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US stocks consolidated gains near record highs, as soothing inflation data from yesterday was blurred by concerns over Federal Reserve (Fed) independence and broader political noise.

Looking at the data, the US CPI came in largely in line with expectations. Headline inflation held steady at 2.7% y/y, while core inflation eased to 2.6% — slightly below consensus. Cherry on top for Fed doves: real earnings fell in December, a development that could help cool demand and keep inflation in check.

Still, the US 2-year yield hovered above the 3.50% mark, while the probability of a March rate cut slipped below 30%, down from around 50% last week. US PPI data is due today, but even a soft print may fail to revive dovish Fed expectations.

Why? Because market pricing is no longer driven solely by economic data — politics is playing an increasingly central role.

In particular, broad support for Jerome Powell amid the DOJ-related controversy appears to be influencing markets. JPMorgan CEO Jamie Dimon said yesterday that attacks on the Fed by the Trump administration could “backfire and push borrowing costs and inflation higher.” He’s right: cutting rates more than necessary today risks higher inflation tomorrow, keeping borrowing costs elevated for longer.

That dynamic is pushing longer-dated yields higher and steepening the US yield curve — hardly the outcome the White House would prefer. Still, Donald Trump appears unmoved. Either way, with the next Fed Chair announcement approaching, concerns around Fed independence are likely to remain firmly in the headlines. These worries continue to weigh on the US dollar and Treasuries, while supporting gold and silver, both of which are rallying to fresh records. Silver traded above $91 per ounce in Asia this morning.

On the US economy, Jamie Dimon reiterated that growth remains “resilient,” noting that consumers continue to spend and businesses are generally healthy.

Turning to JPMorgan’s own results, Q4 earnings were solid overall, with stronger-than-expected profits helped by trading and interest income. However, earnings were held back by a large one-off cost linked to the Apple Card business, while dealmaking revenue missed estimates due to transaction delays into this quarter. The stock fell more than 4% post-earnings, the S&P 500 and Nasdaq 100 also fell.

Still, JPMorgan’s broader assessment of the US economy remained constructive — supportive for the wider equity complex. Today, Bank of America, Wells Fargo and Citigroup head to the earnings confessional.

Zooming out, S&P 500 companies are expected to deliver more than 8% earnings growth overall. Technology is once again expected to do the heavy lifting, with Q4 revenues seen growing around 18–20% — strong, but moderating compared with prior quarters.

That said, US tech is priced close to perfection. Impressive headline numbers alone may not be enough to spark fresh rallies. Investors will dig deeper into how revenues and loans are booked, ensuring the figures reflect sustainable growth rather than hidden risks.

Tech investors see two key risks to the AI rally: overspending and over-leverage. Companies addressing both are better positioned to extend gains — namely those with low debt, ample cash, and exposure across the AI supply chain, from chips to models and applications. Google, Microsoft and Amazon fit that profile.

For those seeking cheaper valuations, Asian tech remains attractive. South Korea’s Kospi hit another record today, the Hang Seng is consolidating near last October’s peak, and Japan’s Topix is also at fresh highs, supported by expectations of stronger fiscal stimulus should Takaichi consolidate power in a snap election.

Beyond tech, a softer US dollar and still-low energy prices have supported emerging-market equities. The World Bank raised its global growth forecast, saying the world economy has proven “surprisingly shock-proof” despite a “historic” escalation in trade tensions. The US economy could see a meaningful growth boost, while China and India are expected to grow near 5% and up to 6.5% respectively — a supportive backdrop for EM stocks.

On trade, the US Supreme Court last Friday offered little clarity on the legality of tariffs imposed under questionable justifications. A ruling is expected today. If deemed unlawful, the US may need to refund tariff revenues to companies that filed complaints last year, potentially widening the US budget deficit. That would be negative for US bonds but welcome relief for exporters to, and importers from, the US — including autos, consumer staples and tech.

