U.S. price inflation accelerated in January to 7.5% year-over-year after 7% in December, vs expectations of around 7.2%. A reading of the Bureau of Labor Statistics report shows that in addition to the recent spikes, it is food prices that have taken another hit. This new inflationary slippage immediately boosted expectations of a 50 basis point rate hike by the Fed, instead of the consensus 25 basis points. The market is predicting a 95.6% probability of this double dose at the time of the decision of the American central bank on March 16. The probability was 24% before the statistic.

Economists now believe that US key rates will have risen by 100 points by July, a scenario that was previously unthinkable. Overnight rate swaps tend to show that the Fed will raise rates by 1.75% this year, the equivalent of seven 0.25% increases. As for markets, they fear that an accelerated rate hike could derail economic momentum. They are looking for reassurance that even with an accelerated rate hike, rates will ultimately remain relatively low. But the Fed is clearly confused, as central banker James Bullard said yesterday that a big rate hike seems necessary to fight inflation... after saying ten days before that a half-point rate hike in March would not help much.

This explains the hesitation of indexes yesterday. Wall Street fell, then flirted with gains, then fell again, dragged down by the technology sector. The Nasdaq gave up 2.33% at the close and the S&P500 1.84%. The decline in bonds pushed the yield on 10-year US debt up to the symbolic 2% mark, without much surprise in the end. Equity markets continue to adjust after a strong start to the week. In the end, the quality of corporate results did not weigh heavily against the inflationary mechanism.

 

Economic highlights of the day:

German inflation for January and the US consumer confidence index are the mains indicator of the day.

US inflation did not dent the dollar: it is trading at EUR 0.8767. The ounce of gold is up to USD 1830, and oil remains bearish at USD 91.04 for WTI and USD 92.42 for Brent. The 10-year T-Bond sees its rate rise to 2.03%, while the Bund has gained 7 points to 0.28%. Bitcoin is falling back to USD 43,600.

 

On markets:

* Apollo - The U.S. private equity firm is close to a deal to acquire Worldline's payment terminal business for $2.3 billion, the Wall Street Journal reported Friday, citing sources close to the matter.

* Under Armour - The U.S. sports equipment maker's shares fell 4.1 percent in premarket trading after it warned that its margin for the current quarter could be hurt by higher freight costs.

* Expedia - The online travel booking platform is up 4.6% in premarket trading after reporting better-than-expected adjusted fourth-quarter earnings on Thursday.

* Novavax- The company announced Thursday that its COVID-19 vaccine showed 80% efficacy against the coronavirus in adolescents aged 12 to 17 in a clinical trial of 2,247 participants between May and September 2021, when the Delta variant was dominant. Novavax shares are up 1.4% in pre-market trading.

* Tesla - The carmaker will open a design office in Beijing to design cars "Chinese style", shows a document published by the authorities of the Chinese capital. In addition, Tesla is being sued by a California public agency for racial discrimination in one of its factories. The stock is down 0.6% in pre-market trading.

* Didi - The stock of the Chinese VTC giant, which jumped 15.4 percent on Thursday in response to a stock market report suggesting a rise in Tencent's stake in the company, fell 5.1 percent in premarket trading on Friday after the internet and mobile services specialist denied it.

* European publishers, including Axel Springer, News UK and Conde Nast, filed a complaint with the European Commission against Google, a subsidiary of Alphabet, on Friday, claiming that the American group is exercising a stranglehold on them through advertising technologies.

* Australia on Friday dropped a lawsuit against Citigroup, Deutsche Bank and four former executives over a breach involving a $1.8 billion in 2015.

* Finland could formally sign the agreement this Friday to buy 64 F-35 fighter jets designed by Lockheed Martin, U.S. sources close to the project said Thursday.

* The Civil Aviation Authority of Singapore and Temasek, the city-state's sovereign wealth fund, announced Friday their intention to support Singapore Airlines' purchase of sustainable aviation fuel (SAF), an energy source that emits up to 70 percent less carbon than fossil fuels, from Exxon Mobil.

* Eli Lilly - The company announced Thursday that it has reached an agreement with the U.S. government to supply up to 600,000 doses of its COVID-19 antibody treatment still in development for at least $720 million.

* Oracle - The U.S. business software giant paid about $300 million for a new five-year sponsorship partnership with Formula One team Red Bull, whose driver Max Verstappen was crowned world champion, sources close to the matter said.

 

Analyst recommendations:

  • AstraZeneca: DZ Bank AG upgrades to hold from sell. PT up 6.4% to 9,200 pence.
  • Carpenter Technology: J.P. Morgan raised the recommendation to overweight from neutral. PT up 60% to $53.
  • Chemring: Jefferies downgrades from buy to hold, targeting GBp 300.
  • Coats: HSBC upgrades from hold to buy targeting GBp 73.
  • Coca-Cola: JP Morgan is positive on the stock with a Buy rating. Previously set at USD 64, the target price is raised to USD 65.
  • GlaxoSmithKline: DZ Bank AG cut its recommendation to hold from buy. PT up 3.6% to 1,700 pence.
  • Kellogg: J.P. Morgan downgrades to underweight from neutral. PT down 10% to $57.
  • Mattel: Monness Crespi Hardt adjusts price target to $32 from $28, reiterates buy rating
  • MGM Resorts International: Stifel lifts price target to $55 from $54, maintains hold rating
  • Motorola Solutions: Citigroup adjusts price target to $275 from $260, reiterates buy rating
  • Murphy Oil: Mizuho Securities upgrades to buy from neutral. PT up 32% to $42.
  • Rotork: Jefferies downgrades from buy to hold, targeting GBp 360.
  • Seagen: Stifel adjusts price target to $145 from $180, reiterates hold rating.
  • Snap: Citigroup adjusts price target to $41 from $53, maintains neutral rating
  • Standard Chartered: Credit Suisse downgrades to underperform from neutral. PT down 11% to 500 pence.
  • Twitter: Piper Sandler adjusts price target to $46 from $54, maintains neutral rating.
  • Uber: Canaccord Genuity adjusts price target to $65 from $75, reiterates buy rating
  • United Microelectronics: Masterlink Securities cut its recommendation to hold from buy.
  • Walmart: Exane BNP Paribas raised its recommendation on Walmart to neutral from underperform. PT inches down 0.1% to $136.
  • Walt Disney: BMO Capital adjusts price target to $175 from $165, maintains market perform rating