US Jan. producer prices rose 0.5% month over month, well above the 0.3% expected. On a yearly basis they climbed 2.9%, compared with forecasts of 2.6%. Last week's consumer inflation report showed that price pressures were cooling, but not disappearing. Now we know that at the wholesale level, they are still very much alive.

Inflation usually works in stages. Companies pay more for materials, transportation, and labor. Then they decide how much of that increase to pass on. Producer prices are the early warning system. When they surprise on the upside like this, it suggests that businesses are still facing rising costs and may soon try to protect their margins by charging more.

Economists had expected wholesale prices to rise modestly in January, slower than in December. That would have reinforced the idea that inflation is gradually bending lower. Instead, the data point in the opposite direction. Markets are no longer satisfied with "not terrible." They want clear progress. What they got was a reminder that the path down may be uneven.

Treasury yields, which had slipped below 4% on the 10 year note in anticipation of rate cuts, are now reassessing. A hotter PPI complicates the Federal Reserve's task. If upstream prices are accelerating, policymakers will be reluctant to ease too soon. The idea of the "Fed Put" only works if inflation cooperates. With producer prices running ahead of expectations, that safety net looks thinner.

Trade policy adds another layer of pressure. The Supreme Court recently voided most of last year's tariffs. President Trump responded with a temporary 10% global tariff that took effect this week. Tariffs function like taxes on imports. Companies sometimes absorb them, but often they pass them on. Stronger than expected producer prices raise the possibility that these new trade costs are feeding into the pipeline. If tariffs lift input prices, and businesses pass them through, inflation can reaccelerate even without a surge in demand.

So today's PPI report is not just a routine release. It suggests that inflation may not be fading on its own. It may be catching its breath before the next round.

Other signals are flashing caution. Oil prices are stabilizing as the United States and Iran prepare to resume nuclear talks next week. Energy costs influence everything from shipping to groceries, and any renewed spike would add to the pressure. Gold is on track for its seventh straight monthly gain, a streak not seen since 1973. Investors tend to buy gold when they feel uneasy about policy, geopolitics, or the purchasing power of money.

Credit markets are also drawing attention. The collapse of British mortgage lender MFS has unsettled parts of the private credit world. Major lenders could face losses. An Apollo Global fund with exposure to the same segment has reduced risk. When stress appears in credit at the same time inflation data surprise to the upside, the policy trade off becomes harder. The Fed may want to cushion growth, but stubborn inflation limits its room to act.

Against this backdrop, technology stocks have lost some of their shine.

Nvidia reported remarkable earnings yesterday. Revenue surged and demand for its chips remains strong. Yet the stock fell more than 5% after an initial rise. In premarket trading today it barely moved. The reaction suggests that investors are questioning how long the current pace of AI spending can last, especially in an environment where borrowing costs may stay higher for longer.

Chip stocks have weakened. Some software companies, which had been punished earlier this year on fears of AI disruption, have begun to stabilize. Industrial firms tied to data centers have performed better. The Dow is on track for a tenth straight month of gains, while the Nasdaq is heading toward its steepest monthly decline since early 2025 and has remained below its 50 day moving average for weeks.

Technology is no longer treated as a single unstoppable force. Investors are becoming more selective. They are asking harder questions about returns on investment and long term demand.

That brings the focus back to inflation. If producer prices had cooled convincingly, the Fed would have gained flexibility. Rate cuts would have become more plausible. Risk assets might have found firmer ground. Instead, the data disappointed. Policymakers are likely to stay cautious, and markets will need to adjust to the possibility that rates remain higher for longer.

Today's economic highlights:

Today's agenda includes: Gfk Consumer Confidence in the United Kingdom; Housing Starts in Japan; in France, preliminary annual and monthly inflation rates followed by unemployment benefit claims; in Spain, preliminary annual and monthly inflation rates; in Switzerland, GDP growth rate and KOF Leading Indicators; in Germany, unemployment rate, unemployment change, and unemployed persons followed by preliminary annual and monthly inflation rates; in China, FDI (YTD) YoY; in the United States, Core PPI MoM, PPI MoM, and Chicago PMI; in Canada, annualized GDP growth rate, GDP MoM, preliminary GDP MoM, and GDP growth rate QoQ. See the full calendar here.