But the tensions are never over.

Donald Trump said he would impose a 25% tariff on goods from countries doing business with Iran amid nationwide protests and a violent crackdown in the country. China, one of the largest buyers of Iranian oil, is watching closely. Such a move could reignite US-China trade tensions.

Soybean futures — a barometer of US-China trade relations — fell on the latest developments.

As for oil, Iranian unrest is adding upward pressure to prices, alongside attacks near the Caspian Pipeline disrupting Kazakhstan’s exports, compounding delays from harsh winter weather and mooring damage. US crude moved above its 100-day moving average and climbed to around $60 per barrel. However, US crude inventories rose by roughly 5.3 million barrels last week — far above expectations for a 2 million-barrel build and the largest increase in two months — suggesting that once temporary supply disruptions fade, prices may drift back toward a bearish trend.

In focus today

Today the French Prime Minister faces two motions of no confidence for the first time since October. The far-right RN and far-left LFI has filed to separate motions over the government's failure to derail the EU's Mercosur trade agreement, which was adopted on Friday. The motions are unlikely to pass, with the left-wing refusing to back the RN's motion and the Socialists rejecting the LFI's motion. While the risk of a government censure is small the impact in the event of no-confidence is higher than usual as Macron has said it would likely lead to snap elections. These could take place together with the municipal elections in March.

In the US, the Producer Price Index (PPI) and retail sales will be released for November after a lengthy delay caused by the government shutdown. November CPI was distorted by delayed data collection, and similar issues could affect the PPI figures. Retail sales will be interesting to follow given that US economic growth increasingly relies on private consumption. NY Fed's Williams is scheduled to speak this evening.

The US Supreme Court rescheduled its opinion day, initially planned for last week, to today. This could include its first ruling on President Trump's global tariffs.

Economic and market news

What happened overnight

China's December trade data exceeded expectations, with exports rising 6.6% y/y, significantly above the expected 3%. This robust performance drove China's annual trade surplus to a record high, highlighting resilient external demand despite renewed tariff tensions in 2025. Strong export growth has helped offset weak domestic demand. Shipments to the US fell sharply in December, dropping 30% y/y, while imports declined 29%, signalling a significant reduction in US-China trade throughout 2025. Amid these tensions, China's exports fell 20%, as Chinese exporters increasingly redirected trade routes and increased shipments to non-US markets.

What happened yesterday

In the US, December CPI surprised to the downside. Headline inflation rose +0.3% m/m SA, while core CPI grew at a slower pace of +0.2% m/m (cons: +0.3% m/m). The downside surprise was largely attributed to weaker core goods prices, while services inflation rebounded modestly across shelter, health care and other services, largely in line with expectations. Energy and food inflation surprised slightly to the upside, resulting in a mixed inflation picture for December. Markets reacted dovishly, with UST yields declining and EUR/USD edging higher. As the Fed is focused on services inflation, policymakers may await January data before reassessing trends.

The US small business confidence index increased by 0.5 points to 99.5 in December. The NFIB's December survey indicated that US small business optimism improved towards the end of 2025. Both realised and expected price changes, which historically correlate well with CPI, have remained relatively steady in recent months. Hiring plans also showed little change, although they remain below pre-pandemic levels. Overall, the survey suggests that firms perceive a stabilising business environment following a volatile year.

Equities: Equities grinded lower yesterday, in our view despite and not because of the inflation figures. The retreat was undramatic, with the S&P 500 down 0.2% and the Stoxx 600 down 0.1%. The strong cyclical run since the start of the year took a breather. Most cyclical sectors traded lower, primarily banks following Q4 reporting. The rotation out of US tech and into value cyclicals continued, albeit mildly, with industrials and materials outperforming the broader market. US futures point to a similar opening today.

