Markets:

• Gold up $9 to $2013
• US 10-year yields up 4.3 bps to 4.28%
• WTI crude oil up $1.20 to $79.23
• S&P 500 down 0.5%
• NZD leads, JPY lags

The new PPI studying initially appeared like it might kick off one thing like CPI did earlier within the week, albeit at a smaller scale. The greenback initially bought off, shares fell and yields popped however it did not final. The greenback highs for the day had been instantly after the discharge after which the questions began.

As I highlighted earlier than the discharge, there may be seasonal adjustment components at play in January BLS inflation information. CPI and import/export costs had been each surprisingly excessive and now PPI has joined in to finish the trio. These are three totally different information units however all are seasonally adjusted so possibly there’s something occurring? January is especially laborious to regulate for due to turn-of-the-year value resets.

Or possibly I am overthinking it. Fed officers in the present day once more dismissed the excessive inflation numbers, highlighting as an alternative that the pattern stays down. The large flip within the markets this week got here after the Powell leak on Tuesday and that has grown into the consensus.

In any case, the greenback gave again all its PPI positive factors in about 90 minutes after which continued even decrease in opposition to the euro, pound and Australian greenback. Nevertheless these overshoots had been later light as shares had been hit by late promoting. I am undecided if these late strikes in shares had been on choices expiration, Center East worries or the lengthy weekend however the strikes accelerated late. The air additionally got here out of SMCI so possibly that is an indication that the bubble is deflating in AI (although I doubt it is bursting).

Finally, most FX ranges completed near flat. I will be watching on Sunday for information out of the PBOC on charges and I think a number of the shopping for in Chinese language shares, copper and antipodeans on Friday had been associated to charge lower hopes/indicators, or another type of stimulus.

Commodities had been notable outperformers throughout the board with gold rapidly rebounding from the PPI quantity and oil bouncing round earlier than ending simply beneath the January excessive That will probably be an attention-grabbing spot to observe within the week forward.

Benefit from the lengthy weekend.