Markets cautious ahead of CPI release; US equity futures fall, Japanese stock indexes hit new highs, bonds and currencies both drop, gold and silver fluctuate at high levels, Iran situation boosts oil prices.

Investors are turning their attention to regions outside the United States, with market volatility focused on Japan. Driven by news that Sanae Takaichi may hold a general election at the end of January, Japanese stock indices surged to new highs, while bonds and the yen came under pressure.

On January 13, US stock index futures collectively fell, European stock indices opened with mixed movements, and most Asian indices rose. US bonds were under pressure, and the dollar was basically flat. Gold and silver fluctuated at high levels; base metals such as copper, aluminum, and tin rose; oil prices increased, and cryptocurrencies moved higher.

The market focus has shifted toward attention on US inflation data and upcoming corporate earnings reports, along with other fundamental indicators. Previously, risk aversion triggered by news of Federal Reserve Chairman Powell facing a judicial investigation has eased significantly, with the mainstream market view now regarding it as short-term "political noise." Meanwhile, investors are also awaiting a Supreme Court ruling on the legality of Trump's tariff policies.

Chris Larkin from Morgan Stanley's E*Trade said:

“After shaking off last week’s geopolitical surprises, the US market will turn to domestic political developments. Unless there are further surprises, the market may shift its attention to corporate earnings and inflation data.”

Major market moves are as follows:

Dow futures down 0.08%, S&P 500 futures down 0.07%, Nasdaq 100 futures down 0.16%

Euro Stoxx 50 opened up 0.1%, FTSE 100 down 0.1%, CAC40 down 0.2%, DAX30 up 0.1%.

Nikkei 225 closed up 3.10% at 53,549.16 points, a record high; Korea KOSPI closed up 1.47% at 4,692.63 points.

The US 10-year Treasury yield rose 1 basis point to 4.19%; Japan’s 10-year bond yield rose 6 basis points to 2.150%.

The US Dollar Index was basically flat; USD/JPY rose 0.5% to 158.94.

Spot gold fell 0.2% to $4,590.17 per ounce.

Bitcoin rose 0.9% to $91,774.31; Ethereum rose 1.3% to $3,131.09.

US stock index futures broadly declined as the market awaits the release of December CPI data tonight.

With statistical distortions caused by the government shutdown fading, economists expect core CPI year-on-year growth to rebound to 2.7%. Due to a rebound in housing inflation and potential tariff cost pass-through, the inflation rate remains stubbornly above the 2% target, virtually eliminating expectations of a rate cut in January.

Meanwhile, according to Bloomberg Industry Research’sMichael Casper andWendy Song, US Q4 earnings will start to be formally released later this week and are expected to show strong performance.

The “Takaichi trade” is making a comeback in Japanese financial markets. The Nikkei 225 jumped more than 3% on Tuesday, setting a historical record. Meanwhile, Japanese bonds tumbled across the board, with 10-year yields climbing to their highest since February 1999 and 20-year yields hitting a new record. In the currency market, the yen fell to 158.98 against the dollar, its lowest since July 2024.

According to sources, as reported by CCTV News, Japanese Prime Minister Sanae Takaichi has informed LDP officials of her intention to dissolve the lower house and hold early elections on the 23rd.

Analysts note that if Sanae Takaichi wins a stronger mandate in an early election, it would further solidify her expansive fiscal stance and preference for loose monetary policy. This outlook, while boosting equities, also raises concerns about Japan’s debt sustainability, intensifying the selling pressure on bonds and yen.

MLIV strategists said:

Asian equities have continued their recent upward momentum, with investor concerns over Powell’s tensions with the Justice Department also providing an extra boost. For those seeking AI investment opportunities, Asian markets offer abundant options, with Chinese, Korean, and Japanese companies all at the forefront of developments in this field.

Gold and silver fluctuated at high levels. Overnight, triggered by news that Fed Chair Powell was under judicial investigation, risk aversion soared, sending gold and silver to record highs. As market analysis increasingly regards the event as “political noise,” some safe-haven buying retreated and the metals consolidated.

On the news front, according to a CME Group notice on January 12, a normal review of market volatility will lead to changes in margin calculation for gold, silver, platinum, and palladium contracts: margins will switch from a fixed amount to a set proportion of notional contract value. The new rates take effect after the close on January 13.

For traders, this mechanism shift means risk exposure will directly follow market swings. High prices or volatility may trigger frequent margin calls, locking up more capital and putting heavy pressure on highly leveraged operators. In the short term, this could tighten market liquidity and force fast position adjustments or liquidations, amplifying volatility.

Aluminum prices have neared their highest levels since early 2022, and tin prices have risen for a third consecutive session, now up nearly 20% year-to-date. Base metals have had a strong start to 2026, extending last year’s upward momentum.

The current rally is mainly driven by two fundamental expectations: first, market consensus that ongoing Fed rate cuts will support global industrial demand, while supply struggles to match potential growth; second, rapid AI development has notably lifted structural demand expectations for key metals needed in data centers, grid upgrades, and electronics—especially copper—providing long-term price support.

Crude oil prices rose amid tensions in Iran. Brent crude rose over 0.6% to $64.26 per barrel, its highest since November.

Risk Warning and DisclaimerThe market is risky, and investments must be made with caution. This article does not constitute personal investment advice and does not take into account individual investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article suit their specific circumstances. Investment based on this information is at your own risk.