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U.S. CPI, BoJ Governor, Palantir, and SPR release - what's moving markets

By Peter Nurse

© Reuters -- The January U.S. CPI release is due for release later Tuesday and could determine market expectations for what the Federal Reserve plans in terms of interest rate hikes in the near future. Kazuo Ueda looks set to become the next Bank of Japan governor, while Lael Brainard heads to the White House. Wall Street is set to open just higher, while crude weakens on the planned SPR release. Here's what you need to know in financial markets on Tuesday, 14th February.

1. U.S. CPI looms large

The latest U.S. consumer price index has the potential to be one of the most important economic releases this year - will it provide room for the Federal Reserve to cut rates later in 2023 or are more aggressive hikes on the agenda?

The January CPI is due out at 8:30 ET (13:30 GMT), and analysts expect the monthly topline figure to rise 0.5% and the yearly figure to rise 6.2%.

A lot of the attention is likely to be on the core release, which excludes fuel and energy prices. It is expected to rise 0.4% for the month and 5.5% for the year, but there could be room for an upside surprise as the blockbuster jobs report earlier this month suggested there could be plenty of wage growth pressure.

"Many business contracts typically reset in January, and companies traditionally set new prices, which are seldom fixed lower," said Stephen Innes at SPI Asset Management.

"January price inflation is also correlated with input cost inflation from the prior year -- which was substantial."

2. Ueda nominated for BoJ governor role

The Japanese government Tuesday officially nominated Kazuo Ueda to become the next central bank governor, confirming speculation which started circulating late last week.

If confirmed, Ueda would succeed Haruhiko Kuroda, whose term ends on April 8, and would become the first postwar BoJ governor to come from academia.

He faces the tricky task of adapting his predecessor's complicated yield curve control policy, which has seen the yen fall to a 20-year low against the U.S. dollar, without derailing a fragile economic recovery.

3. U.S. stocks to open higher; Palantir soars after reporting a profit

U.S. stock markets are set to open marginally higher Tuesday ahead of the important consumer inflation data.

By 6:25 ET (11:25 GMT), Dow Jones futures were up 30 points or 0.1%, S&P 500 futures were up 0.2%, and Nasdaq 100 futures were up 0.4%.

Aside from the January CPI release, investors will continue to look at corporate earnings, although the season is coming to a close.

Coca-Cola (NYSE:KO), Restaurant Brands International (NYSE:QSR), and Airbnb (NASDAQ:ABNB) are scheduled to release numbers Tuesday, and their results will be studied for insights into the health of the consumer.

Additionally, Palantir Technologies (NYSE:PLTR) stock soared 18% premarket after the data analytics firm reported its first-ever quarterly profit, while Ford (NYSE:F) stock edged higher after the auto giant announced plans to cut just under 4,000 jobs across Europe as part of a global drive to cut costs and be competitive in the electric vehicle market.

4. Brainard heads to the White House

Lael Brainard looks to have landed a new job, with Bloomberg reporting that the Fed's vice chair is set, potentially as early as later Tuesday, to be appointed to the White House's top economic policy position.

Brainard would replace White House National Economic Council Director Brian Deese, who has announced his resignation.

It's difficult to see what policy implications such a move would have, but Brainard was widely regarded as something of a dove in the FOMC, being generally pro-stimulus. However, the wider narrative has certainly turned towards combating inflation.

5. Crude weakens on U.S. SPR release

Crude oil prices fell Tuesday, weighed by the plans of the U.S. government to release more oil from its strategic reserves.

The Biden Administration announced late Monday that it will sell another 26 million barrels of crude from the Strategic Petroleum Reserve, as part of a release mandated by Congress, adding to the record 180 million barrels released in 2022 to combat rising fuel prices.

This announcement came as something of a surprise as the Energy Department has been trying to stop some of the sales required by 2015 legislation so the reserve can be refilled.

By 06:25 ET, U.S. crude futures were down 1.7% at $78.75 a barrel, while Brent crude was down 1.3% at $85.47 a barrel.

The American Petroleum Institute is set to release its estimate of U.S. crude inventories later in the session, as is the Organization of Petroleum Exporting Countries monthly report.


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