This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
What’s the connection between 2025 U.S. interest rates and arthouse films? Neither may sustain any cuts.
Since June, the 12-month headline inflation rate has not been at 3%. Even though it’s only 10 basis points higher than the 2.9% reading in December, traders are already reducing their bets on an interest rate cut in the first half of 2025 or on one at all due to the psychological shock of seeing that number, which is similar to how a $2.99 coffee might seem much cheaper than a $3 one.
Unless the U.S. Federal Reserve can continue functioning as an autonomous organization, it has always been.Â
U.S. President Donald Trump has seemingly changed his mind once more and stated that interest rates should decrease. At the same time, his tariffs, which range from reciprocal to industry-specific to country-specific, are implemented.
Wall Street didn’t appear to know how to react to the news. Tariffs often hurt prices, but lower rates are generally excellent for investors. Although not as sharply as in some art films, stocks dropped.
What To Note Today
Annual U.S. Inflation Reaches 3%
The Bureau of Labour Statistics said Wednesday that the U.S. consumer price index increased 3% for the year and 0.5% month over month in January. Both numbers exceeded the 0.3% and 2.9% estimates from the Dow Jones. The core CPI, which does not include the cost of food and energy, was also higher than anticipated. The strong inflation report tempered expectations that the United States would lower interest rates further this year. The Federal Reserve.
Trump Reiterates The Need To Lower Rates
On Wednesday, U.S. President Donald Trump posted on Truth Social that he believes interest rates should be lowered, saying, “This would be in line with the impending tariffs! America, let’s rock and roll!” Regarding interest rates, the Trump administration has taken a mixed stance. Trump stated in January that he would want an “immediate” cut in interest rates, but he later claimed that it was “the right thing to do” for the Fed to leave rates steady in January.
Trump Will Declare Retaliatory Tariffs On Thursday
Press secretary Karoline Leavitt told reporters at the White House on Wednesday that the United States could issue reciprocal tariffs by Thursday. “Very simply, if they charge us, we charge them,” Trump stated aboard Air Force One on Sunday, announcing his intention to impose reciprocal tariffs on “every country” that levies import duties on the United States, according to NBC News. Trump signed an order on Monday imposing 25% tariffs on aluminum and steel imports.
India’s Inflation Is Declining
India’s headline inflation rate for January was 4.31%, the lowest since August 2024 and less than the 4.6% predicted by the Reuters poll. This allowed the Reserve Bank of India to keep lowering interest rates. Separately, TNC confirmed that Indian Prime Minister Narendra Modi will meet with Trump and Elon Musk on Thursday in Washington, D.C., to discuss trade and AI policies.
US Markets Decline While Treasury Yields Increase
On Wednesday, a hot CPI report hurt U.S. markets. The Nasdaq Composite was just above the flatline, the Dow Jones Industrial Average dropped 0.5%, and the S&P 500 sank 0.27%. Additionally, the U.S. 10-year Treasury yield rose above 4.6% due to higher-than-expected prices. After reversing previous losses, Europe’s regional Stoxx 600 index climbed 0.11% and recorded another record closing.
The spinoff’s year?
Breakups, like Lennar’s separation of Millrose Properties this week, may take center stage in the story even as Wall Street is waiting for mergers and acquisitions to resume in 2025. If investors play these business maneuvers right, they could unlock shareholder value.
Bottom Line
Less than two weeks before the federal elections on February 23, Germany’s far-right party, Alternative fuer Deutschland, is leading surveys in the country’s eastern area. Part of the reason for its appeal is economic concerns.
The economy of East Germany crumbled with the fall of the Berlin Wall in 1989, with unemployment skyrocketing and local enterprises and companies failing.
Berenberg chief economist Holger Schmieding said these problems have mostly vanished since then. However, Matthias Diermeier, head of IW’s research section for democracy, society, and the market economy, stated in an interview that the far right has attempted to rekindle preexisting sentiments of being a “second-class citizen.”
