Author: Jamie Dutta, Global Market Analyst, Vantage Markets
Release date: 12/02/24
Markets will see if the recent strong data out of the US translates into higher price pressures on Tuesday. The January US inflation data is forecast to print lower on an annual basis and steady in the monthly readings. The prior data was stronger than expected and that also underscores the bumpy path back to the Fed’s 2% target.
This contrasts with the central bank’s favoured gauge, the personal consumption expenditures (PCE) price index, which was in line with economists’ expectations and translated to an annualised pace in keeping with the Fed’s inflation goal.
Indeed, on a three-month and six-month annualised basis, underlying core PCE inflation is running below target while the increase from a year ago was 2.9%, the smallest rise since March 2021.
Whether CPI follows recent data which has consistently surprised to the upside is a key question. The blowout January jobs report indicated that wage growth picked up to 4.5% after showing signs of cooling. The monthly increase was more than double estimates and corresponds to a 7% annual increase.
Markets have responded to the stream of positive reports, with Treasury yields rising close to the year-to-date top while the dollar recently hit multi-week highs. Another tick up in inflation will further boost this rally and dent the chance of a May rate cut which is currently just above a coin toss.
==
Help keep news FREE for our readers
Supporting your local community newspaper/online news outlet is crucial now more than ever. If you believe in independent journalism, then consider making a valuable contribution by making a one-time or monthly donation. We operate in rural areas where providing unbiased news can be challenging. Read More About Supporting The West Wales Chronicle
