10.02.25 - Comeback of the January scenario

The topic inflation has once again become a key market driver, fueled by the latest policy plan on tariffs, which has caught the attention of US consumers.
On Friday, the latest consumer sentiment survey revealed that one-year inflation expectations surged to 4.3%, up from 3.3% last month.⁠ This marks the highest inflation expectation reading since November 2023 and the second consecutive month of "unusually large" increases.
Notably, this is just the fifth time in 14 years that the survey has recorded such a significant one-month rise - defined as increase of at least one percentage point in year-ahead inflation expectations.⁠

Markets: Immediate reaction with profit taking and some sharp drops in stock prices and risky assets after the data release. Interest rates saw an increase together with the USD. Gold, again the winner.

My View: Markets are reacting nervously to any data that deviates from expectations, likely due to the high volume of speculative bets influencing market sentiment in the short-term. The markets might remain vulnerable the coming days and weeks, so far always with a fast comeback.

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