FI and FX: EUR/USD consolidated in the mid-1.16-1.17 range as the broad USD modestly firmed across G10 FX in yesterday's session, following an initial dip after the slightly softer-than-expected US December core CPI print. The IEEPA Supreme Court ruling could emerge today and represents a far more significant catalyst for near-term USD direction. USD/JPY continues to rise as speculation over a snap election grows, which would likely open the door for a pro-stimulus agenda from PM Takaichi. Global swap yields ended yesterday's session largely unchanged. In Sweden, the first SGB auction for the year will be held today, with the auction size having been increased from SEK6bn last year to SEK8bn. We remain negative 10y SGB ASW. EUR/SEK edged higher yesterday after failing to breach the 10.70 level, while EUR/NOK is slightly lower overnight.

Key Highlights

• GBP/USD found support near 1.3400 and recovered some losses.
• It cleared a key bearish trend line with resistance at 1.3430 on the 4-hour chart.
• EUR/USD is facing heavy resistance near 1.1700.
• Gold remains elevated and might rise further above $4,620.

GBP/USD Technical Analysis

The British Pound dipped below 1.3450 and tested 1.3400 against the US Dollar. GBP/USD traded as low as 1.3391 and recently started a fresh increase.

Looking at the 4-hour chart, the pair cleared a key bearish trend line with resistance at 1.3430. There was a move above the 50% Fib retracement level of the downward move from the 1.3567 swing high to the 1.3391 low.

The pair remained well above the 200 simple moving average (green, 4-hour) and surpassed the 100 simple moving average (red, 4-hour). Immediate resistance sits near 1.3500 or the 61.8% Fib retracement.

The first key hurdle is seen near 1.3525. A close above 1.3525 could open the doors for a move toward 1.3565. Any more gains could set the pace for a steady increase toward 1.3700.

If there is no move above 1.3500, there could be a bearish reaction. On the downside, immediate support is near the 1.3450 level. The first major area for the bulls might be near 1.3400. A close below 1.3400 might spark heavy bearish moves. The next support could be 1.3380, below which the bears might aim for a move toward 1.3320.

Looking at Gold, the bulls remain in action and might soon aim for more gains above $4,640 and $4,650 in the near term.

Upcoming Key Economic Events:

• US Retail Sales for Nov 2025 (MoM) – Forecast +0.4%, versus 0% previous.
• Fed's Miran speech.
• BoE's Ramsden speech.

Brent Crude oil ⬆️ Buy

• Brent Crude oil rising inside impulse wave c
• Likely to rise to resistance level 68.00

Brent Crude oil recently broke the resistance area between the resistance level 62.00, resistance trendline of the daily down channel from October and the 38.2% Fibonacci correction of the downward impulse from September.

The breakout of this resistance area accelerated the active impulse wave c – which belongs to the short-term ABC correction ii from December.

Brent Crude oil can be expected to rise to the next resistance level 68.00 (target for the completion of the active impulse wave c).

USDJPY ⬆️ Buy

• USDJPY broke resistance area
• Likely to rise to resistance level 160.00

USDJPY currency pair recently broke the resistance area between the long-term resistance level 158.70 (which started the sharp downtrend in January) and the resistance trendline of the weekly up channel from April.

The breakout of this resistance area accelerated the active impulse waves v and 3 – which belong to the extended impulse wave (3) from April.

Given the clear daily uptrend, USDJPY currency pair can be expected to rise to the next resistance level 160.00 (target for the completion of the active impulse waves v and 3).

Oil prices accelerated higher today, with WTI decisively breaking above 60 level as markets rebuilt geopolitical risk premium. Traders are factoring in a cluster of geopolitical risks, including potential exclusion of Iranian exports, renewed supply uncertainty around Venezuela, ongoing talks surrounding the Russia-Ukraine war, and broader strategic tensions linked to Greenland.

In particular, Iran is central to the current repricing. As one of the top producers within OPEC, Iran has been hit by its largest anti-government protests in years. Economists estimate that unrest in Iran has already added roughly USD 3–4 per barrel in geopolitical risk premium.

