The January Consumer Price Index (CPI) report revealed a 3% year-over-year inflation increase, marking the fourth consecutive month of rising inflation. Month-over-month prices rose by 0.5%, the largest monthly increase since August 2023. Shelter costs accounted for nearly 30% of the total CPI rise, with some increase attributed to California wildfires. Food prices also contributed, with the food index rising 0.4% in January, particularly driven by a 1.9% increase in the prices of meats, poultry, fish, and eggs. Following the release of this inflation data, stocks initially fell, but losses were reduced later in the session. Treasury yields on 10-year bonds surged above 4.65%, and the likelihood of a March rate cut decreased significantly from 5% to 2.5%. While the inflation figures were somewhat concerning, they aligned closely with expectations, and the first quarter is traditionally known for a New Year’s bump amid various economic factors.

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