The U.S. Department of Labor released its Consumer Price Index (CPI) report on February 2, showing that inflation rose in February from the same month last year, but the increase was in line with expectations and the annual inflation rate for all items was 6%. The cooling of inflation has eased fears, but concerns about financial contagion remain widespread. Market strategists expect more decisions from the U.S. central bank on the Federal Funds rate.
Markets await the Fed’s rate decision after the CPI report
According to the latestreportfrom the U.S. Bureau of Labor Statistics, inflation matched expectations in February, with the Consumer Price Index (CPI) rising 0.4% last month, equivalent to a 6% annual pace.” Over the past 12 months, the all items index has increased 6% before seasonal adjustment.” the CPI report stated.” The shelter index is the major contributor, accounting for more than 70% of the monthly all items increase, with the food, recreation, and home furnishings and operations indexes also contributing.”
Overall stock market sentiment improved as three of the four U.S. benchmark stock indexes rose, with the exception of the Russell 2000. On Monday, however, three of the four benchmark indices fell, with the exception of the Nasdaq Composite Index. Also on Monday, the 2-year Treasury yield posted its largest three-day declinesince “Black Monday” in 1987. However, on Tuesday after the CPI release, the 2-year Treasury yield rebounded
According to Kevin Cummins, chief U.S. economist at Natwest Markets, consumer inflation declined but did not have a significant impact on the market. In an interview with CNBC (28th), Cummins said, “How important this [CPI] is, given the background, it’s definitely not enough to move the market right now.” Analysts at Natwest Markets also expect the Fed to not raise the federal funds rate in March. After the release of the Labor Department’s CPI report, the stock market showed some improvement, but precious metals such as gold and silver experiencedslightdeclines.
The day before, on Monday, the price of gold rose 2% against the U.S. dollar and the cost of silver per ounce rose 6%. However, according to New York spot prices, both precious metals experienced declines at 9 a.m. Tuesday, with gold down 0.80% and silver down 0.71%. Conversely, cryptocurrencies rebounded strongly, with global cryptocurrency market capitalization up 11.17% to $1.13 trillion. Bitcoin (BTC) rose 14.72% above the $26,000 per unit zone, while the second largest crypto asset, Ethereum (ETH), surged 8.43% to $1,744 per ether.
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