Wall Street mixed after smaller-than-expected drop in US CPI

The website inflation continues to slow in the United States, but at a more moderate pace than expected. The website Consumer Price Index (CPI) established in January at 6.4% year-on-year, compared to 6.5% in December. This figure was above expectations for a decline to 6.5% in December. 6.2%.

Core CPI excluding food and energy moderated to 5.6% of 5.7%, while the consensus predicted a drop to 5.7%. 5.5%.

On monthly termsThe headline CPI rose 0.5%, in line with expectations, accelerating from the 0.1% rate recorded in December, while the base rate rebounded 0.4%, also in line with expectations consensus.

Experts from Oxford Economics believe that inflation data will not be well regarded by the Fed. “It was stronger than expected, which, together with the tightness of the labor market and the net easing of conditions in the financial markets, could justify a change in our forecast for the federal funds rate.

“Our subjective probabilities of. An accumulation of another 50 basis points in Fed rate hikes.place the terminal rate for this cycle at 5.25%.would be broadly in line with financial market expectations,” they say.

For Neal Keane, head of sales operations at international brokerage ADSS, “ the Fed’s fight against inflation has come up against a few obstacles. in its bid to move closer to its 2% inflation target.

The publication of this report coupled with the strength of the labor market “ will raise questions at the Fed’s monetary committee meeting next month.. A further 25 basis point interest rate hike is currently expected, but as the fight against inflation is far from over, hikes of more than 25 basis points cannot be ruled out.” , he adds.

John Leiper, chief investment officer at Titan Asset Management, notes that “after a strong January, US stocks have run into resistance recently and could be in trouble going forward.as market players digest the data and recalibrate their expectations.”

“In general, wherever rates peak, Markets will have to shift their attention away from the magnitude of further rate hikes to the fact that rates will remain elevated for some time to come.“, he underlines.

For Tom KremerSenior Strategist at Quintet Private Bank, “U.S. inflation remains on a downtrend, but, as recent revisions and today’s CPI report showed, it is still on a downtrend , the fall may not be so rapid. and smoothly, as the markets have been expecting in recent months”.

“While today’s data was somewhat disappointing for those expecting a rapid normalization of inflationary pressures, we do not believe it fundamentally changes the Fed’s outlook. We expect the fed funds rate to peak just above 5% in the spring, followed by a long pause.“, he believes.

Analysts at Pantheon Macroeconomics believe that “.this report won’t change anyone’s opinion on the inflation outlook.Hawks and doves will find their account there. That doesn’t change the very high probability of a 25bp rally in March, and says nothing about May, which is a long way off. »

DIFFERENT POSITIONS WITHIN THE FEDERATION

The first evaluation of the Fed was announced this afternoon by the President of the Federal Reserve of Dallas, Lori Loganwho planned that interest rate hikes may be sustained longer than expected first if the economic indicators do not meet the expectations of the central bank.

” We must remain prepared to continue rate increases for a longer period than previously envisaged.whether such a trajectory is necessary to respond to the changing economic outlook or to compensate for any untimely easing of conditions,” he stressed.

However, the president of the Philadelphia Fed, patrick harkerleft a more flattering message for investors by stating that believes that the end of interest rate hikes is “near”.He thinks the US central bank’s monetary policy will reach a level tight enough “to keep rates on hold and let monetary policy do its job” at some point this year.

“At the last meeting alone, I voted for a 25 basis point increase, which some would call slow, but is actually closer to cruising speed when it comes to tightening. In my opinion, we’re not done yet…but we’re probably close.” , he said

BRAINARD, BIDEN CONSULTANT

The Federal Reserve is engaged in the difficult task of bring inflation back to the 2% target. and achieve it with asoft landing‘ economy.

In the middle of this pivotal momentwhen the central bank decides how long to keep interest rates at exceptionally high levels in order to restore price stability, it appeared that the president of the United States, Joe Biden has decided to appoint Fed Vice-Chair Lael Brainard as his top economic adviser..

A source close to the White House reported that. Ms. Brainard was chosen to lead the National Economic Council. in the Biden administration, according to Bloomberg and Politico. The announcement could come as early as Tuesday.

Mrs. Brainard will replace Brian Deese and will become, along with Janet Yellen, Treasury Secretary. crucial player in American economic policy.

COMPANIES AND OTHER MARKETS

In the business levelThe earnings season continues. This Tuesday, investors took note of the results reports of Coca Cola and Airbnb, which also gave some “hints” on the evolution of consumption.

Coca-Cola closed the fourth quarter of 2022 with a 16% reduction in profits. In the last three months of 2022, the company will won $2.031 billion against 2.414 billion the previous year. Overall, the numbers are in line with consensus expectations.

Also, David SolomonChairman and CEO of Goldman Sachs, said on Tuesday that the chances of the US economy reaching the long-awaited “…. were weak.soft landingThe country’s economic outlook has improved, which should allow the country to avoid a recession. Nevertheless, the CEO of the bank warned that Uncertainty remains highis in particular due to the inflation and to rising tensions between China and the United States.

In other markets, oil West Texas down 2.56% ($78.06) and the Brent is down 2.22% ($84.65). On the other hand, the euro appreciated by 0.04% ($1.0724), and the ounce of gold lost 0.08% ($1,861). Furthermore, the U.S. 10-Year Bond Yield rises to 3.745% and the bitcoin is up 0.13% ($21,680).