And it looks like they were right. US inflation in January did not fall as quickly as expected. Although the year-on-year rise in consumer prices decelerated from 3.4% to 3.1% between December and January, economists were expecting a sharper slowdown to 2.9%. As for core inflation, it remained steady at 3.9%, whereas specialists were expecting it to fall. Even economists who are rather optimistic about price trends recognize that the January report is bad. It seems clear that monetary policy will not change immediately. In fact, the Fed has won this round against the market: it had warned against over-optimism on the inflation front and spoke about three rate cuts maximum in 2024, starting this summer. And investors now agree: swaps are now predicting only three or four 25bps cuts in US rates this year, the first of which could be in June or even July. March rate cuts are just a pipe dream now.

Higher-than-expected inflation meant less flexible monetary policy. As a result, bond yields jumped, to 4.3% for the US 10-year, for example. The dollar rallied against the major currencies, while gold retreated below USD 2,000 an ounce for the first time since December.

Now, the market could go two ways: investors could just conclude that conditions are less favorable than expected, but that the most important thing is that rates will come down in a few months' time. Or we could be entering a much more uncertain phase, in which investors' anxiety will increase as they speculate on the unimaginable: could consumer prices start to rise again and crush all hopes of a rate cut? The market, which still doesn't have the answer to this question, has become a little tense, as evidenced by the jump in the VIX fear index, which last night hit its highest level since the beginning of last November. Upcoming price-related statistics will take on greater importance, starting with January's US producer prices, announced on Friday.

Meanwhile, there was some good news today  on the inflation front. In Britain, consumer price inflation remained at 4% in January, while economists expected an increase. In addition, U.S. producer prices fell more than initially thought in December, revised data from the Labor Department's Bureau of Labor Statistics showed today. The producer price index for final demand dropped 0.2% in December instead of the 0.1% fall that was previously reported. This is due to a new method, which removes seasonal fluctuations from the data.

In Asia Pacific, most of the markets that were closed for the Lunar New Year have resumed trading, with the exception of mainland China, which will not reopen until next Monday. In Hong Kong, for the first weekly session, the Hang Seng had its ups and downs, but it ended in the green. Japan, which was on a roll yesterday, lost 0.5% after the yen held out against the US dollar. South Korea and India also ended in the red. Australia recorded its third consecutive session of decline. Today, European leading indicators are bullish, with the Euro Stoxx 600 up 0.5%. On Wall Street, futures on the main three indexes are also in the green, with +0.6% for the Nasdaq 100.

Today's economic highlights:

The UK consumer price index, eurozone industrial production, and US crude oil inventories are on the agenda; The full earnings calendar is here. 

The dollar remains steady at EUR 0.9337 and GBP 0.7962. The ounce of gold fell back to USD 1991. Oil rallied a little, with North Sea Brent at USD 82.72 a barrel and US light crude WTI at USD 77.88. The yield on US 10-year debt rose from 4.18% to 4.32%. Bitcoin is trading at USD 51,770.

In corporate news:

