Breakfast | U.S. core inflation slows more than expected, three major indices fluctuate and retreat

Market Overview

Core CPI inflation slowdown fails to maintain the upward trend of US stocks, with the three major indices turning negative during the session. The S&P and Dow fell from record highs, dragged down by bank stocks, with the financial sector down nearly 2%. After announcing its fourth-quarter earnings and the CFO hinted at potential impacts from Trump's credit card interest rate cap, JP Morgan fell over 4%, and credit card giant Visa also dropped over 4%; however, Google rose over 1%, hitting a new historical high for four consecutive days. The chip index and Nvidia saw two consecutive days of gains, with AMD rising over 6% and Intel over 7% after being upgraded by institutions.

After the US CPI was released, US Treasury prices surged, and yields hit daily lows; the dollar index briefly retraced some gains and refreshed daily lows, but later the dollar's gains expanded, approaching four-week highs.

The yen fell for six consecutive days, hitting a one-and-a-half-year low. Following the US CPI, the offshore yuan briefly turned positive but later fell below 6.97, dropping from a 20-month high; Bitcoin surged nearly 4% from its daily low, breaking above $94,000.

Crude oil rose for four consecutive days, closing at a two-month high, with Trump stating that he canceled talks with Iran, causing oil prices to rise over 3% during the session. Gold turned negative after hitting an intraday record high for the second day, while silver rose nearly 5% during the session, setting a historical high for two consecutive days. London tin rose over 3%, approaching record levels, while London copper halted its two-day gains, not continuing to approach record highs.

During the Asian session, A-shares saw record trading volume, with the ChiNext down 2%. The commercial aerospace sector collectively corrected, while the new "Yi Zhongtian" continued its strong performance. The Hang Seng Index rose nearly 1%, with active pharmaceutical stocks, and lithium carbonate rose over 7% against the trend.

Key News

G7 finance ministers stated they would reduce reliance on Chinese rare earths, China's Ministry of Foreign Affairs: China's position on maintaining the stability and security of the global critical mineral supply chain remains unchanged; the Ministry of Foreign Affairs responded to Trump's statement about imposing a 25% tariff on Iranian business partners: China will firmly safeguard its legitimate rights and interests.

China's Ministry of Commerce: Starting from January 14, 2026, anti-dumping duties will continue to be imposed on imported solar-grade polysilicon originating from the United States and South Korea, with a duration of five years.

US core inflation slows more than expected, with December's core CPI growth rate below expectations, year-on-year growth at 2.6%, matching the lowest level in nearly five years, while CPI year-on-year growth at 2.7% met expectations; Wall Street does not expect a rate cut this month, with the "New Federal Reserve News Agency" stating that the Fed's wait-and-see attitude is unlikely to change.

Trump has added fuel to the fire regarding the Federal Reserve investigation, criticizing Powell as "either incompetent or corrupt," stating that CPI gives Powell an opportunity for a significant rate cut, and that if the economic situation is good, rates should be cut.

After Powell was sued, the third-in-command of the Federal Reserve spoke out: The Fed does not face strong pressure to change interest rates.

Central banks from multiple countries issued a joint statement "fully supporting" Powell, with the central bank governor stating: he "embodies the highest level of public service."

Trump stated that he has canceled all talks with Iranian officials, causing crude oil prices to rise over 3% during the session

After a surge in precious metals, the Chicago Mercantile Exchange has taken action again, changing the contract margin from "fixed" to "floating"; retail demand is too strong, and the Chicago Mercantile Exchange will launch 100-ounce silver futures.

CCTV: The United States has relaxed export controls on NVIDIA's H200 chips to China.

The next target for price control is "electricity prices," Trump stated that "tech giants must bear the electricity costs of data centers," and Microsoft will make changes this week; Microsoft stated it is willing to bear high electricity prices, covering the electricity costs of data centers.

OpenAI's first hardware is reportedly AI headphones, aiming for sales of 50 million this year.

Liang Wenfeng's signed new paper: Equipping large models with a "dictionary," after separating computation and memory, IQ skyrockets, possibly hinting at DeepSeek V4.

