CPI rose 0.5%m/m in January, after rising 0.1% in December, the Labor Department reported on Tuesday. For his part, core prices rose 0.4% m/m.
Richmond Fed President thomas barkin said on Tuesday that the annual increase is also in line with the Fed’s expectations. “It’s more or less expected. Inflation is normalizing, but it’s coming down slowly. I just think there’s going to be a lot more inertia, a lot more inflation persistence than maybe we all want.” he commented in an interview with Bloomberg TV after the report was released.
However, after a hectic login, the return of the 10-year bonds operated at 3.726%, its highest level since January 3, reflecting market expectations that the Fed will keep interest rates higher for longer.
The performance of the two year notes especially sensitive to expectations of rate hikes, it rose to 4.583%, its highest since early November.
The yield curve between the two-year and 10-year notes inverted further, at -86 basis points, after declining to -88 basis points last week.
Futures rose as investors expect the Fed rate to peak at 5.243% in July. For December, the market puts it at 5.008%, more than 50 basis points above the level before last month’s strong jobs data, which stoked fears of further tightening.
Source: Ambito
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