12.02.25 - Hot inflation data

In the US, the Consumer Price Index (CPI) increased by 0.5% in January, leading to an annual raise of 3.0%, up from 2.9% in December. Core inflation also rose by 3.3% on an annual basis while a data point of 3.1% was expected.
This marks the fourth consecutive month of rising inflation. Investors have now reduced the number of rate cuts from to 2 to 1 this year and pushed their expectations from September to December while US President Trump is calling for lowering the interest rates.

Markets: Overall stock markets took a hit right after the data release and are now on the way to recover some of the losses. Same for cryptos while interest rates jumped with the 10-year US Treasury yield above 4.6%. On the back of higher interest rates the US dollar saw some gains, giving some of it back already.

My View: This inflation snapshot is the last before Trump’s tariffs hit. Therefore inflation could remain elevated or even reaccelerate which could prompt an even more cautious stance by the Fed going forward. Looser monetary policy will not be the supporting factor for stock markets in the US for the timing being.
With a continuing higher level of uncertainty, volatility and fast moving asset fluctuations as seen the recent weeks, will not disappear that quickly.
Fluctuations mostly offer selective opportunities. I am happy to share these investment opportunities identified soon with all the subscribers of the Premium Newsletter. The feature is going to be activated soon.

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