U.S. Indices closed in the red on Tuesday with the initial rally seen after the soft-leaning CPI faded. Downside was led by the Dow, while Russell and Equal Weight S&P were flattish with both the S&P and NASDAQ closing lower by 0.2%. Sectors were more mixed with Energy and Defensives leading the gains, whilst Financials and Consumer Discretionary lagged. The downside in Financials was led by the big banks after JPM was hit post earnings, weighing on peers – hence Dow underperformance, too, and also not the best start to the Q4 ’25 earnings season. Meanwhile, the upside in Energy stocks largely tracked crude prices higher due to ongoing geopolitical concerns, mainly around Iran. President Trump has advised US citizens in Iran to “get out”, whilst also telling Iranian protestors that “help is on its way”. T-Notes bull steepened after the soft CPI report, but ultimately the report does little to change the Fed calculus, with officials likely awaiting more reports and confirmation of inflation returning to target before cutting, unless there is a drastic downturn in the labour market. The Dollar was ultimately firmer after paring the initial post-CPI weakness as geopolitics took focus after the punchy Trump comments on Iran. The Japanese Yen continues to lag after Takichi confirmed snap elections. Metals were mixed with gold prices lower, albeit silver held onto gains as volatility continues. Attention on Wednesday turns to US PPI and Retail Sales, and potential SCOTUS opinions on Trump’s tariffs. Overall, the CPI report leaned soft. The headline M/M rate rose 0.3%, in line with expectations, while the core rate rose 0.2%, beneath the 0.3% forecast. The headline Y/Y print rose 2.7%, in line with forecasts and matching the November print, while the core Y/Y rose 2.6%, below the 2.7% forecast and matching the prior pace. The supercore was also maintained at 2.7%. The report is welcome as it does not show any further upward pressure in prices, albeit it remains sticky above target. This should not change the Fed calculus too much, with Wall Street Journalist Timiraos noting the Fed will likely want to see more evidence that inflation is levelling off and then declining before cutting rates. Money markets are not pricing in cuts until the June or July meeting. If inflation were to ease in the upcoming months, this could bring forward rate cut bets, particularly if aligned with a weakening labour market. Following the data, Citi group are now expecting a 0.31% M/M increase in core PCE inflation; “Details like stronger restaurant prices and recreational services will boost PCE, while soft recreation equipment, tax services, and communications services should weigh on PCE”. The desk also notes the data would apply 2.9% Y/Y, and 2.8% for Q4 vs Q4, albeit PPI data with October and November due this afternoon, these expectations will change. Fed Member Williams said monetary policy is well-positioned ahead of the January decision amid a favourable outlook, noting policy is now closer to neutral, but still described it as moderately restrictive. Williams expects that we will see the labour market stabilise this year. He also echoed guidance, noting that in considering the extent and timing of additional adjustments, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. Williams added that the actions taken by the FOMC have moved the modestly restrictive stance of monetary policy closer to neutral. On inflation, underlying trends have been pretty favorable and expect inflation to be just under 2.5% for this year as a whole, before reaching 2% in 2027, and anticipate it will peak at around 2.75 to 3% sometime during the first half of this year. The New York Fed president added that inflation expectations remain well anchored. He also said the economic outlook is favourable and expects the economy to grow above trend this year, with real GDP growth between 2.5 and 2.75%. GDP growth looks to have been somewhat above 2% last year, and it will likely pick up some this year. Williams added that downside risks to employment have increased as the labour market cooled and expects that they will see the labour market stabilise this year and then strengthen somewhat thereafter. Elsewhere, Oil closed higher by 2.7% while Gold was flat.
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For anyone following my Platinum Service it made 410 points yesterday and is now ahead by 2132 points for January having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 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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