Thursday's Markets Update (February 13, 2025)

13 Feb 2025 by rate3

On Thursday, stocks close higher despite rising producer inflation and falling jobless claims, reinforcing Fed's hawkish stance. European equities rally on hopes for war resolution after Trump's press conference. EU manufacturing slowdown continues, but decelerates. BTC, SOL, and ETH fluctuate in bearish territory amid market uncertainty.

Details

Annual core producer inflation was 3.6% in January, slightly below December's revised 3.7% but well above market forecasts of 3.3%. From 2011 to 2025, it averaged 2.61%, peaking at 9.70% in March 2022. 1Y trend: "Up" (DOL)
Initial jobless claims dropped to 213K in early February, below forecasts, signaling labor market strength. The four-week average also declined, supporting the Fed's stance on delaying further rate cuts. 1Y trend: "Side" (DOL)

World Markets

Eurozone industrial production fell 2.0% YoY in December 2024, less than the expected 3.1% decline. Since 1991, it averaged 0.86%, peaking at 41.60% in April 2021 and hitting a low of -28.40% in April 2020. 1Y trend: "Up" (Eurostat)
European stocks surged, driven by strong earnings and hopes for a Ukraine conflict resolution. The STOXX 50 hit a 25-year high, rising 1.7%, while the STOXX 600 gained 1.1%. Autos and tech led gains, with Adyen up 14%. 1Y trend: "Up"
Japan's producer prices rose 4.2% yoy in January, the highest since May 2023 and the 12th straight month of producer inflation, driven by increases in transport, food, and metals. Monthly prices grew 0.3%, matching forecasts but easing from December's 0.4%. Chemical and steel prices declined. 1Y trend: "Up"

Commodities

Nickel futures dropped below $15,250/tonne, nearing a 4-year low, as potential Indonesian output cuts didn't offset oversupply concerns. Despite Indonesia's plan to slash mining quotas (to 150M/t from 270M/t), Chinese smelting growth and reduced nickel use in batteries weighed on prices. 1Y trend: "Side"

Comment: What's Up With Inflation?

This fourth uptick in annual inflation could indeed be a game changer for crypto. Inflation crossing 3% sends a strong signal to the Fed that its easing policy must not only be halted but also reversed. Of course, the Fed bears responsibility for the inflation itself, as all business owners have simply priced in the Fed's rates and passed those costs on to consumers. Naturally, trade wars and the endless geopolitical havoc also do not help to ease food and energy prices. With the economy, particularly the manufacturing sector, continuing to slow down, it appears my predictions from nearly two years ago have come true: we are entering an era of prolonged stagflation. This could have mixed implications for crypto, depending on the Fed's actions.

If the Fed reverses its policy and begins tightening on its nearest meetings, it could trigger a new bear market for stocks, which would likely affect crypto as well. This is currently the most probable outcome. The less likely scenario is that the Fed will maintain rates at their current level for two to four sessions, till, roughly Q4. If that happens, we may have a bit more time to take profits.