Daily Brief - Guess who's back

TLDR: In January, the Producer Price Index (PPI) for final demand ticked up by 0.3%, contrasting with a slight decline in December.

This uptick reflects a nuanced economic landscape, with services prices leading the charge, rising by 0.6%. However, the goods sector didn't keep pace, marking a 0.2% decrease, underscoring the divergent forces at play in the inflation narrative.

The unexpected strength in producer prices has dampened hopes of the Federal Reserve easing interest rates in the near term, sending Treasury yields upward across all maturities.

This movement is particularly pronounced in shorter-term yields, such as the two-year yield, which rose as much as 10 basis points to 4.68%.

This market reaction, coupled with earlier consumer price data, suggests a recalibration of expectations regarding the Fed's monetary policy path for 2024.

Market Movers: When the 2Y jumps?

Here are the best and worst performing sectors when the US 2Y has historically jumped above 4.7%:

Top 3 Performing Sectors:

1. Energy Sector with a 1-month return of 3.83%
2. Materials Sector with a 1-month return of 3.22%
3. Communication Services Sector with a 1-month return of 2.30%

Bottom 3 Performing Sectors:

1. Health Care Sector with a 1-month return of -0.90%
2. Utilities Sector with a 1-month return of -0.92%
3. Financials Sector (specifically Banks) with a 1-month return of -0.17%

Earnings Update: Walmart reports on Tuesday

Walmart is expected to report a year-over-year increase in earnings on higher revenues. Over the past quarters, Walmart has consistently managed to meet or exceed consensus EPS estimates.

Leading up to the earnings report, there has been a slight revision in the consensus EPS estimate for the quarter, reflecting a modestly more optimistic view from analysts.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Asset Spotlight: JD.com at a recent low

In the 8 past occurrences when JD.com was at a recent low, analysis from Toggle indicated a pattern of a median upward movement in the stock's price over the next 6 months.

Today, Hong Kong equities gained after a report by delivery giant Meituan showed China’s average daily consumer spending during the ongoing Lunar New Year holidays jumped more than 155% from the same period of 2019.