Moore Threads collaborates with Zhiyuan: For the first time, it verifies the efficiency of training domestic kilocalorie cluster embodied intelligence models, with kilocalorie expansion efficiency exceeding 90%.

Rongbai Technology signed a contract with CATL, achieving a massive order of 120 billion yuan for lithium iron phosphate.

JP Morgan's Q4 revenue exceeded expectations with a year-on-year increase of 7%, stock trading income surged 40% year-on-year, while weak bond underwriting dragged net profit down by 7%, investment banking business fell short of guidance.

South Korean prosecutors demand the death penalty for Yoon Suk-yeol, with a verdict expected on February 19.

Market Report

US and European Stock Markets: The S&P 500 fell 0.19%, closing at 6963.74 points; the Dow Jones fell 0.80%, closing at 49191.99 points; the Nasdaq fell 0.10%, closing at 23709.873 points. The European STOXX 600 index fell 0.08%, closing at 610.44 points.

A-shares: The Shanghai Composite Index fell 0.64%, closing at 4138.76 points. The Shenzhen Component Index fell 1.37%, closing at 14169.40 points. The ChiNext Index fell 1.96%, closing at 3321.89 points.

Bond Market: By the end of the bond market, the yield on the benchmark 10-year U.S. Treasury was about 4.18%, unchanged from Monday; the yield on the 2-year U.S. Treasury was about 3.53%, unchanged from Monday.

Commodities: WTI February crude oil futures rose 2.77%, closing at $61.15 per barrel; Brent March crude oil futures rose 2.51%, closing at $65.47 per barrel. COMEX February gold futures fell 0.34%, closing at $4599.1 per ounce. COMEX March silver futures rose nearly 1.5%, closing at $86.338 per ounce. LME copper futures fell nearly 0.4%, closing at $13164 per ton. LME nickel futures fell about 1.2%, closing at $17681 per ton. LME tin futures rose nearly 3.3%, closing at $49528 per ton.

News Details

Global Highlights

G7 finance ministers state they will reduce reliance on Chinese rare earths, Chinese Ministry of Foreign Affairs: China's position on maintaining the stability and security of the global critical mineral supply chain remains unchanged.

-Trump claims he will impose a 25% tariff on Iranian business partners, Ministry of Foreign Affairs responds. According to Xinhua News Agency, Foreign Ministry spokesperson Mao Ning stated at a regular press conference on the 13th that China's position on tariffs is very clear, and there are no winners in a tariff war. China will firmly safeguard its legitimate rights and interests.

Chinese Ministry of Commerce: Starting from January 14, 2026, anti-dumping duties will continue to be imposed on imported solar-grade polysilicon originating from the United States and South Korea, with a duration of 5 years.

U.S. core inflation slows more than expected, December core CPI growth lower than expected, year-on-year increase of 2.6% matches the lowest level in nearly five years, CPI year-on-year increase of 2.7% meets expectations. The U.S. December CPI year-on-year and month-on-month met expectations, with core CPI year-on-year rising by 2.6%, the lowest level since March 2021, and lower than the expected 2.7%; month-on-month 0.2%, lower than the expected 0.3%. The data strongly confirms that inflation is continuing to slow.

• What signals does CPI send? Wall Street does not expect a rate cut this month, “New Federal Reserve News Agency” states that the Fed's wait-and-see attitude is unlikely to change. Market participants believe that the CPI report provides more conclusive signals that price pressures are easing, but it is still insufficient to prompt the Fed to cut rates this month. The “New Federal Reserve News Agency” believes that to restore rate cuts, Fed officials may need to see new evidence indicating that the labor market is weakening or that price pressures are dissipating. The latter may require at least a few more months of inflation reports to be confirmed.

Trump adds fuel to the fire of the Federal Reserve investigation, criticizes Powell as “either incompetent or corrupt”. Trump stated he would announce the Federal Reserve chair nominee in the coming weeks, and the Justice Department's investigation would not affect this timeline. Media reports indicate that the prosecutor Pirro, responsible for the investigation, did not seek approval from the Justice Department superiors before issuing a subpoena to the Federal Reserve and has no intention of abandoning the investigation. Pirro stated he had contacted the Federal Reserve multiple times but was ignored, thus having to resort to legal procedures. Media reports indicate that the Federal Reserve received two emails during the winter holiday, neither of which conveyed any urgent information or mentioned a criminal investigation

• Trump called Powell "very rigid" and stated that if the economic situation is good, the Federal Reserve should cut interest rates. He said that if economic data is good, the market should rise, not fall, and hopes that interest rates will decrease when the market performs well. After the CPI was released, Trump stated that the inflation rate in the U.S. is very low, which gives the slow-moving Powell the opportunity to "bring us a nice significant interest rate cut."

