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- š CPI Day Arrives as Markets Sit at Records
š CPI Day Arrives as Markets Sit at Records
Markets closed at fresh all-time highs Monday, but the real test comes this morning
Jason Paloma
January 13, 2026 ā¢ Estimated Reading Time: 13 minutes
š Market Vibes
š CPI Day Arrives as Markets Sit at Records
Markets closed at fresh all-time highs Monday, but the real test comes this morning. December's inflation data drops at 8:30 AM ET while JPMorgan kicks off earnings season - two major catalysts that could either validate current valuations or trigger a swift repricing. With the Fed under investigation, banks navigating political pressure, and gold flirting with records, today's data releases could set the tone for the entire quarter.
š CPI Surprise Keeps Markets Calm - JPM Kicks Off Earnings Season
Well, well, well - inflation decided to play nice for once. Markets opened Tuesday morning with the S&P 500 around 6,944, the Dow near 49,540, and the Nasdaq hovering at 23,734 after December's Consumer Price Index came in right on target. The headline number hit 2.7% year-over-year (exactly as expected), while core CPI surprised to the downside at 2.6% versus the 2.8% consensus. That's the kind of data that makes the Fed breathe a sigh of relief - and keeps traders from panic-selling their portfolios.
But before anyone gets too comfortable, remember that CPI data's been about as reliable as your buddy's "guaranteed" stock tips lately, thanks to government shutdown disruptions throwing sand in the statistical gears. Still, a win's a win, and markets are taking it.We're talking about a complete rebuild of digital civilization.
Global AI infrastructure spending is projected to hit between $400-450 billion in 2026, covering everything from new data centers to semiconductor plants to power grid expansions. To put that in perspective, the data center semiconductor market alone expanded 44% year-over-year and analysts expect another 33% jump in 2026.
JPMorgan kicks off earnings season before the bell today, with analysts expecting revenue of $46.25 billion and EPS of $5.02. The big question: how will banks navigate a world where net interest income tailwinds from higher rates might be fading, and whether deal flow can pick up the slack. Bank of New York Mellon and Delta Air Lines also report Tuesday, with Wells Fargo, Citigroup, Bank of America, Goldman Sachs, and Morgan Stanley following throughout the week.
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š Fed Drama Escalates - Bitcoin Consolidates Above $92K
The Department of Justice investigation into Fed Chair Jerome Powell dominated headlines Monday. Powell called it a "pretext" by President Trump to pressure the Fed into cutting rates, and central bankers worldwide rushed to express solidarity. When bank stocks like Capital One (-7%) and Citigroup (-3%) took hits Monday on speculation about Trump's proposal to cap credit card interest rates at 10%, the political-monetary intersection got messy.
Markets are pricing in about a 95% probability the Fed holds rates steady at their January 27-28 meeting according to the CME FedWatch Tool, with potential cuts starting in June. Two cuts for the full year appears to be consensus, assuming inflation cooperates and labor markets don't deteriorate significantly.
Meanwhile, Bitcoin traded around $92,133, up about 1.85% as crypto markets held relatively steady. Privacy coins gained attention as the Powell-Trump saga escalated, with some traders viewing crypto as a potential hedge against political uncertainty. BTC remains well off its recent highs near $125K but has found support above the $90K level.
Gold traded around $4,606 per ounce, approaching fresh record territory as safe-haven demand intensified. When the DOJ investigates Fed chairs and political pressure on monetary policy becomes headline news, precious metals typically benefit from flight-to-quality flows.
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š„ Market Breadth Strong Despite Political Noise
Nine of the 11 S&P sectors closed higher Monday, led by consumer staples, industrials, and materials. The laggards? Financials absorbed pressure amid the Powell investigation and credit card rate cap speculation. Walmart surged 3.00%, Johnson & Johnson gained 2.64%, and IBM added 2.45%, while American Express fell 4.27%, Walt Disney dropped 2.77%, and Visa declined 1.78%.
The CBOE Volatility Index ticked higher Monday, though not to panic levels - more of a "let's hedge before CPI" positioning than genuine fear. With this morning's inflation data, tomorrow's Producer Price Index, and a parade of bank earnings this week, there's ample opportunity for market-moving surprises.
Small caps continue their impressive run - the Russell 2000 is up nearly 5% year-to-date and sitting 13% above November lows. Domestic-focused companies are benefiting as economic data suggests resilience better than many expected. However, with significant debt maturities approaching for many smaller companies, sustainability of this rally remains a question mark.
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š Commodities Mixed, Treasury Yields Near 4.19%
Crude oil futures are trending higher with WTI near $59.82 per barrel, as energy markets balance geopolitical tensions against demand concerns. Trump announced Monday that any country doing business with Iran will face a 25% tariff "on any and all business" with the United States, effective immediately. The move aims to economically isolate Iran as the country faces ongoing anti-government protests.
The U.S. 10-year Treasury yield is near 4.19%, with bond markets positioning ahead of Tuesday's CPI release. Yields have been relatively stable as traders await concrete inflation data before making significant directional bets.
The dollar remains relatively firm despite mixed economic signals, with forex markets pricing in a Federal Reserve that stays on hold while other global central banks consider easing paths. China's central bank extended its gold-buying streak to 14 months, tightening available supply and providing structural support for precious metals prices.
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šø Earnings Week Kicks Off Today - Bank Focus Intensifies
JPMorgan reports this morning before the bell, marking the unofficial start of Q4 earnings season. The consensus estimate calls for $5.01 EPS, representing about 4.16% growth versus the prior year. Bank of New York Mellon expects $1.97 EPS, while Delta Air Lines consensus stands at $1.53, down 17.30% year-over-year.
The big question for banks: can investment banking momentum from Q4 carry into 2026? Analysts are watching for commentary on the rumored $1.5 trillion SpaceX IPO and other potential blockbuster deals. Net interest income guidance will be critical as the Fed's rate hiking cycle appears to have ended.
Consumer credit metrics remain under scrutiny, with card charge-off rates and delinquency trends closely monitored. Banks have noted that consumers continue spending while businesses remain generally healthy, though labor markets have shown some softening.
Wells Fargo, Citigroup, Bank of America, Goldman Sachs, and Morgan Stanley follow later this week, creating a comprehensive picture of how major financials performed in Q4 and what they expect for 2026. Deposit dynamics, loan growth, and M&A pipeline commentary will be key focus areas.
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š The Bottom Line
With the Fed investigation ongoing, bank earnings accelerating, and critical economic data releases throughout the week, volatility may increase from current levels. Gold approaching records and small caps at all-time highs suggest some portfolio positioning for uncertainty, even as major indices reach new peaks. Markets showed resilience Monday, but multiple catalysts today could alter the current trajectory.
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