The annual rate of CPI in the United States fell less than expected in January, and the Fed's expectations for interest rate cuts were hit again
Finance Associated Press, February 13 (edited by Zhao Hao) On Tuesday (February 13), local time, the latest announcement of the overall inflation rate in the United States fell less than expected, and failed to enter the "2 era" as the market wished.
According to specific data released by the U.S. Department of Labor, the seasonally adjusted consumer price index (CPI) in the United States rose by 0.3% month-on-month in January, the largest increase since September last year, higher than the 0.2% expected in December last year;
This brought the non-seasonally adjusted CPI to 3.1% year-on-year in January, the lowest level since June 2023, but higher than the market expectation of 2.9%, compared to 3.4% in December.
In terms of sub-data, food prices rose by 0.4% month-on-month and 2.6% year-on-year, energy prices decreased by 0.9% month-on-month and 4.6% year-on-year, of which gasoline prices decreased by 3.3% month-on-month and 6.4% year-on-year, and fuel prices fell by 4.5% month-on-month and 16.2% year-on-year.
Core CPI, which excludes instability factors such as fuel and food, rose 0.4% month-on-month, the largest increase since May last year, slightly higher than market expectations of 0.3%, and 3.9% year-on-year, the lowest level since May 2021, but the market had expected it to fall to 3.7%.
Looking at the breakdowns, the year-on-year growth of transport services (9.5%) and housing (6.0%) significantly outperformed the core CPI, and while both were down from December, the analysis pointed to a new weighting in January's data, which may explain in part why the data was stronger than expected.
Analyst Katia Dmitrieva also mentioned that the "super-core prices" that the Fed is particularly concerned about, excluding housing prices, appear to be stronger, with this indicator rising 0.85% month-on-month and 4.3% year-on-year, the largest increase since April 2022 and May 2023, respectively.
After the release of the data, the market's expectations for the Fed's rate cut path also changed significantly. According to CME Group's FedWatch tool, traders are pricing in a nearly 60% chance that the bank will maintain current interest rates in May, compared to a 40% probability before the data.
The yield on the 10-year Treasury note jumped more than 10 basis points, the yield on the 2-year Treasury note, which is most closely correlated with the Fed's interest rate expectations, also rebounded to a new high since December 13, 2023, and the dollar index surged 70 points higher to around 104.80, the highest level in nearly three months.
Brian Jacobsen, chief economist at Annex Wealth Management, said the slightly hot CPI did send chills down the spine for investors. "The Fed does not have a coherent set of criteria for cutting rates, and we all know that the timing of the rate cut may be delayed. ”
Last month, the Fed announced that it would keep the target range for the federal funds rate unchanged at 5.25% to 5.50%. At the time, Powell said at a press conference, "I don't think I'll be able to get enough confidence at the March meeting to confirm that interest rate cuts will start in March." ”
Jacobsen added, "If rate cuts are a confidence game, we don't know when we'll get enough confidence to cut rates, or whether a slight pickup in inflation will undermine their confidence to cut rates." This is undoubtedly an increase in the volatility of bonds. ”
(Finance Associated Press Zhao Hao)