After Powell was sued, the third-in-command of the Federal Reserve spoke out: the Federal Reserve is not under strong pressure to change interest rates. New York Fed President Williams warned against undermining the independence of the central bank, stating that attacks on central bank independence often lead to very unfortunate economic consequences, including high inflation. He also indicated that the current monetary policy stance is robust, with no need for short-term interest rate adjustments, and expects GDP growth of 2.5%-2.75% in 2026, with inflation returning to the 2% target by 2027.

Central banks from multiple countries issued a joint statement “fully supporting” Powell, with the Bank of Canada Governor stating that he "embodies the highest level of public service". Major central banks around the world released a joint statement to support Federal Reserve Chairman Powell in response to the Trump administration's judicial pressure on the central bank and threats to its independence. Several officials have voiced their support, and Powell's tough stance has unexpectedly gained widespread public support from U.S. retail investors.

Trump stated that he has canceled all talks with Iranian officials, with crude oil rising over 3% during trading. According to CCTV News, on January 13 local time, U.S. President Trump posted on social media that he has canceled all talks with Iranian officials. On January 13 local time, Iranian Army Commander Hatami stated that after the previous conflict with Iran, the Iranian armed forces' ability to respond to related security threats has significantly improved.

After a surge in precious metals, the Chicago Mercantile Exchange took action again, changing contract margins from “fixed” to “floating”. According to a notice released by the Chicago Mercantile Exchange on January 12, the margin setting method for gold, silver, platinum, and palladium contracts will change from a fixed amount to a margin calculated as a certain percentage of the contract's nominal value. The margin ratio for some non-high-risk gold contracts will be adjusted to about 5% of the nominal value, while silver will be about 9%. This mechanism change means that risk exposure will directly fluctuate with the market. High prices or periods of high volatility may trigger frequent margin calls, leading to unstable capital usage, with high-leverage operators facing particularly significant pressure

• Retail demand is too strong, the Chicago Mercantile Exchange will launch 100-ounce silver futures.
• Will silver experience a "roller coaster" market this year? UBS warns: it may surge another 25% in the first half, but could fall in the second half. UBS believes that driven by a surge in trading in the Chinese market and investor enthusiasm, silver may surge another 25% in the first half; however, in the second half, as the market returns to fundamentals, prices may fall. Market participants need time to assess how supply and demand factors adapt to the new price dynamics, which may lead to increased price volatility. The bank reiterates its bullish view on gold, expecting it to continue rising in the first half of this year, with about 9% upside potential remaining at current levels.

The U.S. eases export controls on Nvidia's H200 chips to China. According to CCTV News, previously, Trump stated on social media that the U.S. government would allow Nvidia to sell H200 artificial intelligence chips to China. It is reported that the sales to China will be subject to approval and security review by the U.S. Department of Commerce, and the U.S. will also charge fees from the related transactions.

The next target of price control is "electricity prices," Trump states "tech giants must bear the electricity costs of data centers," Microsoft will make changes this week. The increase in U.S. electricity prices has exceeded the overall inflation level, exacerbating voters' dissatisfaction with the costs of essential goods like energy. Trump emphasized that although data centers are "crucial" for the prosperity of artificial intelligence, large tech companies that build these facilities must "foot the bill" themselves, and Microsoft is considering the issue of cost-sharing for AI infrastructure.

Microsoft: willing to bear high electricity prices, covering the electricity costs of data centers. Microsoft has launched a "community-first" AI infrastructure plan, committing that the electricity costs of data centers will not be passed on to residents, and will require utility companies to set sufficiently high electricity prices to cover their own electricity costs, while investing to enhance grid capacity and efficiency.

