1. Yen Reaches Multi-Month High；
2. IRS to Lay Off 6,700 Workers；
3. Walmart’s Conservative Full-Year Outlook Raises Concerns；
4. Rivian Finally Achieves Profit Target；
5. Mixue Ice City IPO Raises $444 Million；
6. U.S. Mortgage Rates Fall for 5th Straight Week；
7. Homebuilder Stocks Near Bottom of S&P 500
1. Yen Reaches Multi-Month High
On Thursday, the Japanese yen appreciated against the U.S. dollar, hitting its highest level since December. Market sentiment is leaning toward the expectation that the Bank of Japan may raise interest rates sooner than anticipated.
On Thursday, the yen rose by 1.3%, reaching a high of ¥149.54 per U.S. dollar, the strongest since December 6. The yield on Japanese government bonds also rose, with the 10-year bond yield reaching its highest level since 2009.
Swap market data shows an 84% chance that the Bank of Japan will raise rates in July, up from 70% in early February.
The recent rise in Japan’s inflation rate indicates that consumers are beginning to spend again.
______
2. IRS to Lay Off 6,700 Workers
Bloomberg reports that over 6,700 employees at the U.S. IRS will be laid off. These employees, who were still in their probationary period, will be notified by paper mail due to issues with the IRS’s email system.
The layoffs are part of a cost-saving strategy across federal agencies. Interestingly, the U.S. Department of Energy recently laid off nuclear weapons experts, only to quickly rehire them. Similarly, the U.S. Department of Agriculture unexpectedly laid off employees working to control the avian flu outbreak.
______
3. Walmart’s Conservative Full-Year Outlook Raises Concerns
On Thursday, retail giant Walmart forecast adjusted earnings per share for 2025 to range between $2.50 and $2.60, well below analysts’ expectations. This indicates that even the world’s largest retailer is not immune to the broader economic slowdown.
The news caused Walmart’s stock to drop by 5.6%, dragging the broader market lower. Over the past 12 months, Walmart’s stock had risen by 77%.
Bloomberg analysts note that Walmart typically provides conservative forecasts at the start of the year, which are then adjusted upward later. The company is not facing new challenges, but investor expectations may be too high.
The CFO acknowledged significant uncertainties surrounding the global economy, geopolitical environment, and consumer habits.
______
4. Rivian Finally Achieves Profit Target
Electric vehicle company Rivian announced it achieved a total profit of $170 million in the fourth quarter, reaching a long-standing profitability goal. However, the company warned that changes in government EV policies could introduce significant uncertainty.
Rivian’s progress reflects its efforts to improve its supply chain and control costs. In the fourth quarter, the average profit per vehicle sold reached $12,000, a significant improvement from the $39,000 loss per vehicle in Q3.
However, Rivian expects to sell only 8,000 vehicles in Q1, well below its fourth-quarter target of 14,000 vehicles.
Rivian expects to sell between 46,000 and 51,000 vehicles in 2025, down from 51,579 vehicles sold last year.
Source: Bloomberg – Rivian Posts First Gross Profit as EV Policy Risks Loom
______
5. Mixue Ice City IPO Raises $444 Million
China’s largest bubble tea chain, Mixue Ice City, plans to raise HKD 3.45 billion ($444 million) in its Hong Kong IPO.
According to a statement released today, Mixue Ice City will sell 17.06 million shares at HKD 202.5 per share. If demand exceeds expectations, the number of shares sold may increase.
Last year, Mixue’s competitors, Cha Ba Dao and Gu Ming, also completed their listings, but their stock prices sharply declined after an initial increase.
The number of Mixue franchise stores now exceeds Starbucks’ global store count.
Source: Bloomberg – Bubble-Tea Giant Mixue Seeks $444 Million in Hong Kong IPO
______
6. U.S. Mortgage Rates Fall for 5th Straight Week
The latest statement from Freddie Mac reveals that the 30-year mortgage rate fell to 6.85% last week, continuing its decline for the fifth consecutive week. However, the current rate is still higher than the 6.5% rate at the end of October last year.
High mortgage rates have limited market entry, and sales have been suboptimal.
Redfin reports that the supply shortage that has plagued the market in recent years has shown some signs of improvement. The number of newly listed homes rose by 4.2% in the month ending February 16, reaching a three-year high.
Although rates remain high, their volatility has decreased, and buyers are gaining more confidence in entering the market.
______
7. Homebuilder Stocks Near Bottom of S&P 500
Data from Tuesday showed that confidence among U.S. homebuilders has dropped to a five-month low. Wednesday’s data also revealed a significant decline in new home development. Luxury homebuilder Toll Brothers and other companies have reported disappointing earnings.
This series of data points indicates that profits in the real estate industry are becoming harder to achieve due to high mortgage rates and trade war concerns.
Since President Trump’s election, homebuilders have been the second-worst performing sector in the S&P 500, with a 24% drop. Over the past two years, the iShares US Home Construction Index has risen by 70%, outperforming the overall S&P 500, which gained 53%.
The demand for options to hedge against homebuilder stock declines has notably increased, suggesting that investors expect further downturns.
______
This report contains information sourced from Financial Times, Bloomberg, The Real Deal, and other financial news media.