The latest inflation numbers have finally landed. December's consumer prices rose by 0.3% month on month, exactly as expected, lifting annual inflation to 2.7%. Core inflation, which strips out food and energy, came in a touch softer than forecast: 0.2% on the month and 2.6% on the year, rather than the anticipated 2.7%. Markets had been braced for something more dramatic. They did not get it. Futures, which had been flat, edged into a light green shortly after the release, and then returned near zero.

This matters because inflation remains the hinge on which almost everything else now swings. America's labour market is under strain but not broken. Prices are no longer running away, but neither are they fully tamed. The White House sees room for interest-rate cuts. The Federal Reserve does not, or at least, not yet. Today's data strengthen the Fed's hand. Inflation is easing, but not enough to justify haste. Holding rates steady looks like the least controversial option, which in today's climate counts as a minor triumph.

That climate, it should be said, has been anything but calm. Yesterday began with markets unsettled by reports that the Department of Justice was considering action against Jerome Powell, the Fed's chairman, linked to developments at the central bank's headquarters. Investors read this less as a legal matter than as another episode in the long-running tug-of-war between the Fed's independence and the White House's impatience. Even prominent Republicans have criticised the probe, worrying aloud about the precedent it might set. By the end of the session, those fears had faded. Western indices drifted back towards balance, and Wall Street even closed slightly higher. The prevailing assumption is that the case against Mr Powell will amount to little more than noise.

With inflation data now in hand, attention turns to earnings. The fourth-quarter 2025 reporting season has begun with America's banking giants. JPMorgan Chase and Bank of New York have both reported, and broadly confirmed what analysts suspected: the past quarter was strong. JPMorgan's pre-tax profit is estimated at $73.8bn, roughly the size of Azerbaijan's entire economy. Even so, markets are less interested in what banks earned yesterday than in what they expect tomorrow. Banks, after all, are paid handsomely to feel the economy's pulse.

For now, that pulse seems healthy enough. Trading and investment-banking revenues have picked up, and dealmaking has improved. Yet clouds remain. Donald Trump has urged lenders to cap credit-card interest rates at 10% for a year, in the name of helping households. It is a politically neat idea and a commercially awkward one. How banks square robust guidance with the possibility of price controls will be one of the more interesting subplots of this earnings season.

Beyond America, investors continue to perform an impressive act of selective attention. Geopolitical tensions have pushed gold higher, as safety-seekers reach for insurance, and lifted oil prices on fears of disrupted supply linked to unrest in Venezuela and Iran. Washington's threat to impose a 25% tariff on any country doing business with Iran has added to the unease. 

In Japan, rumours of an early election are swirling, with the new prime minister, Sanae Takaichi, reportedly planning to dissolve the lower house within days. Her aim is to lock in her authority and push through a stimulus plan. With approval ratings near 70%, she can afford the gamble. Tokyo's stock market surged more than 3% after a public holiday, reaching a record high. Investors appear untroubled by the prospect of even more debt, so long as it comes wrapped in fresh liquidity.

Elsewhere in Asia-Pacific, the picture is mixed. Australia and South Korea continue to climb. India and mainland China have edged lower. Hong Kong and Taiwan are both up about 0.6%. European indices are mixed.

Today's economic highlights:

See the full calendar here.

  • Dollar index: 99,048
  • Gold: $4,594
  • Crude Oil (BRENT): $65.03 (WTI) $60.64
  • United States 10 years: 4.19%
  • BITCOIN: $91,969.2

In corporate news:

