and strong bank results set the table for a strong earnings season. consumer price inflation in the us was 2.9% in the 12 months to december. we will break down what that means in a moment. across the pond, a bell will have more on the m a ket bell will have more on the m a moment. across the pond, a surprise full in uk inflation in a moment. across the pond, a surprise full in uk inflation but it's still above the bank but it's still above the bank of england target, keeping the of england target, keeping the uk economy under pressure. and uk economy under pressure. and more bad news for germany's more bad news for germany's economy. gdp shrank for a economy. gdp shrank for a second year in a row, just over second year in a row, just over a month before a crucial a month before a crucial elections. also, cashing in on elections. also, cashing in on trump's china terror threats, trump's china terror threats, market businesses look to pick up the businesses look to pick up the slack. we begin in the us, slack. we begin in the us, where prices edged up more than where prices edged up more than expected in december, driven expected in december, driven higher by food and energy higher by food and energy costs. that didn't stop stock costs. that didn't stop stock markets in the us from soaring markets in the us from soaring on the news that the opening on the news that the opening

bell will have more on the bell will have more on the market reaction in a moment. consumer prices rose 04% last month after climbing 0.3% in november. it means that in the 12 most to december prices rose 29%, up from 2.7% in november.

continuing, which is the key that could unlock rate cuts from the federal reserve. the federal reserve can't control energy and food costs, which are set globally factors including climate, but they can control service prices so, they decline, that's when the fed will feel more confident enough to cut interest rates. if will feel more confident enough to cut interest rates.— to cut interest rates. if you look at 396 _ to cut interest rates. if you look at 396 roughly, - to cut interest rates. if you look at 396 roughly, which l to cut interest rates. if you | look at 396 roughly, which is look at 3% roughly, which is where we are right now, but still 4% above the federal reserve target. what does that tell us about how tough the battle is going to be to bring it down and make a difference, because we've seen the profound effect it's had and how it had a knock—on effect on the election result. a knock-on effect on the election result.— a knock-on effect on the election result. effect have been saying _ election result. effect have been saying this _ election result. effect have been saying this for - election result. effect have i been saying this for months, that this is going to be the trickiest part of the whole inflation journey, trickiest part of the whole inflationjourney, and it's inflation journey, and it's certainly inflationjourney, and it's certainly proving to be the case. a 0.1% drop in the core

rate of inflation has sent markets searching for top this is how slow progress is, but it's is how slow progress is, but its progress nonetheless. i think, compared to how much expectation there was full strong inflation today, its not been met, so it's not as bad as expected, and that's what the markets are reacting to. today, uk inflation _ markets are reacting to. today, uk inflation data _ markets are reacting to. today, uk inflation data is _ markets are reacting to. today, uk inflation data is also - markets are reacting to. today, uk inflation data is also out, . uk inflation data is also out, also surprise. it comes against also surprise. it comes against a backdrop of real problems of a backdrop of real problems of a lack of growth in the uk. how does this fit in? it a lack of growth in the uk. how does this fit in?— does this fit in? it doesn't tell us anything _ does this fit in? it doesn't tell us anything about - does this fit in? it doesn't - tell us anything about growth. we are keen to hear more about gdp tomorrow for the it is his pressure about stagflation a much bigger decline when expected, particularly in that sticky service price inflation, but no victory lap yet. pressure in the bond market is

down to economic policy. there is a lot of hurdles for the uk to get over to get back on a more secure fiscal footing. we will talk more _ more secure fiscal footing. we will talk more about that tomorrow. thank you very much forjoining us. the dowjones the dow jones industrial average the dowjones industrial average is up, and so is another index. service is the nasdaq. let's dig into the markets reaction now — we have uma moriarity, senior investment strategist & global esg lead at centequuare thank you forjoining us. why are we seeing this outsized reaction from the markets, given that we are still seeing energy and food prices higher? what the markets are looking for is an excuse. inflation

data came in a bit better than expected and we saw a big decline on the ten year treasury yield on the back of that market surge grabbing onto that market surge grabbing onto that one data point. what i would say is that one day to your point doesn't make trend. we have been convinced in the part that inflation is probably going to be higherfor a bit longer. there are a lot of structural things driving prices up. we don't really know what policies are going to get implemented and how that is going to invite inflation and growth, how that will impact the labour market, so there is a lot of uncertainty. i think the market reaction is a brief rally but not indicative of something long term. what's been going — something long term. what's been going on _ something long term. what's been going on in _ something long term. what's been going on in the - something long term. what's been going on in the market| been going on in the market lately, with these high yields? is the news today moved that at all? ~ ., .,

is the news today moved that at all? ~ . . , is the news today moved that at all? ~ ., ., , .,, is the news today moved that at all? ~ . . , .,, ., all? we have a big drop down in the treasury — all? we have a big drop down in the treasury yields _ all? we have a big drop down in the treasury yields this - the treasury yields this morning on the back of inflation data. on the back of the strong something in the banking sector. i still think about the ten year treasury yield, those long—term rates. it's been controlled by many different market forces and if we think about the structural pieces of that ten year treasury yield, things like inflation, growth, there is a lot of pressure across the board all those things. from an inflation perspective, there are a lot of things, like the continued housing shortage. although we have some relief in the past year on that front, in the past year on that front, in the next few quarters, we are seeing that supply, back off and we are still dealing with a structural undersupply of housing and that's a big part of the inflation number. we'll continue to be a bit higher.

