Geoffrey Smith 

Investing.com — Oil prices and bond yields rise on the signs that Goldman Sachs CEO David Solomon described as “wage inflation everywhere”, after he released disappointing fourth-quarter earnings results on Tuesday. Procter & Gamble (NYSE:) will cast more light on that phenomenon when it reports earnings later. The U.S. 10-year bond yields are rising, pushing their German counterpart to 0% above for the first-time in almost three years. Inflation in the United Kingdom reaches its highest level for 30 years. Also Sony The shock at Microsoft’s (NASDAQ) purchase of Activision Blizzard, (NASDAQ:), has left the stock exchange (NYSE:). This will transform its market position in videogames. This is what you should know about financial markets Wednesday 19 January. 

1 Inflation is everywhere

The rise in inflation has further fueled bond yields around the world to record highs.

Overnight, the yield on U.S. 10-year Treasury bonds climbed 2 basis points higher to 1.90%. This is its highest point in over two years. That came a day after Goldman Sachs CEO David Solomon complained of “wage inflation everywhere” – not least at his own bank, where higher compensation ate into profits and sent its stock down 7%.

In other news, the 10-year German bond yield jumped above 0%. German inflation was at 5.3%, and U.K. inflation rose beyond what had been expected, to 5.4%. Two top Bank of England officials are scheduled to speak shortly and will likely give some clues about the probability of another BoE rate rise at its meeting in February.

2. Is it ready for Player 2?

Sony stock plummeted 13% in Tokyo trading in response to Microsoft’s acquisition of video games publisher Activision Blizzard.  The $69 billion deal, Microsoft’s largest ever, will make the software giant a serious challenge to the Japanese company’s status as the world’s second-largest video gaming company by revenue.

Whether or not the deal will end up restricting access to Activision’s games on Sony’s PlayStation console – the big rival to Microsoft’s Xbox – is yet to be seen. It is certain that antitrust regulators will review the agreement. Traders in Tokyo weren’t waiting for regulators to tell them how bad it would be for Microsoft’s competitors, however.

3. Stocks set to open with dead-cat bounce; P&G earnings eyed, ASML shines

Earnings season broadens out in scope on Wednesday, with reports due from UnitedHealth (NYSE:) and, of special interest given the current focus on inflation, consumer giant Procter & Gamble.  The reports are due before trading begins. ASML, a Dutch company, already reported a significant increase in profit and dividends.

United Airlines Prologis (NYSE:) And pipeline operator Kinder Morgan Reports on (NYSE:) will also be available, Morgan Stanley (NYSE:) and Bank of America (NYSE:) will flesh out the details of Wall Street’s fourth quarter.

The stock market is expected to only partially recover from Tuesday’s heavy losses. Stocks were at 6:20 am ET (11120 GMT) up 62 points or 0.2% while they were up 0.2% (0.3%).

This data calendar contains very little data, the most notable being December’s housing starts and December’s building permits.

4. As war clouds gather, Blinken will meet Lavrov

In an attempt to prevent another Russian invasion, U.S. Secretary Of State Anthony Blinken will be meeting Sergey Lavrov later in the week.

Talks at a lower level of government have not yielded much. On Tuesday, the German Foreign Minister Annalena Bock returned from Moscow empty handed.

Russian forces will conduct joint maneuvers within southern Belarus. This is less than 100 miles away from Kyiv, Ukraine.

5. After the explosion of the Iraq-Turkey pipeline, oil prices hit new heights; API eyes

Crude oil prices remain close to their seven-year peak despite slight improvement following news that an important export pipeline which transports oil from Iraqi Kurdistan into the Mediterranean had reopened.

The Kirkuk-Ceyhan pipeline, which runs through what has been one of the world’s most unstable regions for the last 20 years, was damaged by a mystery blast on Tuesday. According to Turkish officials, the pipeline is capable of transporting 400,000 barrels per day to international markets. It currently operates at 75,000.

At 6:30 AM ET futures had still climbed 1.2% at $85.83 per barrel while they were up 1.0% at $88.35 per bar. The American Petroleum Institute releases its weekly estimate of U.S. stockpiles at 4:30 PM ET, a day later than usual owing to Monday’s holiday.