month.

• General business activity improved to +2.7 (Dec: -5.0), moving back into positive territory after four months of contraction.

• Company outlook rose to +5.6 (Dec: -2.7), signaling firmer sentiment toward near-term conditions.

• Input price pressures eased to 21.1 (Dec: 27.1), while selling prices were little changed at 7.9 (Dec: 8.2), indicating slower cost growth alongside steady output pricing.

• Wages and benefits increased to 13.5 (Dec: 10.6), pointing to slightly stronger labor cost pressures.

• Outlook uncertainty held near recent levels at 16.5 (Dec: 16.1), remaining elevated but largely unchanged.

Analysis

Almost as abruptly as President Trump’s tariff and possibly military threats related to Greenland came, they went. Trump called off the proposed tariffs on eight NATO allies following talks with NATO leadership in Davos last-Wednesday that the president said yielded an accepted framework for a future deal.

This chain of events joins several other examples of Trump threatening and then scrapping tariffs due either to concessions gained, backlash, or both since taking office last year. President Trump issued more tariff threats on social media this week, promising 25% tariffs on all exports from South Korea if parliament does not pass the bill approving the terms of the US-Korea trade deal negotiated last year. And, prompted by Canada’s recent trade agreement with China centering on Chinese EVs and Canadian canola seeds, Trump also threatened Canada with 100% tariffs if it enters a comprehensive free trade deal with China.

This development reflects growing tensions between the US and Canada ahead of a possible US review of the USMCA this summer. In addition to resolving tariff issues with China, Canada is also holding trade cooperation talks with India, as they and other countries are increasingly looking to diversify away from an over-reliance on the US as trade tensions stretch on.

Asia - Europe ocean rates were level to N. Europe and dipped 5% to the Mediterranean as the pre-Lunar New Year rush starts to ease. A five-day rail worker strike in Belgium started on Sunday which could cause delays and additional congestion in Antwerp and knock-on impacts on ports like Rotterdam and Hamburg, which are already struggling with congestion.

Transpacific container prices were stable last week as well, with reports that carriers are starting to offer discounts. Rates starting to slide a little earlier than usual suggests carriers are working to capture volumes that may be proving weaker than expected, as retailers exercise caution in ordering decisions given the trade war-driven uncertainty.

The massive winter storm that brought snow, sub-zero temperatures and ice to much of the northeast, southeast and parts of the midwest US over the weekend significantly disrupted rail services, road transport and container port operations across the impacted regions. Ports in the southeast have started to recover slowly, but as snowfall in the northeast continued through Monday, the major hubs including New York/New Jersey remained closed.

The storm also led to more than 11,000 flight US cancellations on Sunday – the most since the pandemic – with that number dropping to 6,000 on Monday as some southeast and midwest airports were able to restart. Still, more than 1,000 Tuesday flights were scrapped, now concentrated in the northeast. Extremely cold temperatures that may linger and keep conditions icy could slow the speed of recovery.

Air cargo rates from China to the US climbed to more than $6.20/kg and back to early January levels, with prices increasing 9% to $4.57/kg out of South East Asia, possibly helped by storm-driven backlogs  and the beginning of some pre-LNY frontloading. China - Europe rates were level at about $3.60/kg.

The possibility of a US strike on Iran is leading several European carriers to cancel flights to the Middle East, with rising tensions also relevant to ocean freight as the Houthis have threatened to renew attacks on passing vessels in the event of US military action.

U.S. M&A deal activity increased in December, going up 4.8% with 1,146 announcements compared to 1,094 in November. Aggregate M&A spending increased as well. In December 56.9% more was spent on deals compared to November.

• In terms of M&A deal activity, 10 of the 21 sectors tracked by FactSet saw an increase in M&A deal activity over the past three months relative to the same three-month period one year ago. The six sectors that witnessed the largest increases in M&A deal volume were: Technology Services (865 vs. 697), Non-Energy Minerals (117 vs. 76), Industrial Services (237 vs. 208), Commercial Services (422 vs. 399), Retail Trade (109 vs. 92), and Electronic Technology (92 vs. 75).
• On the other hand, 10 of the 21 sectors tracked by FactSet saw a decrease in M&A deal activity over the past three months relative to the same three-month period one year ago. The five sectors that witnessed the largest declines in M&A deal volume were: Finance (652 vs. 861), Consumer Services (184 vs. 234), Producer Manufacturing (194 vs. 234), Health Technology (88 vs. 128), and Distribution Services (141 vs. 163).