what is the premium driving interest rates higher? we are not seeing a structural reason for those ten year treasury yields dropping at the moment. thank you forjoining us. now to germany where the economy shrank last year, for the second year in a row. initial calculations show gdp in europe's biggest economy fell by 0.2%. the news comes less than six weeks before general elections, where the main governing party, chancellor olaf scholz�*s social democrats, is currently lagging in third place in opinion polls. salomon fiedler is an economist at berenberg bank. he told business today more about some of the particular barriers holding back germany growth. the problem is that very large amounts of structural problems are affecting all production sectors at the moment, bringing growth down. so the amount of

labour labour will be lower going forward. and we have an irrational energy policy, making productions much more. we have excessive regulation, which slows everything down, very high tax rates, which sapped the incentives to put an effort in and go for growth opportunities, so a lot of sites where we would need structural reforms. this is an environment. so a lot of potential issues that could be addressed by the next government. in other news... the us markets watchdog — the sec — is suing elon musk, alleging he failed to disclose a large number of shares that he'd bought in twitter before declaring his intention to take over the platform. the lawsuit alleges that the tesla boss saved 150 million dollars, buying the shares at "artificially low prices." responding, mr musk called the sec a "totally broken organisation."

us chipmaker intel has said it it will separate its venture capital and investment arm into a standalone company as it seeks to cut costs and increase efficiency. intel capital — a prominent tech investor with more than five billion dollars in assets — is expected to separate in the second half of this year and will get a new name. intel would remain an anchor investor in the new venture fund. to india now, where businesses are focused on the incoming trump presidency and the impact of its tariff policies that might follow. he will be inaugurated on monday, but already the president—elect�*s tariff threats have been making global traders nervous. but in india, manufacturers are more optimistic, hoping to benefit from companies seeking to find new factories located outside of china, the us�*s main trade adversary. archana shukla reports.

something energy. hoping donald trump's threat of a tariff war with china might move business. these are motherboards, the computer hardware that powers your laptops and desktops, remotes, even appliances. until five years ago, india was completely reliant on imports for such hardware but today factories like these manufacture almost 50% of it. this is one segment where india is trying to push its manufacturing muscle. this makes india well placed to fill the gap. if and when the us enforces high tariffs on chinese imports, they will be forced to look for alternatives.- forced to look for alternatives. ~ ., , ., alternatives. we are poised for the second _ alternatives. we are poised for the second term _ alternatives. we are poised for the second term of _ alternatives. we are poised for

the second term of president l the second term of president trump. i think global supply chain china are hopefully ready with a solution. india is a great choice, we feel, so we have talked to us potential customers and so they know about our offering and capabilities in india. the us is one of— capabilities in india. the us is one of india. _ capabilities in india. the us is one of india. wrote - capabilities in india. the us. is one of india. wrote largest trading partners and its biggest export market. it's not just goods. the export services of talent that fuels the us tech industry.— of talent that fuels the us tech industry. of talent that fuels the us tech indust . , ., , tech industry. they tax us, we tax them- _ tech industry. they tax us, we tax them. if _ tech industry. they tax us, we tax them. if india _ tech industry. they tax us, we tax them. if india charges - tech industry. they tax us, we tax them. if india charges us | tax them. if india charges us 10096 tax them. if india charges us 100% and — tax them. if india charges us 10096 and we _ tax them. if india charges us 10096 and we charge - tax them. if india charges us 10096 and we charge them i tax them. if india charges us - 10096 and we charge them nothing 100% and we charge them nothing for the _ 100% and we charge them nothing for the same? 10096 and we charge them nothing for the same?— for the same? economists say india will need _ for the same? economists say india will need to _ for the same? economists say india will need to look - for the same? economists say india will need to look at - for the same? economists say india will need to look at its . india will need to look at its own trade policies to deal with trump must probe aggressive tactics. . . , trump must probe aggressive tactics. , , , ,, tactics. trump is very pro-us business _ tactics. trump is very pro-us business and _ tactics. trump is very pro-us business and he _ tactics. trump is very pro-us

business and he has - tactics. trump is very pro-us business and he has a - tactics. trump is very pro-us business and he has a us - tactics. trump is very pro-us| business and he has a us first kind of approach. whatever the us business are going to face an issue, be it any country, be it in europe or otherwise, he is going to protest against it. if india continues to have high tariffs on us products. to ease protectionism, _ tariffs on us products. to ease protectionism, looking - tariffs on us products. to ease protectionism, looking to - tariffs on us products. to ease| protectionism, looking to boost trade that helps to create more trade that helps to create more jobs. that's all from us. jobs. that's all from us. stay with us here on bbc news. stay with us here on bbc news.

hello from the bbc sport centre. at the australian open tennis, defending champion aryna sabalenka moved into the third round in straight sets against spain'sjessica bouzas maneiro. coco gauff and naomi

osaka are also through. but the biggest shock of the tournament so far came when last year's runner—up, zheng qinwen, lost to german veteran laura siegemund. the fifth seed is the highest ranked playerfrom either singles draw to lose in melbourne so far. i had ihada i had a lot of chances to break her in the first set but in that moment perhaps my concentration was not there. there were easy mistakes in that moment. it was a bit tricky for me in the first set also. i didn't perform good enough but, at the same time, i thought she played really good today. novak djokovic made history when he overtook roger federer to compete in the most major singles matches ever. in his 430th grand slam contest he beat portuguese qualifier jaime faria by three sets to one to move into the third round. british number one jack draper also went through after digging deep to beat home hope

ta nasi kokkinakis. the 15th seed came back from two sets to one down to win