The inflation rate in the US stood at +6.5 percent, which triggered forecasts that the Federal Reserve’s rate hikes could be scaled back. Core inflation, monitored closely by the Fed, rose by 0.3 percent on a cyclical basis and by 5.7 percent on a year-on-year basis (+0.3 percent m/m according to forecasts). In December, energy costs decreased by 4.5 percent, while the cost of food increased by 0.3 percent.
The 10-year US Treasury yield fell 11 basis points to a near-recent low of 3.45%. The two-year Treasury yield, closely tied to Federal Reserve policy, fell to a three-month low. Investors are almost entirely sure that the Federal Reserve will implement a quarter-point rate hike on February 1, which will be a decrease from the 50 and 75 basis points of the previous two conferences. Furthermore, the market is strongly anticipating another quarter-point hike in March to a range of 4.75-5%, and traders are betting that this will be the last rate hike.
Analysts point out that representatives of the Federal Reserve are demonstrating greater caution in raising interest rates in the future. Markets estimate a 93.2% probability of a quarter-point rate hike at the Federal Open Market Committee meeting on February 1, a higher probability than the 76.7% expected yesterday and 35. 1% from a month ago.
US stocks rallied on Friday as the market viewed the latest inflation figures, which showed that costs rose in December at a slower pace over the year, which was in line with analysts’ expectations cheap. The S&P 500 was up 0.4%, the Dow Jones Industrial Average was up 0.33%, and the technology-focused Nasdaq Composite was up about 0.71% in the close.
