U.S. Indices closed mixed yesterday ahead of this afternoon’s key CPI release (S&P +0.1%, NASDAQ 100 -0.1%, DJIA -0.5%, RUSSELL 2000 +1.1%), despite futures seeing an initial bounce on a cool US PPI print on the headline. Thereafter, stocks and Treasuries saw choppiness as markets continued to remain tentative over the direction of US yields, with the latest Reuters poll suggesting 2/3 of bond strategists surveyed see the 10 Year yield surpassing 5% in 2025. Concerning data, as mentioned the PPI report saw equity futures and Treasuries bid, but strength faded in both the S&P and NDX throughout the day, while the Russell 2000 benefitted from short-duration treasuries strength. Outperformance was seen in Utilities, Materials, and Real Estate, whereas Healthcare and Communications were the biggest losers, with the former weighed on by Eli Lilly’s disappointing Q4 preliminary weight loss drug numbers. As mentioned, Treasuries were bought across the curve which steepened, though, gains notably were trimmed on longer duration. In FX, dollar strength faded after the PPI report, as gains were initially present despite reports US -President-elect Trump’s team is considering less aggressive tariffs to avoid inflation spikes (M/M hikes of 2-5%). As such, gains arrived in the G10 space on the Dollar weakness, with EUR and CHF outperforming while the Japanese Yen was the sole laggard in the red after Bank of Japan Deputy Governor switched to a more neutral stance (previous hawk), refraining from committing to a rate hike in the January meeting, citing caution on various upside and downside risks at home and abroad. Post-PPI, Fed pricing still has one full 25 basis point Fed rate cut in 2025, with the first cut seen by September. Elsewhere, crude prices took a breather from their recent surge, as initial Dollar strength weighed, then followed by growing optimism surrounding a Gaza ceasefire deal, with CBS News reporting Israel and Hamas agreed in principle to a ceasefire draft deal. The December PPI report was mixed ahead of the US CPI data, where it appeared soft on the headline and core metrics but a surge in airfares has upside risk for the PCE report on January 31st (two days after the FOMC on January 29th). Headline PPI rose +0.2% M/M (exp. 0.3%, prev. 0.4%), while the annual rate rose to 3.3% (exp. 3.4%, prev. 3.0%) The core metrics saw the monthly figure unchanged, despite expectations for a move up to 0.3% from 0.2%, while the annual measure was unchanged at 3.5% Y/Y after revisions (exp. 3.8%). Within the report, the PPI components that feed into PCE were mixed, where airline passenger services skyrocketed 7.2% M/M after declining 1.6% in November, potentially due to seasonal factors due to high demand over the holiday period. Meanwhile prices of portfolio management, physician care, home health and hospice care, nursing home care accelerated, while hospital inpatient care decelerated with outpatient care unchanged. Aside from the jump in airline services, the other components do not appear too concerning. In wake of the report, Capital Economics said it looks like core PCE prices rose at a rate of 0.27% M/M (prev. 0.1% M/M), while Pantheon Macroeconomics expects a 0.3% rise, both citing the jump in airline services. Regarding CPI, Pantheon Macroeconomics continues to look for an above-consensus increase in the headline and core CPIs tomorrow of 0.5% and 0.3%, respectively. However, the desk adds that “a run of better CPI and core PCE prints likely lies immediately ahead, provided the BLS correctly updates the seasonals and Mr. Trump holds back on immediately imposing new tariffs”. Elsewhere, Oil closed 1.66% lower on Tuesday while Gold rose 0.5%.
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For anyone following my Platinum Service it made 235 points yesterday and is now ahead by 856 points for January after closing December with a gain of 1997 points after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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