Key Developments

  • US January CPI surged 0.5% MoM (vs. 0.3% expected), pushing annual inflation to 3.0%, with notable increases in shelter costs (0.4%), energy prices (1.1%), and food prices (0.4%)
  • Treasury yields spiked: 10-year up 8.8bps to 4.63%, 2-year up 7.2bps to 4.355%
  • Reports emerge of potential Trump-brokered Ukraine-Russia peace negotiations, with Putin reportedly ready to negotiate immediately

Market Impact

  • US equities mixed: Dow (-0.5%), S&P 500 (-0.27%), Nasdaq (+0.1%)
  • European markets resilient: DAX (+0.5%), STOXX 50 (+0.3%)
  • Asian markets surged: Hang Seng (+2.7%), KOSPI hits three-month high
  • Oil plunged over 3%: Brent at $74.99, WTI at $71.39 on peace talk prospects
  • Gold stable around $2,903.08 despite volatility

Strategic Playbook

Short-Term (Traders)

  • Consider tactical long positions in European equities, particularly export-heavy sectors
  • Watch for oversold conditions in defense stocks as peace talks progress
  • Monitor commodity volatility, especially in oil markets
  • Consider EUR/USD positions as pair approaches 1.0440 resistance

Long-Term (Investors)

  • Maintain higher-than-normal cash positions given inflation uncertainty
  • Consider rotating into quality dividend payers as rates likely stay higher for longer
  • Evaluate 5% commodity allocation for portfolio volatility reduction
  • Focus on sectors benefiting from sustained higher rates

Forward Outlook

Catalysts

  • Upcoming US PPI and Weekly Jobless Claims
  • Further developments in Ukraine peace negotiations
  • Key earnings: Nestle, Siemens, Applied Materials
  • ECB monetary policy signals

Risk Radar

  • Fed policy pivot timing remains uncertain given stubborn inflation
  • Peace talk headlines could create significant commodity price volatility
  • Potential sanctions relief impact on energy markets
  • Shifting stock-bond correlation dynamics

Note: Data as of February 13, 2025, market close. Past performance does not guarantee future results.