Core Viewpoint - Stocks ended the day roughly flat despite a surprisingly cool inflation report [1] Group 1 - The inflation report was unexpectedly lower than anticipated, which typically would lead to positive market reactions [1] - Despite the positive inflation data, the stock market did not show significant movement, indicating potential investor caution or other underlying factors affecting market sentiment [1]

Inflation Trends - The annual Consumer Price Index (CPI) in the US rose by approximately 2.4% in January 2026, indicating a deceleration from December and falling below many economists' forecasts [2] - Monthly consumer prices increased by 0.2%, influenced by lower energy costs and modest rises in services and food categories [3] - Core inflation, which excludes food and energy prices, also exhibited restrained growth, although it remains elevated compared to long-term averages [4] Retail Sales Performance - Retail sales in January showed a steady expansion, with total sales rising by 0.2% on a seasonally adjusted monthly basis and increasing by 5.72% year-on-year, marking the fourth consecutive monthly increase [5] - Core retail sales, excluding categories like restaurants, demonstrated annual strength, particularly in clothing, digital products, and health and personal care [6] - The retail data, based on anonymized credit and debit card purchases, indicates sustained consumer demand beyond the holiday peak, with overall sales remaining above year-ago levels [7] Implications for Global Retail Sector - The moderating inflation rate in the US could alleviate pricing pressures on imported goods for international retailers, potentially stabilizing input costs [8]

Economic Overview - The U.S. economy shows strength with tame consumer inflation and stronger-than-expected job growth, leading traders to adjust their expectations for rate cuts, resulting in lower two-year yields [1][3][4] - The labor market's strength is questioned, with suggestions that job growth numbers may be overstated by approximately 60,000 per month, indicating caution regarding future rate cuts [3][12] Inflation and Federal Reserve Policy - Recent inflation data is viewed as encouraging, with both headline and core inflation moderating, although core services continue to exert upward pressure on inflation [8][9] - Federal Reserve officials, including Governor Stephen Myron, advocate for lower interest rates, citing supply-driven changes in the economy that could support growth [5][6] - The market is pricing in a 50% chance of a third rate cut by December, but some analysts believe this is an overreaction to recent data [11][12] Bond Market Dynamics - The two-year yield has reached its lowest level since September 2022, reflecting the market's sensitivity to Federal Reserve policy [4][8] - A significant rally in the two-year note has been observed, although it remains within a tight range [4][8] - The dollar has been declining, with investors diversifying into other markets, particularly emerging markets, as the Fed eases and global economic growth continues [17][18] Corporate Debt Issuance - A surge in reverse Yankee bond sales has been noted, with U.S. companies like Alphabet and Goldman Sachs raising funds in non-dollar markets, indicating a trend towards diversifying funding sources [72][76] - The scale of recent bond sales includes Alphabet's £5.5 billion deal and Goldman Sachs' €7 billion financial bond, both experiencing strong demand [73][74] - Companies are seeking to diversify their funding to avoid pushing up borrowing costs in their home markets [76] Market Sentiment and Future Outlook - The current market environment is characterized by a mix of strong issuance and cautious investor sentiment, with credit spreads beginning to widen slightly [91][92] - Analysts suggest that while issuance may continue, there is a growing dispersion in performance among different sectors, particularly in tech and financials [93][94] - The structural increase in supply from tech companies is expected to impact spreads, with a potential regime change in how tech bonds are perceived by investors [96][115]