The US M2 money supply increased 0.5% MoM in December, a stronger monthly rise than the 0.1% MoM increase in November. The annual increase accelerated from 4.3% YoY to 4.6% YoY.

• The M1 money supply increased 0.4% MoM in December, after a 0.1% MoM increase in November. The annual rate bounced back from 3.9% YoY to .2% YoY.
• The monthly data suggests that the drop in reserve balances in November was almost completely reversed in December.

Australia’s CPI rose +0.2% MoM and +3.8% YoY in December 2025 (up from +3.4% YoY in November), showing a reacceleration in headline inflation.

• Trimmed mean inflation increased to +3.3% YoY (Nov: +3.2%), indicating slightly firmer underlying price pressures.

• Goods inflation edged up to +3.4% YoY (Nov: +3.3%), driven primarily by faster electricity price growth.

• Services inflation accelerated to +4.1% YoY (Nov: +3.6%), with domestic holiday travel and rents contributing to the pickup. On a monthly basis, services prices surged 2.1% MoM.

• In December, discretionary goods prices increased 2.2% MoM, while non-discretionary goods prices were up just 0.1% MoM.

• Electricity prices rose +21.5% YoY (Nov: +19.7%), reflecting the exhaustion of state and federal rebate effects; excluding rebates, electricity inflation held at +4.6% YoY, unchanged from November.

• Rents increased +3.9% YoY (Nov: +4.0%), showing a slight easing consistent with stable vacancy rates; excluding rent assistance changes, rents rose +4.2% YoY.

• New dwelling prices rose +3.0% YoY (Nov: +2.8%), with a +0.2% MoM increase in December linked to higher demand and cost pass-through.

• Food and non-alcoholic beverages inflation ticked up to +3.4% YoY (Nov: +3.3%), led by higher meat, fruit and vegetable prices, and sharp increases in coffee, tea and cocoa costs.

• Domestic holiday travel and accommodation surged +8.2% MoM and +9.6% YoY, driving a jump in recreation-related inflation during the December holiday period.

Japan’s measures of underlying inflation in December:

• Trimmed mean CPI inflation eased -0.3 ppts to 1.9% YoY (lowest since December 2024).
• Weighted median CPI inflation eased -0.5 ppts to 0.8 YoY (lowest since October 2024).
• The mode CPI inflation fell was unchanged at 1.4% YoY (lowest since June).

India’s Index of Industrial Production rose +7.8% YoY in December 2025 (up from +6.7% YoY in November), marking the strongest reading in over two years.

• Headline IIP increased to 170.3 from 158.0 a year earlier, indicating a broad pickup in overall industrial output.

• Manufacturing output expanded +8.1% YoY, while Mining rose +6.8% YoY and Electricity increased +6.3% YoY, showing strength across all three major sectors.

• Sector indices stood at 153.0 for Mining, 169.9 for Manufacturing, and 204.9 for Electricity, reflecting elevated activity levels relative to December 2024.

• Within manufacturing, 16 of 23 industry groups posted YoY growth, pointing to broad-based expansion across industrial categories.

• The strongest manufacturing gains came from computer, electronic and optical products (+34.9%), motor vehicles, trailers and semi-trailers (+33.5%), and other transport equipment (+25.1%), highlighting rapid output growth in technology and transport-related industries.

• Basic metals (+12.7%), motor vehicles (+33.5%), and pharmaceuticals (+10.2%) were the largest contributors within manufacturing, driven by higher production of steel products, auto components, and medical-related goods.

• On a use-based basis, output rose +12.1% YoY in infrastructure/construction goods, +12.3% in consumer durables, +8.3% in consumer non-durables, +8.1% in capital goods, +7.5% in intermediate goods, and +4.4% in primary goods, showing widespread demand across investment and consumption categories.

The MBA Mortgage Applications Composite Index fell 8.5% WoW last week, a sharp decline driven by higher mortgage rates.

• The Purchase Index was mostly unchanged over the week, down -0.4% WoW, but the Refinance Index dropped -15.7% WoW.
• Total purchasing applications fell -3.9% WoW but were still up 17.7% YoY, and total refinancing applications dropped -24.2% WoW but were still up 155.8% YoY.
• The 30-year fixed mortgage rate increased 8 bps to 6.24%, and the 15-year fixed mortgage rate increased 9 bps to 5.64%.