Market Beats | Israel and Hamas Agree to Ceasefire; NYC Apartments Expected to Rise 7.3%; U.S. Core Inflation Eases in December; Citigroup Reserves $600 Million for Layoff Severance; U.S. Mortgage Rates Surpass 7%

1. Israel and Hamas Reach Ceasefire Agreement

2. U.S. Core Inflation Eases in December

3. Citigroup Reserves $600 Million for Layoff Severance

4. U.S. Mortgage Rates Surpass 7%

5. Energy Trading Firm Profits Exceed $2 Billion

6. Wells Fargo Stock Soars

7. NYC Apartments Expected to Rise 7.3%

1. Israel and Hamas Reach Ceasefire Agreement

Sources reveal that Israel and Hamas have reached a ceasefire agreement, bringing a temporary halt to the 15-month-long conflict that has claimed thousands of lives.

The details of the agreement, including the number of Israeli hostages released by Hamas, have not been disclosed, but official statements are expected soon.

Incoming President Trump reportedly played a significant role in the final rounds of negotiations and has claimed responsibility for the ceasefire.

Following the ceasefire, humanitarian aid teams are now able to enter the war zone.

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2. U.S. Core Inflation Eases in December

Data released today by the U.S. Bureau of Labor Statistics shows that the core CPI for December was lower than expected, helping ease the sell-off in U.S. bonds and increasing the likelihood of earlier interest rate cuts by the Federal Reserve.

Excluding food and energy, the core CPI rose by 0.2%, a slowdown compared to 0.3% the previous month.

The Fed will need to see more inflation relief in the coming months before considering an early rate cut. Before today’s CPI release, traders had expected no rate cuts by the Fed until June.

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3. Citigroup Reserves $600 Million for Layoff Severance

Citigroup CFO Mark Mason announced that the company plans to set aside $600 million in 2025 for severance pay related to further layoffs, 14% less than the previous year.

The bank’s ongoing restructuring plan, which has been in place for several years, is halfway through, aiming for 20,000 job cuts and technology investments to replace these roles.

Citigroup’s return on equity has been lower than its competitors in recent years, and CEO Jane Fraser is cutting costs to boost shareholder returns.

In Q4, Citigroup’s salary and benefits expenses were below analyst expectations, suggesting the layoffs are effective.

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4. U.S. Mortgage Rates Surpass 7%

Today, the 30-year U.S. mortgage rate broke the significant 7% threshold, and the likelihood of a Fed rate cut is declining. Homebuyers are unlikely to find much relief in the short term.

Chief economist at Zonda, a real estate analytics firm, stated that affordability is expected to improve in 2025, but for now, mortgage rates, insurance, and property taxes are all on the rise.

For the year ending June 2024, first-time homebuyers represented only 24% of total buyers, the lowest in history.

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5. Energy Trading Firm Profits Exceed $2 Billion

Mercuria Energy Group, an energy trading firm, reported $2 billion in profits for the past year.

For the fiscal year ending September 30, the company earned $20.9 billion in profits, a drop from $2.98 billion in 2022, but still significantly higher than any year before 2022.

In 2024, Mercuria’s profits surged while Trafigura Group saw a 62% decline due to penalties following violations by staff on a Mongolian project.

Last year, Mercuria hired numerous experts in liquefied natural gas and metals trading.

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6. Wells Fargo Stock Soars

Wells Fargo reported that its costs decreased by 12% in Q4, as CEO Charlie Scharf’s cost-cutting and restructuring efforts took effect. The company’s stock surged more than 5%.

In Q4, non-interest expenses totaled $13.9 billion, and net interest income is expected to rise by 1% to 3% this year, surpassing analyst expectations.

Charlie Scharf stated that the bank’s financial performance will continue to improve. Over the past 12 months, Wells Fargo’s stock has risen by 58%, partly due to Trump’s election.

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7. NYC Apartments Expected to Rise 7.3%

The New York City Department of Finance’s analysis indicates that apartments in NYC valued over $1 million could increase by 5.7% to $1.6 trillion in the upcoming fiscal year starting July 1, mainly due to housing shortages and high interest rates affecting sales.

The value of co-ops, condominiums, and rental apartment buildings is expected to rise by 7.3%, driven by limited inventory. Brooklyn’s residential values are projected to rise by 9.4%, and rental apartment buildings may see a 15% increase.

Property taxes are NYC’s largest source of revenue, accounting for a third of total tax income and serving as the primary collateral for municipal bonds.

Single-family properties are expected to increase in value by 6%, with Staten Island leading the charge.

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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.