  • Dollar index: 97.759
  • Gold: $5,176
  • Crude Oil (BRENT): $71.22 (WTI) $66.44
  • United States 10 years: 3.98%
  • BITCOIN: $67,585

In corporate news:

  • CPP Investments and Equinix agreed to jointly buy Nordic data-center operator atNorth from Partners Group for about $4B (incl. debt), with CPP taking 60% and Equinix 40%.
  • Ameren priced a $400M public offering of 5% senior notes due 2036 and will use proceeds for general corporate purposes.
  • CoreWeave reported a wider Q4 loss (-$0.89/sh) on revenue up to $1.57B and guided Q1 revenue of $1.9B–$2.0B and 2026 revenue of $12B–$13B, sending shares down premarket.
  • Wärtsilä said a U.S. push for datacenters to generate their own power should boost demand for its datacenter engines, with plans to lift delivery capacity ~80% by 2028 and grow U.S. service hiring at a double-digit rate over two years.
  • Meta Platforms reportedly signed a multiyear, multi-billion-dollar deal to rent Google's AI chips (TPUs) for model development and has discussed buying TPUs for its data centers starting next year.
  • South Korea approved Google's request to export high-precision map data (with security conditions like blurring sensitive sites), a move expected to pressure local map leaders Naver and Kakao.
  • Nio said its chip-focused unit GeniTech raised 2.26B yuan from new investors, reducing Nio's stake to 62.7%.
  • Hyatt Hotels said it aims to quintuple its India hotel footprint over the next five years as it bets on rising domestic travel demand.
  • Kazakhstan's energy minister said output at Chevron-led Tengiz is close to full capacity again after late-January outages, with oil exports seen roughly stable versus 2025.
  • Netflix drops its bid for Warner Bros., after Paramount raised its offer.
  • Jefferies is reportedly exposed to $135 million in losses from the bankruptcy of British mortgage finance company MFS, according to Bloomberg.
  • Ford recalls 4.3 million vehicles in the US due to a software issue.
  • Meta files lawsuit over deepfake scams in Brazil and China. In other news, Google has reportedly signed a multi-billion dollar deal with Meta to lease AI chips, according to The Information.
  • Block is cutting more than 4,000 jobs, with its share price jumping 23%.
  • eBay is cutting 6% of its workforce.
  • United Airlines is increasing its stake in Brazilian airline Azul to 8.7%.

Analyst Recommendations:

  • American Electric Power Company, Inc.: UBS upgrades to neutral from sell with a price target raised from USD 115 to USD 132.
  • CoreWeave, Inc.: D.A. Davidson initiates coverage with a buy recommendation and sets a price target of USD 125.
  • Duolingo, Inc.: Evercore ISI downgrades to in-line from outperform and reduces the target price from USD 330 to USD 114.
  • Honeywell International Inc.: Wolfe Research upgrades to outperform from peerperform with a target price of USD 293.
  • Live Nation Entertainment, Inc.: Rothschild & Co Redburn upgrades to buy from neutral and raises the target price from USD 166 to USD 193.
  • Marsh & Mclennan Companies: Mizuho Securities downgrades to neutral from outperform and reduces the target price from USD 213 to USD 199.
  • Palantir Technologies Inc.: UBS upgrades to buy from neutral with a target price of USD 180.
  • Synopsys, Inc.: Morgan Stanley downgrades to market weight from overweight and reduces the target price from USD 550 to USD 480.
  • Globant S.a.: Canaccord Genuity maintains its hold recommendation and reduces the target price from USD 70 to USD 50.
  • Intuit Inc.: Deutsche Bank maintains its buy recommendation and reduces the target price from USD 850 to USD 600.
  • Keysight Technologies, Inc.: Jefferies maintains its hold recommendation and raises the target price from USD 220 to USD 270.
  • Paramount Skydance Corporation: Wolfe Research maintains its underperform recommendation and reduces the target price from USD 13 to USD 10.
  • Primo Brands Corporation: Deutsche Bank maintains its hold recommendation and raises the target price from USD 18 to USD 24.
  • Samsara Inc.: KeyBanc Capital Markets maintains its overweight recommendation and reduces the target price from USD 55 to USD 40.
  • The Middleby Corporation: JP Morgan maintains its neutral recommendation and raises the target price from 140 to USD 180.
  • The Trade Desk, Inc.: Huber Research Partners LLC maintains its underweight recommendation and reduces the target price from USD 30 to USD 22.50.
  • Unity Software Inc.: CITIC Securities Co Ltd maintains its buy recommendation and reduces the target price from USD 50 to USD 30.
  • Zscaler, Inc.: Capital One Securities maintains its overweight recommendation and reduces the target price from USD 277 to USD 190.