Softer U.S. inflation, markets regain balance: bonds rise, stocks cautious

Bonds are back in the spotlight on global markets after U.S. inflation data strengthened expectations of a rate cut by the Federal Reserve by the summer. In January, the consumer price index rose 0.2%, the slowest pace since July, fueling bets that monetary easing could begin as early as June or, at the latest, July.

Treasuries saw broad-based buying: yields on the 10-year and the two-year notes — the latter more sensitive to rate expectations — fell by five basis points. Futures remained steady in a session affected by Presidents' Day, which kept the U.S. cash market closed. In Asia, trading was subdued due to the Lunar New Year holiday, with mainland China closed. The MSCI Asia Pacific Index hovered near record highs after gaining about 11% since the start of the year, while European futures pointed to a slightly higher open.

The mood also appeared more relaxed on Wall Street, where the S&P 500 is coming off two negative weeks, weighed down by concerns over the disruptive impact of artificial intelligence on business models. “The data do not change the Fed’s course, but they make a cut easier sooner rather than later,” said Neil Birrell of Premier Miton Investors.

Caution remains among central bankers, however. Austan Goolsbee, president of the Federal Reserve Bank of Chicago, reiterated that the institution will be able to act only if inflation clearly returns toward 2%, noting that the path currently still appears uncertain.

Among other asset classes, precious metals retreated: gold fell below $5,000 an ounce after its previous rally, while silver lost 1%. The dollar was steady and Bitcoin hovered around $68,300. In Asia-Pacific, 10-year yields in Australia and New Zealand declined, while the yen weakened after disappointing Japanese macro data reduced expectations of rate hikes by the Bank of Japan. Thinner markets and contained volatility prevailed as investors await upcoming U.S. data and the minutes of the Fed’s latest meeting.

Corporate highlights

Fresh large-scale moves may be looming in Hollywood: Warner Bros. Discovery is reportedly considering reopening talks for a sale with rival Paramount Skydance Corp. after receiving a revised final offer from its hostile bidder. According to sources familiar with the matter, the media group has resumed reviewing its strategic options amid ongoing consolidation reshaping the global entertainment industry.

In the European automotive sector, Volkswagen AG is reportedly planning a 20% cost cut by the end of 2028, according to German weekly Manager Magazin, which did not disclose its sources. The target would form part of a broader efficiency plan aimed at strengthening the group’s competitiveness during a complex transition toward electric vehicles and amid margin pressure.

In Australia, a consortium led by Macquarie Asset Management announced the acquisition of Qube Holdings Ltd. in a deal valued at approximately A$11.7 billion (about US$8.3 billion). The transaction marks one of the country’s largest infrastructure deals of the year and underscores institutional investors’ interest in the logistics and transport sector.

Key market moves

Financial markets started the day with limited changes in a cautious environment. Futures on the S&P 500 rose 0.2% at 6:55 a.m. London time, while those on the Nasdaq 100 were little changed. A similar pattern was seen in Asia, where the MSCI Asia Pacific Index closed flat, and in Europe, with Euro Stoxx 50 futures broadly steady.

The euro stood at $1.1868, showing no significant change, while the Japanese yen weakened 0.3% to 153.13 per dollar. The offshore yuan gained 0.2% to 6.8840 per dollar, and the British pound remained steady at $1.3645.

Cryptocurrencies were mixed: Bitcoin slipped 0.6% to $68,394.68, while Ether rose 0.4% to $1,965.02.

In fixed income, Japan’s 10-year yield was unchanged at 2.210%, while the equivalent Australian yield fell four basis points to 4.71%.

Finally, among commodities, spot gold declined 0.9% to $4,996.48 an ounce, while West Texas Intermediate crude was little changed, as investors await fresh signals on global demand and supply developments.

Andrea Pelucchi