Notes From The Desk: US Inflation Heads Into Overtime
US inflation slowed less ‘swiftly’ than expected in January, challenging the market’s expectations for rate cuts to be ‘ushered’ in this spring.
The headline numbers.
- Headline CPI was 3.1% vs. expected 2.9%
- Core CPI came in at 3.9% vs. expectations of 3.7%.
Beyond the headlines.
- Core services were up 0.7% m/m driven by shelter.
- Core goods fell 0.3% m/m with solid declines in used car prices.
The implications.
If Powell’s comments on ‘60 Minutes’ didn’t temper rate cut expectations, today’s numbers certainly did.
After the report was released, US yields jumped ~10 bps higher, as the market moved the timing of the first cut towards the second half of the year.
