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US December CPI Y/Y +2.7% vs 2.7% expected
Key Takeaways (30s Read)
US December CPI fell short of expectations, impacting markets significantly.
The US December Consumer Price Index (CPI) recorded a year-on-year increase of +2.7%, aligning with expectations, but the Core CPI year-on-year came in at +2.6%, falling short of the anticipated +2.7%. This has triggered a classic dovish reaction in the markets. Initially, the market was pricing in a 52 basis point easing by year-end, which has now risen to 57 basis points. The data confirms a previous easing seen in November, which had been treated skeptically due to shutdown-related distortions. US stocks are up, the dollar is down, precious metals are gaining, and US yields are falling. While this situation should support risk sentiment due to declining inflation and a strengthening economy, potential political risks, particularly any provocative statements from Trump, could dampen the outlook.
AI Analyst
AI Opinion
"The lower-than-expected inflation data from the US has fueled optimism for risk assets, leading to a drop in the dollar. This dovish inflation reading is likely to underpin expectations for the Federal Reserve to ease monetary policy. Generally, a moderation in inflation is received positively by equity markets, so further gains in stock prices might be anticipated. However, potential political volatility, particularly regarding any statements from former President Trump, presents a risk factor that requires caution. In the forex market, rapid fluctuations are expected, emphasizing the need for a strategic approach."
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