OpenAI's first hardware is reportedly AI headphones, aiming for 50 million sales this year. OpenAI is accelerating its entry into the hardware field, with its first audio hardware product, codenamed "Sweetpea," expected to be released in September this year, aiming to directly compete with and replace Apple's AirPods. The product is designed by a team led by Apple's former Chief Design Officer Jony Ive, featuring a unique shape with a "pebble-like" metal main unit and a split-ear design. It is reported that it is powered by a 2nm process chip, aiming to achieve localized inference for most AI tasks, and Foxconn has received notifications for mass production preparation, with a target shipment of 40 to 50 million units in the first year Liang Wenfeng's new paper: Equipping large models with a "dictionary," separating computation from memory leads to explosive IQ growth, possibly hinting at DeepSeek V4. The paper reveals that when we separate "memory" from "computation," entrusting what needs to be memorized to the "dictionary" and what needs to be calculated to the brain, AI's reasoning ability will experience an explosive growth that defies intuition. This moment may be the eve of the birth of DeepSeek V4.

Moore Threads collaborates with Zhiyuan: First verification of the efficiency of domestic kilocalorie cluster embodied intelligence model training, with kilocalorie expansion efficiency exceeding 90%! Moore Threads, in collaboration with Zhiyuan, successfully completed the full-process training of the self-developed embodied brain model RoboBrain 2.5 based on the FlagOS-Robo framework and relying on the MTT S5000 kilocalorie intelligent computing cluster. This is the first verification in the industry of the usability and efficiency of domestic computing clusters in training embodied intelligence large models, marking a key step for domestic AI infrastructure in tackling complex multimodal tasks.

Rongbai Technology signs a contract with CATL for a 120 billion yuan lithium iron phosphate mega order! Rongbai Technology has signed a "Lithium Iron Phosphate Cathode Material Procurement Cooperation Agreement" with CATL. Starting from the first quarter of 2026 until 2031, Rongbai Technology is expected to supply a total of 3.05 million tons of domestic lithium iron phosphate cathode materials to CATL, with a total sales amount exceeding 120 billion yuan.

JP Morgan's Q4 revenue exceeds expectations with a 7% year-on-year increase, stock trading income surges 40% year-on-year, weak bond underwriting business drags net profit down by 7%. Although trading and interest income performed strongly, investment banking business fell short of guidance, leading to a "divergent" overall performance. Investment banking fees in the quarter decreased by 5% year-on-year, significantly lower than the company's previous guidance of "low single-digit growth," becoming the biggest surprise in this financial report.

Venezuela's stock index hits a new high, soaring 130% in ten days, the first related ETF in the U.S. filed. A major political change in Venezuela triggered a market frenzy, with the benchmark stock index IBC soaring over 130% in ten days to reach a historic high. Wall Street quickly bets on an economic turnaround and a revival of oil, with U.S. ETF issuer Teucrium applying for the first ETF focused on exposure to the country. Despite the $170 billion external debt remaining extremely fragile, global capital is betting heavily on this "complete re-rating." South Korean Prosecutors Seek Death Penalty for Yoon Suk-yeol, verdict on February 19. The special prosecutor's office investigating the emergency martial law incident requested the court to impose the death penalty on former President Yoon Suk-yeol on the grounds of allegedly leading a coup. The court announced that the first-instance verdict will be delivered on February 19.

Research Report Highlights

Goldman Sachs Annual Institutional Survey: US Stocks Fall Out of Favor, Mag7 Underperform, Geopolitics Becomes the Biggest "Gray Rhino," Gold Price Expected to Reach $6,000. The survey reveals an extremely divided picture: investors are unprecedentedly optimistic on a macro level while frantically seeking safe-haven assets, viewing "geopolitics" as a Damocles sword hanging overhead. The years-long "American exceptionalism" trading logic is collapsing, with funds preparing for an epic rotation from US tech giants to cyclical stocks, emerging markets, and hard assets (gold, copper).