Market Overview - The S&P 500 increased by 0.05% to 6,836.17, while the Nasdaq Composite decreased by 0.22% to 22,546.67, and the Dow Jones Industrial Average rose by 0.10% to 49,500.93, with all three indices finishing the week in the red [1] - The Nasdaq experienced a decline of 2.10% over the past five days, indicating a cautious sentiment among investors as they prepare for a long weekend with U.S. markets closed for Presidents' Day [1] Company Performance - Applied Materials saw a significant rise in stock price following a positive Q1 earnings report and an optimistic outlook [2] - Rivian Automotive's stock surged by 26.64% to close at $17.73 after reporting earnings that exceeded expectations [2] - Coinbase's stock increased by 16.46% to $164.32 despite disappointing Q4 revenue, attributed to gains in Bitcoin [3] - Medtronic, a defensive healthcare company, experienced a decline ahead of its upcoming earnings report [3] Economic Indicators - January's Consumer Price Index (CPI) data showed inflation slowing to 2.4%, while core inflation rose by 2.5%, providing some reassurance to investors and indicating a cooling in housing inflation [4] - Concerns regarding AI replacement have affected market sentiment, particularly impacting software as a service (SaaS) stocks, although some analysts believe the sell-off was an overreaction [5]

Market Overview - The U.S. stock market is showing resilience, with major indexes trending higher due to a positive inflation report suggesting the Federal Reserve's restrictive policy may be nearing its end [1] - Major market indexes are largely in the green, with the S&P 500 trading between 6,500 and 7,000, the Dow Jones Industrial Average gaining over 150 points, and the Nasdaq Composite up approximately 0.4% [2] Inflation Data - The January Consumer Price Index (CPI) showed a month-over-month increase of just 0.2%, below the consensus estimate of 0.3%, and a year-over-year CPI of 2.4%, the lowest since early 2024 [3] - This "muted" inflation reading has led traders to price in a higher probability of a rate cut in the second quarter, benefiting growth-oriented equities [3] AI Capital Expenditure Trends - The combined AI-related capital expenditure for Alphabet, Amazon, Microsoft, and Meta Platforms is expected to exceed $650 billion in 2026, reflecting confidence in long-term AI demand but raising concerns about near-term free cash flow [4] - Amazon is expected to generate significant cash flow, but most is being reinvested into data centers and GPUs, limiting buybacks or dividends [5] - Microsoft is experiencing slight margin pressure due to costs associated with Azure AI workloads, while Nvidia benefits as a primary supplier of hardware for these infrastructure projects [5] Corporate Earnings and News - Restaurant Brands International reported an 8% organic growth in adjusted operating income for full-year 2025 [6] - Apple is adjusting its supply chain in India to mitigate potential tariff impacts [7] - Tesla projects vehicle delivery growth of 47% to 59% for the 2026 fiscal year [7] - Baxter International shares are under pressure following an earnings miss and cautious forward guidance [7] - Advance Auto Parts reported steady performance in a challenging retail environment [7] Upcoming Market Events - U.S. markets will be closed on February 16th for President's Day, with focus shifting to the December Personal Consumption Expenditures (PCE) price index upon resumption of trading [8]

Market Overview - Stocks are higher due to cooler than expected inflation data, although there has been a recent sell-off [1][2] - The Nasdaq composite and S&P 500 are up, with real estate, healthcare, and utilities leading the gains as investors rotate away from tech [2] - Walmart reached an all-time high, while Visa, Nvidia, and Apple saw declines [3] Inflation and Economic Indicators - January's consumer price index (CPI) showed slower inflation, the lowest since May, with improvements in food and energy prices [6][7] - Services inflation remains high, indicating persistent inflationary pressures [7][22] - The unemployment rate dropped to 4.3%, with job growth concentrated in healthcare and social assistance sectors [9][10] Federal Reserve Outlook - Chicago Fed President Austin Goulby emphasizes the need for more progress on inflation before considering further rate cuts [28][29] - Core inflation is projected to remain around 3%, which is above the Fed's target [30][31] - The Fed is cautious about making premature rate cuts, focusing on actual inflation and employment data [21][26] Sector Performance - Semiconductor and software stocks are showing mixed performance after a recent sell-off [4][5] - Defensive sectors like consumer staples and utilities are gaining traction as investors seek stability amid market volatility [57] - AI disruption fears are impacting various industries, including transportation and real estate, as companies adapt to new technologies [51][52] Company Highlights - Rivian reported better-than-expected Q4 results, achieving its first annual gross profit and strong guidance for future vehicle deliveries [63][64] - Applied Materials, a major supplier of chipmaking equipment, has seen significant stock gains due to increased demand driven by AI investments [70][71] - American Superconductor is focusing on enhancing grid reliability and power quality to meet rising electricity demands [81][82]

