February 10, 2022 Headlines

An early morning rally in Treasuries has reversed to a sell-off following another upside surprise in the inflation data. Both headline and core CPI rose 0.6% m/m in January versus expectations of 0.4% and 0.5% gains, respectively. The headline gauge also set a fresh 40-year high of 7.5% year-over-year in January, and the core rate was slightly above expectations at 6% y/y. Higher shelter costs contributed strongly to the core rate increase, with owners’ equivalent rent up 42 basis points (bps), and medical services were up 60 bps. The 2-year Treasury yield is now up 7 bps on the day with market pricing now implying a 50 bps rate hike in March. Equities have reversed sharply as well, with S&P 500 futures swinging from slightly positive before the CPI release to currently down 0.92% (8:57am EST). The markets have already done a lot of the heavy lifting for the Fed with a 2%+ short-term rate priced into Treasuries by 2024.

Jason Haley
Chief Investment Officer

02/07/22Consumer Credit$21.900b$18.898b$39.991b$38.821b
02/08/22NFIB Small Business Optimism97.597.198.9
02/08/22Trade Balance-$83.0b-$80.7b-$80.2b-$79.3b
02/08/22Revisions: CPI
02/09/22MBA Mortgage Applications-8.10%12.00%
02/09/22Wholesale Inventories MoM2.10%2.20%2.10%
02/09/22Wholesale Trade Sales MoM1.50%0.20%1.30%1.70%
02/10/22Initial Jobless Claims230k223k238k239k
02/10/22Continuing Claims1615k1621k1628k1621k
02/10/22CPI MoM0.40%0.60%0.50%0.60%
02/10/22CPI Ex Food and Energy MoM0.50%0.60%0.60%
02/10/22CPI YoY7.30%7.50%7.00%
02/10/22CPI Ex Food and Energy YoY5.90%6.00%5.50%
02/10/22CPI Index NSA280.441281.148278.802
02/10/22CPI Core Index SA286.065286.431284.759284.77
02/10/22Real Avg Hourly Earning YoY-1.70%-2.40%-2.00%
02/10/22Real Avg Weekly Earnings YoY-3.10%-2.30%-2.00%
02/10/22Monthly Budget Statement$23.0b-$162.8b
02/10/22Revisions: PPI
02/11/22Bloomberg Feb. United States Economic Survey
02/11/22U. of Mich. Sentiment6767.2
02/11/22U. of Mich. Current Conditions72.172
02/11/22U. of Mich. Expectations64.564.1
02/11/22U. of Mich. 1 Yr Inflation5.00%4.90%
02/11/22U. of Mich. 5-10 Yr Inflation3.10%


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