Big Tech vs. Value Stocks, US Earnings Season Approaches, Wall Street's "Rotation Trade" Faces a Crucial Test. Currently, funds in US stocks are rotating from tech giants that have led the rally for years to value sectors like banks and industrials, with the earnings season set to bring a critical test. Tech stocks are expected to still contribute the majority of profit growth (growth rate may reach 20-30%), while non-tech sectors may see a sharp drop to 1%. Institutions believe that if traditional industries cannot deliver better-than-expected earnings guidance, this large-scale "rotation trade" will be difficult to sustain. The market urgently needs to see a broader profit recovery beyond tech stocks to support the continuity of the rotation.

From Large Models, Robots to Dating Apps, the Market's Pricing Standard for AI in 2026 Shifts to Return on Investment! By 2026, the market's pricing standard for AI technology has shifted from mere expectations of technological breakthroughs to rigorous assessments of capital return on investment (ROIC). Morgan Stanley is particularly optimistic about giants like Amazon, META, and Doordash that can achieve efficiency improvements and business expansion through AI, and expects strong growth for cloud service providers. In contrast, sectors facing disruptive uncertainties from autonomous driving or agency technologies, such as ride-hailing, online travel, and smaller advertising platforms, will receive lower valuation multiples.

Domestic Macro

Ministry of Industry and Information Technology Holds Symposium for Manufacturing Enterprises: Focus on Stabilizing Effective Investment in Manufacturing, Consciously Resist "Involution". Representatives from 12 key enterprises in industries such as steel, non-ferrous metals, new materials, automobiles, machinery, shipbuilding, light industry, pharmaceuticals, and electronics attended the meeting. The meeting emphasized coordinating policies to stabilize effective investment in manufacturing and stimulate private sector vitality. It also called on enterprises to deepen innovation, strengthen self-discipline, consciously resist "involution," and win competitive advantages with high-quality products to jointly maintain a healthy industry ecosystem Ministry of Industry and Information Technology: Implementing the Action for the Integration of Industrial Internet and Artificial Intelligence, with over 450 influential platforms by 2028. The Ministry of Industry and Information Technology issued the "Action Plan for Promoting the High-Quality Development of Industrial Internet Platforms (2026-2028)." By 2028, significant progress will be made in the high-quality development of industrial internet platforms, with a multi-level platform system of "professional + industry + collaborative" continuing to grow, and over 450 influential platforms; the number of connected industrial devices will exceed 120 million; the platform penetration rate will reach over 55%, and a new generation of industrial internet platform ecosystem characterized by ubiquitous connectivity, digital intelligence integration, deep collaboration, and open-source will be basically established.

The China-Europe Electric Vehicle Case "Flexible Breakthrough": Price Commitment Replaces Tariffs, Releasing Positive Signals. According to The Paper, on January 12, the Ministry of Commerce reported on the progress of consultations regarding the China-Europe electric vehicle case. The statement indicated that both sides agreed on the necessity of providing general guidance on price commitments to Chinese exporters of pure electric vehicles to the EU, so that Chinese exporters can address relevant concerns in a more practical, targeted, and WTO-compliant manner.

China-Europe Electric Vehicle Tariff Reaches "Price Commitment" Framework, What Will Sales Look Like in 2026? China and Europe have reached a "price commitment" framework regarding electric vehicle tariffs, allowing Chinese car companies to replace high tariffs with commitments to minimum import prices. This mechanism requires companies to set price bottom lines and cooperate with investment commitments for building factories in Europe. In the first half of 2025, the market share of Chinese cars in the EU reached 6%, up from 5% in 2024. It is expected that under this controllable market access mechanism, sales will continue to grow, with a market share expected to reach 10% by 2030.

Domestic Companies

Shanghai Stock Exchange Takes Action, Two "Commercial Space" Concept Stocks Warned by Regulators. Electric Power Science and Technology Digital and Hangxiao Steel Structure received regulatory warning decisions from the Shanghai Stock Exchange. The decision indicated that the two companies had inaccuracies and incompleteness in the information released regarding "commercial space" concepts, and insufficient risk warnings, which could mislead investor decisions. The commercial space sector has been the most prominent theme in the A-share market this year.