Core Viewpoint - All three major U.S. stock indexes experienced a decline of 1.2% or more by the end of the week [1] Group 1 - The decline in stock indexes indicates a bearish trend in the market [1] - Investors may be reacting to various economic indicators and geopolitical events influencing market sentiment [1] - The overall market performance reflects a challenging environment for equities [1]

Market Overview - The S&P/TSX composite index increased by 608.43 points, reaching 33,073.71, while the Dow Jones industrial average rose by 48.95 points to 49,500.93. The S&P 500 index saw a modest increase of 3.41 points to 6,836.17, whereas the Nasdaq composite decreased by 50.48 points to 22,546.67 [1][3]. Sector Performance - The basic materials sector experienced gains, potentially driven by investors identifying opportunities following fluctuations in the precious metals market. This sector's performance may also be attributed to investors closing positions after significant short selling [2][3]. Company Highlights - Magna International Inc., an auto parts manufacturer, saw its shares surge by 18.94% after providing guidance for increased profits in 2026 [2]. Inflation Impact - A report indicated that U.S. inflation slowed to 2.4% year-over-year, which, while above the Federal Reserve's 2% target, was an improvement from December's 2.7% rate. This slowdown in inflation could provide the Federal Reserve with more flexibility to consider interest rate cuts [3][4][5]. Market Sentiment - Stock prices on Wall Street stabilized for companies previously viewed as vulnerable to AI disruption, reflecting a market sentiment characterized by rapid reactions to perceived threats [6]. Commodity Prices - The March crude oil contract rose by five cents to US$62.89 per barrel, while the April gold contract increased by US$97.90 to US$5,046.30 per ounce [7].

Group 1 - Gold prices advanced as traders increased bets on Federal Reserve rate cuts following a mild inflation reading, with some investors capitalizing on a recent selloff to purchase gold at lower prices [1][2] - The yield on 10-year Treasury bonds decreased, with swap traders estimating around 50% probability of a third rate cut by December, contributing to a rise in gold prices by as much as 2.5% [2] - The market remains volatile after significant liquidation in precious metals, but recent movements indicate that the correction may have overshot, leading to support from bargain-hunting and position adjustments [3] Group 2 - Gold reached a record high above $5,595 in late January due to speculative buying, but experienced a rapid decline below $5,000 an ounce by the end of the month; despite this volatility, gold is expected to finish the week higher [6] - Chinese markets are closed for the Lunar New Year holiday, which may lead to a consolidation phase in precious metals as Chinese market participants, who contributed to recent volatility, are absent [7] - Spot gold and silver prices have increased, while platinum and palladium also saw gains; the Bloomberg Dollar Spot Index remained relatively unchanged [7]

Core Insights - A key measure of inflation fell to 2.4% in January, down from 2.7% in December, nearing the Federal Reserve's 2% target [1] - Core prices, excluding food and energy, rose 2.5% in January, the smallest increase since March 2021, down from 2.6% the previous month [1] - Consumer prices increased by 0.2% in January compared to December, while core prices rose by 0.3% [1] Inflation Trends - The decline in inflation is attributed to slower apartment rental price growth and falling gas prices, providing some relief to consumers [1] - Despite the recent cooling, consumer prices remain approximately 25% higher than five years ago, keeping affordability a significant political issue [1] - A notable drop in used car prices, which fell 1.8% in January from December, contributed to the moderation in core inflation [1] Retail Impact - Retailers are passing on some costs from tariffs on goods like furniture, appliances, and clothing, although these increases are offset by price drops in other areas [1] - Furniture prices increased by 0.7% in January and are up 4% year-over-year, while appliances rose 1.3% in January, showing only slight increases compared to the previous year [1] - Clothing prices rose 0.3% in January and have increased by 1.7% over the past year [1]