Additionally, the forceful government crackdown has drawn sharp warnings the US, including the threat of possible military action. The late upleg in oil prices appeared to be triggered right after President Donald Trump warned any country doing business with Iran would face a 25% tariff on all trade conducted with the US, a move that risks tightening Iran’s effective export channels.

Technically, WTI is clearly in near-term upside acceleration as the rebound from 54.98 extends. It's now targeting 161.8% projection of 54.98 to 58.96 from 55.79 at 62.21. If the move is corrective as currently seen, that 62.21 area should act as a natural cap.

However, sustained break above 62.21 would argue the rally is impulsive rather than corrective, opening the case for a broader bullish trend reversal. Such a development would mark a significant shift in market structure.

Indeed, the daily chart signals support that possibility. WTI has successfully defended key support at 55.20 (2025 low), formed bullish convergence on D MACD, and reclaimed the 55 D EMA decisively. A confirmed break above 62.21 would raise the probability that the entire decline from 78.87 (2025 high) is reversing. That would open up further rise through 38.2% retracement of 78.87 to 54.98 at 64.10.

St. Louis Fed President Alberto Musalem said he sees little justification for further near-term easing, arguing that the Fed’s policy rate is already “right around neutral.” Excluding inflation, Musalem estimates the real policy rate at roughly 1%, and warned it would be "inadvisable" to push policy into an accommodative stance at this stage.

Musalem said he supported the December rate cut due to a slightly elevated risk to the labor market alongside moderating concerns about accelerating inflation. However, he emphasized that additional easing would only be warranted if the labor market weakens more than expected and inflation falls below 2%, allowing policy to be eased without becoming stimulative.

Looking ahead, Musalem expects the US economy to grow at or above potential in 2026, supported by "robust tailwinds" from fiscal stimulus and the lagged effects of prior rate cuts. He said the labor market as cooling in an orderly fashion and remaining resilient, with unemployment near its neutral level and job growth around breakeven rates of roughly 30k to 80k per month.

WTI Oil price extends steep rally into fourth consecutive day, as growing tensions over Iran fuel fears of potential supply disruptions. Adding to strong uncertainty was the latest threat from President Trump that he will impose a 25% tax to all countries that buy oil from Iran.

Slight optimism from Venezuela, where the situation is calmer and outlook for normalization of oil supply, did not make significant counter effect that kept oil prices rising.

Today’s rally (oil was up around 2.7% for the day) broke important barriers at $60 (psychological), 60.25 (100DMA) $60.76 (Fibo 76.4% of $62.58/$54.87 descend) and $61.00 (round figure) and probed above the top of descending daily Ichimoku cloud ($61.18).

Improving daily studies support the action, though stretched indicators suggest that bulls may take a breather.

Limited dips are likely to mark positioning for fresh push higher, as geopolitical situation is fragile with serious risk of further escalation, which would spark stronger rally of oil prices.

Potential dips should find firm ground above broken $60 level to keep bulls alive, with sustained break above daily cloud to unmask targets at $62.24 (200DMA) and $62.58/80 (tops of Oct 24 / Oct 9).

Res: 61.18; 61.40; 62.24; 62.58.
Sup: 60.76; 60.25; 60.00; 59.46.

Silver continues to trend higher despite warnings from overbought daily studies and hit new record high ($89.10) on Tuesday, following daily advance of nearly $6.

Precious metals continue to benefit from growing safe-haven demand, with silver being additionally supported by strong industrial demand and insufficient supply.

Bulls approach $90 level (round-figure), with psychological $100 barrier being unmasked.

Technical studies remain firmly bullish but overbought on all larger timeframes and traders should anticipate headwinds at $90 zone, but also to be aware of possible stronger dips on approach to $100 level, which marks very significant resistance.

Res: 89.10; 90.00; 91.30; 93.11
Sup: 87.22; 85.42; 83.40; 82.73