Key inflation data emerges with rate cuts in focus

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People shop in the produce section of a grocery store on September 12, 2023 in Los Angeles, California.

Mario Tama | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open gives investors access to everything they need to know, wherever they are. Like what you see? You can subscribe here.

What you need to know today

Nikkei rallies
Japan’s Nikkei crossed the 38,000 mark for the first time since 1990 on Tuesday, while the rest of the sector mostly advanced as well. The Nikkei 225 it rallied about 3%, and the Topix also won. Overnight in the US the blue-chip Dow closed at a new record. But the S&P 500 closed after the broad market index closed just above 5,000 for the first time on Friday. The tech-heavy Nasdaq Composite entered lower.

Confidence problem in China
The biggest problem in China is “a lack of confidence,” Standard Chartered CEO Bill Winters told CNBC. China’s stock market and inflation issues, along with its property woes, pose challenges to its prospects. “Outside investors in China lack confidence and domestic savers lack confidence,” Winters said.

China, Russia threat
A new survey showed that China and Russia are seen as less of a threat to Western populations now than a year ago. This is largely because public concern has shifted to non-traditional threats such as mass migration due to war or climate change and radical Islam.

The exchange rate of Bitcoin is going up
Bitcoin extended its gains, breaking through the $50,000 level on Monday. This is an important milestone since the launch of “spot ETFs” last month, a move above this key psychological level not only failed but resulted in selling and a few soul searching about these new bitcoin products, “said Antoni Trenchev, co-founder. from the crypto services company Nexo.

[PRO] China is still playing
Despite the problems facing the Chinese economy, there are several sectors and stocks that offer good investment opportunities, said Redmond Wong, market strategist at the investment company Saxo. “I’m still positive and optimistic about China right now,” he said.

The bottom line

Wall Street will get its first look at US inflation on Tuesday when the consumer price index for January is released.

This is a much anticipated report that once again draws attention to what the Fed might do on interest rates.

A lower-than-expected CPI reading will boost investors’ hopes that rate cuts could happen sooner rather than later.

However, a recent statement from Fed officials confirmed the central bank’s cautious tone and that more confidence in inflation data is needed to start the rate cutting cycle.

Federal Reserve Governor Adriana Kugler pointed out last week that there are signs that inflation is easing, but she said she wants to see more evidence of it.

“I am pleased with the progress on inflation, and hopeful that it will continue, but I will be watching the economic data closely to confirm that this progress continues,” said Kugler.

The President of the Minneapolis Fed, Neel Kashkari, also expressed a warning about cutting rates too quickly and said that he only expects two or three reductions this year.

Key economic data is also expected this week, including January’s reading on retail sales, production and the producer price index. These should give investors new clues about the Fed’s path to rate cuts amid the uncertainty.

— CNBC’s Jeff Cox contributed to this report

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