Is progress on inflation stalling?

Prices on displayed in a New York grocery store on Feb. 1, 2023.

Leonardo Munoz | Corbis News | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

China stocks rise
Asia markets were mixed Monday as Chinese stocks climbed on the back of positive travel data, while Hong Kong stocks dropped. The CSI 300 gained as trading resumed after the Lunar New Year holidays and the Hang Seng index fell. U.S. stocks closed Friday in the red after hotter-than expected producer price index data for January. The benchmark S&P 500 slipped, while the Dow lost 0.37% and the Nasdaq Composite fell 0.82%. Wall Street is closed Monday for Presidents Day.

Weak dollar on Asian currencies
The U.S. Federal Reserve is expected to cut interest rates later this year, which may boost some Asian currencies as a weak U.S. dollar is seen as positive for emerging markets. The Chinese yuan, the Korean won and the Indian rupee are expected to benefit from the Fed’s easing monetary policy.

Boeing no show
Boeing will not have any commercial aircraft at the Singapore Airshow after recent troubles over a midflight blowout of a fuselage panel on one of its 737 Max 9s in January. This means its rival Airbus and China’s homegrown passenger jets will grab the spotlight at the event held this week.

Sony margins
Sony’s declining margins in its critical gaming business has become a major issue despite higher-margin products like digital game sales and its PS Plus subscription service. The Japanese tech giant slashed its sales forecast for its flagship PlayStation 5 console for the fiscal year, which wiped off around $10 billion off its market value last week.

[PRO] Bullish on equities
Morgan Stanley has a positive outlook on equity markets despite some concerns over valuations. The bank’s Andrew Slimmon highlighted: “It’s going to be a good year for equities,” and picked three stocks that are in play.

The bottom line

Is progress on inflation stalling?

That’s the fear gripping Wall Street as another inflation gauge on Friday came in hotter-than-expected.

The producer price index rose 0.3% in January — the largest increase since August and higher than the 0.1% forecast. Excluding food and energy, core PPI jumped 0.5%, again well above consensus.

It is yet another sign of stubborn price pressures across the broader U.S. economy. And it came just days after an unexpectedly hot CPI reading, which gave markets a nasty jolt.

Both data have stoked investor worries on whether inflation is firmly under control. The latest developments also reinforce the Fed’s caution that it will need to see more evidence of disinflation before committing to lower rates.

Mohamed El-Erian, Allianz chief economic advisor, posted on X that like the CPI data, the PPI report was a “further indication that the “last mile” of the inflation battle is more complex than many had assumed (and still assume).”

Some economists even argue the jump in Friday’s data will likely push January’s personal consumption expenditures price index, the Fed’s preferred inflation gauge.

“The PPI data means we can finalize our core PCE forecast for January, at 0.32%. That would be the biggest increase since September,” Pantheon Macroeconomics wrote in a note on Friday. “But the three months since then all saw much smaller gains.”