Beaten Predictions for U.S. Inflation in January
Core and Headline Inflation Exceeds Expectations
The headline and core inflation readings for January in the United States were higher than anticipated, showing that inflationary pressures are still present in the nation. Although this is the case, the market’s early response looks to be in sharp contrast to the data, with the US dollar falling and US equities (SPX) climbing. As investors process the information, the yield on 2-year government bonds is still unknown. It remains to be seen if the market response will last.
Uptick Caused by Energy, Food, and Service Prices
When the Consumer Price Index data is examined more closely, it is found that food and service costs as well as energy prices grew by 2%.
Focus on Fed Officials and Inflation-Reduction Objective
The focus will be on Fed officials in the following days as they are anticipated to underline the Fed’s goal of decreasing inflation, which might result in more hawkish bets.
Money Markets Modify the Terminal Rate for 2023
The implied Fed funds futures table shows that money markets have changed the 2023 terminal rate from 5.180% before to the announcement to 5.213%.