  • Kraft Heinz loses 1.3% in pre-market trading after reporting fourth-quarter sales below consensus, as price increases affect demand for its products.
  • Airbnb loses 3.7% in premarket trading despite the group's publication of a sales forecast for the current quarter that exceeded Wall Street expectations. However, the online rental services specialist posted a quarterly net loss of $349 million, as outstanding tax liabilities in Italy weighed on its results.
  • Robinhood Markets climbed 12.7% in pre-market trading, as the online broker reported higher fourth-quarter revenues, up to $471 million from $380 million a year ago.
  • Uber Technologies rises 6.6% to $73.57 in premarket trading after the VTC and meal delivery giant announces a $7 billion share buyback plan, which could lead to a record opening.
  • Lyft soared 16.2% in pre-market trading on Tuesday, after reporting adjusted quarterly earnings ahead of the LSEG consensus. Its Ebitda forecast for the current quarter also exceeded expectations.
  • Instacart fell by 10.2% in premarket trading after the food delivery specialist reported fourth-quarter sales below the LSEG consensus on Tuesday evening. The group is also to cut 250 jobs, or 7% of its workforce, saying it wants to concentrate on "promising" initiatives.
  • MGM Resorts International was down 3.2% in pre-market trading, as the casino operator reported a 12% drop in net sales from its regional operations in the fourth quarter on Tuesday evening, against a backdrop of strikes.
  • Intuitive Machines plunged 8.9% in premarket trading after the aerospace company announced the postponement of its launch of a lunar robot, less than two hours before the scheduled launch time.
  • Akamai Technologies dropped 5.7% in pre-market trading, as the IT services group reported fourth-quarter sales below expectations.
  • Motorola Solutions announced on Wednesday that it had acquired Silent Sentinel, a British specialist in long-range thermal imaging cameras, for an undisclosed sum, in order to strengthen its video security capabilities in locations such as airports and oil and gas sites.
  • Vizio soars 21.6% in after-hours trading after the Wall Street Journal reports that WALMART is discussing a takeover of the connected TV manufacturer for more than $2 billion.
  • VF Corp, owner of The North Face, Vans and Timberland brands, said on Tuesday it would appoint a new member to its board of directors and select another with the help of activist investor Engaged Capital.

Analyst recommendations:

  • Bae Systems: Jefferies downgrades to hold from buy with a target price raised from GBX 1150 to GBX 1210.
  • Biogen: Wells Fargo downgrades to equalweight from overweight with a price target reduced from USD 315 to USD 240.
  • Bytes Technology Group: Jefferies downgrades to hold from buy with a target price of GBX 670.
  • Cameco Corporation: William O'Neil & Co Incorporated drops coverage on the stock.
  • Citigroup: Piper Sandler & Co upgrades to overweight from neutral with a price target raised from USD 56 to USD 63.
  • Datadog: Loop Capital Markets maintains its buy recommendation and raises the target price from USD 120 to USD 160. Capital One Securities maintains its overweight recommendation and raises the target price from USD 116 to USD 148. Canaccord Genuity maintains its buy recommendation and raises the target price from USD 120 to USD 150.
  • Ecolab: JP Morgan upgrades to neutral from overweight with a target price raised from USD 200 to USD 220. Deutsche Bank maintains its hold recommendation with a price target raised from USD 180 to USD 230. Jefferies maintains its hold recommendation and raises the target price from USD 183 to USD 225. Baird maintains a neutral recommendation with a price target raised from USD 184 to USD 232.
  • Ferguson: HSBC maintains its buy recommendation and raises the target price from GBP 143.20 to GBP 176.70.
  • Globalfoundries: Citi downgrades to neutral from buy with a price target reduced from USD 70 to USD 56.
  • Gsk: Intron Health upgrades to buy from hold with a price target raised from GBP 14.50 to GBP 19.
  • Hp Inc: HSBC upgrades to buy from hold with a price target raised from USD 30 to USD 33.
  • Incyte Corporation: JMP Securities downgrades to market perform from market outperform.
  • Lpl Financial Holdings: Morningstar downgrades to hold from buy with a target price of USD 289.
  • Nxp Semiconductors: Fubon Securities downgrades to neutral from buy with a target price of USD 227.
  • Palantir Technologies: HSBC downgrades to hold from buy with a target price of USD 22.
  • ROLLS-ROYCE: Jefferies maintains its buy recommendation and raises the target price from 310 to GBX 390.
  • Synchrony Financial: Morningstar upgrades to buy from hold with a price target raised from USD 42 to USD 47.
  • Transunion: JP Morgan maintains its overweight recommendation and raises the target price from USD 69 to USD 84. Barclays maintains its equalweight recommendation and raises the target price from USD 55 to USD 75.
  • Walt Disney Company: Fubon Securities maintains a neutral recommendation with a price target raised from USD 95 to USD 115.
  • Waste Management: Scotiabank maintains its sector perform recommendation and raises the target price from USD 170 to USD 211.
  • Wizz Air Holdings: Deutsche Bank upgrades to hold from sell with a target price raised from GBX 1800 to GBX 2300.