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Deutsche Bank Research’s Early Morning Reid macro strategy showed that analysts’ expectations for the consumer price index are slightly better than consensus.
The New York Fed’s inflation expectations report showed that three-year inflation expectations fell to 2.35% from 2.62%. Now it’s at a minimum level since 2013. One-year inflation expectations remained essentially unchanged at 3%.
Gas prices fell nearly 2.5% in January compared to December, and U.S. economists at Deutsche Bank Research expect headline CPI to rise 0.15% (0.2% consensus) and l ‘Core CPI up 0.27% (with consensus at 0.3%).
“This would see year-over-year core CPI fall two-tenths to 3.7%, and headline CPI fall four-tenths to 2.9%, both in line with consensus,” analyst Jim Reid wrote.
Fed Governor Michelle Bowman said it was still “too early to predict when and how much the Fed will cut rates,” as “many risks remain to the Fed’s inflation fight.”
Richmond Fed President Tom Barkin said there was a real risk that inflationary pressure would continue.
Market expectations for Fed rate cuts show that 91.5% see no change in rates for March. “Expectations for Fed rate cuts have changed little, with a slightly less than one-in-five chance priced in a 25 basis point Fed cut at the March meeting, and an unchanged 112 basis point cut expected by December.” , Reid said.
Furthermore, Treasury bond yields (NASDAQ: TLT) remained stable, with the 10-year bond (US10Y) rising 0.4 basis points and the two-year yields (US2Y) falling 0.6 basis points.