Daily Markets: Will We See a Peak in Consumer Prices?

Today’s Big Picture

Asian markets closed up across the board today as Hong Kong’s Hang Seng rose 2.79%, South Korea’s KOSPI gained 1.54% and Japan’s Nikkei advanced 1.92%. Additionally, India’s Sensex grew 0.88% while China’s Shanghai Composite and Taiwan’s TAIEX finished the day ahead 0.84% ​​and 0.48%, respectively. By mid-day trading, European equity indices are also up across the board.

Ahead of the December CPI report that will be released at 8:30 AM ET, US equity futures are ticking higher. The headline figure is expected to increase 0.4% MoM and 7.0% YoY, while the core reading that excludes food and energy is slated to rise 0.5% MoM and 5.4% YoY. For those looking for some context, if the headline figure comes in as expected on a YoY basis, it would be the first time since 1982. Should the December figures come in hotter as they have for the past 7 of 9 releases, there will likely be greater pressure on the Fed to ramp up its efforts to normalize monetary policy, meaning it might raise rates sooner than expected. Today’s report is followed by tomorrow’s December Producer Price Index release, and we suspect all eyes will be watching for adjustments in the CME FedWatch Tool that shows expected probabilities for monetary policy actions by the Fed as the December inflation data is digested.

Data Download


Per the World Health Organization, as of yesterday there have been over 308 million confirmed cases of COVID-19, including roughly 5.5 million deaths. Additionally, a total of almost 9.2 billion vaccine doses have been administered.

The Canadian province of Quebec has announced it will begin to levy an additional tax on unvaccinated citizens in the form a of a “Health Tax” that is planned to be applied, not to hospital services for Covid treatments, but instead to prescription drugs. While not a full-blown trend, Quebec is not the only jurisdiction to impose vaccine-related fines. In December, Austria said people who flout the country’s vaccine mandate could be charged up to approximately $ 5,171 every three months starting in 2022. In Greece, the government has recently mandated vaccines for everyone 60 and older, stating that refusal to vaccinate will result in a $ 144 monthly fine.

China ordered on Wednesday the suspension of six more US flights in coming weeks after a surge in passengers testing positive for COVID-19, taking it to 70 cancellations this year, which is not even two weeks old.

International Economy

November Eurozone Industrial Production MoM surprised to the upside posting 2.3% growth reversing the prior figures 1.3% contraction and handily beating estimates of 0.50%. On a YoY basis this figure contracted 1.5% surprising 2.6% to the downside. This brings the longer-term chart back into a traditionally normal range after the April 2020 plunge to almost -30% followed by the more than 40% growth peak in April 2021.

China announced December figures for CPI and PPI December with CPI reported at 1.5%, down from 2.3% in November and also short the expected 1.7%. PPI came in at 10.3% which extends the trend established in November but fell short of the 11.3% consensus. Observers of China’s central bank have postulated that these figures and continuing trends point to relatively dovish posturing. Goldman Sachs cut its 2022 forecast for China economic growth to 4.3%, down from 4.8% previously, in expectation of increased restrictions on business activity aimed at containing the omicron variant.

This morning the World Bank cut its global growth forecast for 2022 to 4.1% and reduced its outlook for 2023 to 3.2% vs. 5.5% in 2021. According to the organization, ongoing supply-chain bottlenecks, rising inflationary pressures and elevated levels of financial vulnerability in large parts of the world could increase the risks of a “hard landing.”

Domestic Economy

As discussed above, at 8:30 AM ET this morning the December Consumer Price Index will be published, and that report will likely dictate how US equity markets trade today. In addition, we will receive the usual weekly economic reports for the MBA Mortgage Applications Index and EIA Crude Oil Inventories.


Yesterday, the return of “buy the dip” strategy led the S&P 500 to close 0.9% higher yesterday, with information technology and energy sectors leading the way. Lending a helping hand was the drift lower in the 10-year Treasury yield to 1.75%, likely spurred by comments made during Fed Chairman Powell’s testimony before the Senate Banking Committee. That helped calm market watchers by reassuring that the Fed would carefully steer monetary policy back to more normalized levels. In particular, Powell shared “it’s a long road to normal from where we are no… and it really should not have negative effects on the employment rate.” Powell also argued that much of the inflationary pressures the US is experiencing will return to more normalized levels as well as supply-chain issues and labor force shortages ease. The Nasdaq Composite index closed 1.4% higher yesterday, while the Russell 2000 added 1.1% and the Dow Jones Industrial Average finished 0.5% higher.

As of last night’s market close, the major US stock market indices were as follows on a year-to-date basis:

  • Dow Jones Industrial Average: -0.2%
  • S&P 500: -1.1%
  • Russell 2000: -2.3%
  • Nasdaq Composite: -3.1%

Stocks to Watch

Apple (AAPL) supplier Foxconn (FXCOF) restarted production at its plant in southern India earlier today, roughly three weeks after it was closed because of protests over workers falling ill.

Europe’s largest meal delivery company, Just Eat Takeaway.com (GRUB) reported a 14% increase in orders in the fourth quarter, matching expectations and the company maintained its financial forecasts for 2022.

The UK’s Competition and Markets Authority announced a March 9 deadline for when the phase 1 decision will be announced regarding the investigation of Microsoft’s (MSFT) acquisition of Nuance (NUAN).

Sprague Resources (SRLP) received a proposal from Hartree Partners whereby Hartree would acquire all common units of Sprague for $ 16.50 per unit.

The New York Post reports DirecTV and Dish Network (DISH) are in fresh talks to merge after years of on-again, off-again wrangling, and multiple clampdowns from federal antitrust officials.

Johnson Controls (JCI) completed the acquisition of FogHorn, the leading developer of Edge AI software for the industrial and commercial Internet of Things (IoT) solutions.


Investors continue to await the IPO pricing for Justworks (JW), TPG, Inc. (TPG), and Verdant Earth Technologies (VDNT) this week. Readers looking to dig deeper into the IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Homebuilder KB Homes (KBH) is slated to report its latest quarterly results. We would continue to advise investors to be on watch for both positive and negative earnings announcements as we get closer to the December quarter earnings season. Those looking for more on what companies are reporting when, head on over to Nasdaq’s Earnings Calendar.

On the Horizon

  • Thursday, Jan. 13
    • US: Weekly Initial & Continuing Jobless Claims
    • US: Producer Price Index – December
  • Friday, Jan. 14
    • UK: Construction Output, Industrial Production & Manufacturing Production – November
    • US: Retail Sales, Industrial Production & Capacity Utilization – December
    • US: Business Inventories – November
    • US: University of Michigan Consumer Sentiment Index (Preliminary) – January

Thought for the Day

“If I had my way, I would remove January from the calendar altogether and have an extra July instead.” DahlRoald Dahl


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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