"Infrastructure Mania" is Making Satellites. China Electric Power Construction successfully developed its first energy engineering dedicated satellite "Dianjian No. 1," marking a shift in major engineering geological disaster monitoring from traditional ground models to an integrated "sky-ground" approach. The satellite has all-weather observation capabilities, breaking through the traditional monitoring dilemma of "relying on the sky and being constrained by others," achieving a complete independent technology chain from satellite manufacturing to data processing. The entire satellite weighs only 300 kilograms and can achieve millimeter-level deformation monitoring, compressing the revisit cycle to a daily level In the future, it can be widely applied to national strategic projects such as hydropower, transportation, and energy, opening up a new model of "satellite + infrastructure."

Shanghai Pudong Development Bank 2025 Quick Report: Double-digit net profit growth, asset quality "turning point" has emerged. Shanghai Pudong Development Bank has delivered the first 2025 report card among listed banks, disclosing that the company achieved revenue and net profit attributable to shareholders of RMB 146.55 billion and RMB 50.017 billion.

Overseas Macro

World Bank raises 2026 economic outlook due to "significant" economic resilience. The World Bank has raised its global economic growth forecast for this year, stating that the global economy has demonstrated unexpected resilience in the face of a "historic" escalation of global trade tensions. The agency noted that the resilience of the world economy is "significant," but risks remain tilted to the downside, with a substantial risk of renewed escalation in trade tensions. The World Bank's report includes forecasts for Brent crude oil prices in 2026.

Morgan Stanley delays its first interest rate cut expectation for this year, stating that the Federal Reserve's focus has shifted from employment to inflation. Morgan Stanley has pushed back its expectation for the Federal Reserve to cut interest rates this year from January and April to June and September, each by 25 basis points. The core logic has shifted from "stabilizing employment" to "combating inflation," with policy actions needing to wait for the full impact of tariffs to manifest and inflation to clearly return to the 2% target. The bank maintains its forecast for the terminal rate at 3.0%-3.25%.

US stock volatility is too cheap, Bloomberg strategists warn: be cautious of "liquidation" at the S&P 7000 point. As US stocks surge towards 7000 points, they have fallen into extreme complacency, with index volatility severely underestimated. Analysts believe that the current short positions on volatility are extremely crowded, resembling the situation just before the crash in July 2024. With this week's CPI data and the January 16 options expiration date approaching, policy risks and geopolitical uncertainties could easily trigger a "volatility liquidation," leading to a chain reaction of high-level market pullbacks.

"High market trading" makes a comeback, Japanese stocks hit new highs, bond and currency markets suffer double blows. Driven by news that Prime Minister Fumio Kishida may hold early elections at the end of January, the Nikkei 225 index surged more than 3% on Tuesday, while government bonds and the currency market fell across the board. Analysts believe that if Kishida gains a stronger mandate in the early elections, it will further consolidate his expansionary fiscal stance and preference for loose monetary policy. While this outlook has boosted the stock market, it has also raised concerns about the sustainability of Japan's debt, exacerbating selling pressure on bonds and the yen

• "Is 'High Market Trading' a Misjudgment? Nomura: Early Election Does Not Strengthen Re-inflation, but Shifts to Structural Reform". Nomura Securities report points out that the market's interpretation of Japan's early election as a continuation of "re-inflation" policy is a misjudgment. The firm believes that the election is essentially to gain political capital and shift policies from short-term stimulus to structural reform and deregulation.

Overseas Companies

Anthropic Releases Claude Cowork, "No Programming" Claude Code! Anthropic has launched Cowork, delegating AI code execution capabilities to ordinary users, allowing them to handle complex tasks such as batch processing files and data scraping without programming. This "civilian version" developer tool is said to disrupt hundreds of single-function SaaS products, triggering a major reshuffle in the B2B software market. The market expects OpenAI and Gemini to soon follow with similar products, potentially marking the beginning of the "desktop AI agent" competition era.

Today's News Preview

China's December Import and Export.

U.S. November PPI.

OPEC releases monthly oil market report.

U.S. November Retail Sales.

U.S. December Existing Home Sales.

U.S. EIA Crude Oil Inventory Change from Last Week.

The U.S. Supreme Court may announce its ruling on the Trump tariff case on January 14.

Philadelphia Fed President Harker, Minneapolis Fed President Kashkari, and New York Fed President Williams will speak.

The Federal Reserve will release the economic conditions "Beige Book."