  • Global drugmakers including Pfizer, AstraZeneca, Merck, and Roche are investing hundreds of billions to expand U.S. manufacturing in response to potential 100% tariffs on imported patented medicines proposed by the Trump administration.
  • The Pentagon will invest $1 billion in L3Harris Technologies' rocket motor business, which will be spun off into a new public company as part of efforts to expand missile production and revamp defense procurement.
  • BNY posted record 2025 revenue and profit, raised its medium-term profitability target to 28%, and reported $59.3 trillion in assets under custody, benefiting from market gains and rising interest income.
  • JPMorgan beat Q4 profit expectations due to strong trading, despite a hit from taking over the Apple Card, and forecasts $103 billion in net interest income for 2026.
  • Cardinal Health raised its 2026 profit forecast to at least $10 per share, citing growing demand for specialty medicines and biosimilars, and expects over $50 billion in specialty revenue.
  • Delta Air Lines forecast 2026 earnings growth of about 20% and placed an order for 30 Boeing 787-10s with GE Aerospace engines, highlighting a focus on premium travel demand and supplier diversification.
  • Google will begin developing and manufacturing high-end Pixel smartphones in Vietnam this year, expanding its shift away from China and building on its existing supply chain in the country.
  • Apple signed a multi-year deal with Google to use its Gemini AI models in a revamped Siri, integrating them into future Apple Intelligence features.
  • Citigroup plans to cut around 1,000 jobs this week as part of its ongoing restructuring efforts to reduce headcount by 20,000 by year-end.
  • BlackRock will cut approximately 250 jobs globally as part of its annual performance review process, despite continued expansion into private markets.
  • Rio Tinto has tapped Evercore and JPMorgan to advise on its pursuit of Glencore, according to Bloomberg.
  • Meta Platforms expands global data center partnerships and AI infrastructure with Meta Compute, while planning workforce reductions and facing an antitrust investigation.
  • Citigroup declares a $0.60 dividend per share and plans to cut approximately 1,000 jobs as part of a cost-trimming strategy.
  • Amgen announces positive Phase 2 trial results for MariTide, showing robust reductions in blood sugar and weight.
  • Nvidia eliminates the upfront payment requirement for its H200 chips amid regulatory uncertainty.
  • Ørsted granted an injunction to resume construction of its Revolution Wind offshore wind project in Rhode Island.
  • Invesco Ltd reports assets under management (AUM) totaling $2,169.9 billion as of December 31, 2025.

Analyst Recommendations:

  • Albemarle Corporation: Deutsche Bank upgrades to buy from hold and raises the target price from USD 125 to USD 185.
  • Bentley Systems, Incorporated: Piper Sandler & Co downgrades to neutral from overweight and reduces the target price from USD 60 to USD 45.
  • Bxp, Inc.: Barclays upgrades to overweight from equalweight with a price target raised from USD 78 to USD 82.
  • Centerpoint Energy, Inc.: BMO Capital Markets upgrades to outperform from market perform with a target price of USD 42.
  • Digital Realty Trust, Inc.: Barclays upgrades to market weight from underweight and raises the target price from USD 161 to USD 164.
  • Five Below, Inc.: Jefferies downgrades to hold from buy and reduces the target price from USD 215 to USD 210.
  • Installed Building Products, Inc.: JP Morgan downgrades to underweight from neutral with a target price of USD 245.
  • Live Nation Entertainment, Inc.: Jefferies downgrades to hold from buy and reduces the target price from USD 161 to USD 155.
  • Mastercard, Inc.: Compass Point Research & Trading upgrades to buy from neutral with a price target raised from USD 620 to USD 735.
  • Moody's Corporation: Daiwa Securities upgrades to outperform from neutral with a price target raised from USD 500 to USD 590.
  • Paypal Holdings, Inc.: Daiwa Securities downgrades to neutral from outperform and reduces the target price from USD 77 to USD 61.
  • Saia, Inc.: Evercore ISI downgrades to in-line from outperform and raises the target price from USD 319 to USD 367.
  • Stag Industrial, Inc.: Barclays downgrades to underweight from equalweight and reduces the target price from USD 40 to USD 39.
  • Synopsys, Inc.: Piper Sandler & Co downgrades to neutral from overweight and reduces the target price from USD 602 to USD 520.
  • Vail Resorts, Inc.: Jefferies upgrades to buy from hold and raises the target price from USD 159 to USD 165.
  • Wyndham Hotels & Resorts, Inc.: Mizuho Securities upgrades to outperform from neutral with a price target raised from USD 71 to USD 97.