Wake Up Call - Feb 21

Good Morning. At the open, major U.S. markets have opened broadly lower, following Core CPI data that exceeded expectations and renewed concerns that the Fed may still need to raise rates to tame inflation.

Asia:
Hang Seng Index +0.41; Shanghai/Shenzhen 300 CLOSED; NIKKEI 225 -0.14%; BSE SENSEX 30 -0.46%; KRX 100 -0.12%

U.K. & Europe:
DJ STOXX 50 Index -0.73%; FTSE 100 -0.69%; CAC 40 -0.34%; DAX -0.54%; Russian RTS Index +0.75%

KEY HEADLINE NEWS

• The Consumer Price Index for January was reported at 8:30 a.m. The Core CPI figure, excluding volatile food and energy, rose 0.3%, ahead of the Bloomberg survey median expectation for a 0.1% increase. Year over year, core consumer prices rose 2.7%, ahead of the 2.6% reported in December. The Fed's preferred figure is the personal consumption expenditures index. The Commerce Department reported on February first that the index rose 2.2% in December, and remained above the 2.0% level that sets off the Fed alarm.
• Concluding its two-day meeting, the Bank of Japan raised the government benchmark rate a quarter percentage point, to 0.5%. The decision passed on an 8 to 1 vote, but the bank indicated that there were few signs of inflation, and that it expected the economy to continue growing. The BOJ also stated it would proceed slowly with any future adjustments. Full text of the BOJ statement provided here.
• Weekly mortgage applications declined 5.2% in the week ended February 16th, despite a decrease in borrowing rates. The purchase index, which measures new loans for home purchases, fell to its lowest level since October 2006, while refinancing activity declined 5.4%.
• The British are leaving! The British are leaving! The Brits have had enough, as Tony Blair announced that Britain will reduce its troop count in Iraq sharply.
• Following the deadline expiration today, the International Atomic Energy Agency (IAEA) is expected to report that Iran has defied its 60-day ultimatum to suspend nuclear fuel activities. We expect rhetoric from all sides to tick up today and tomorrow.
• This week has its share of key economic news, corporate events and important Fed appearances. See our report, "The Greek's Week Ahead" for all the details.

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Check back in later this morning, as "Today's Morning Coffee" will outline in greater detail the day's activity in overseas and commodity markets, and provide economic data & analysis and stock specific news. (disclosure)