Bonds on Tenterhooks Ahead of the CPI Data

Today's CPI data will serve as a test for the bond market

Highlights

• Today's CPI data will serve as a test for the bond market

• Powell affirms the labor market has moved into balance

• Small businesses don't seem too worried about inflation

• U.S. economic growth sharply decelerates in December

Key Takeaways

Markets Rally Ahead of CPI Data

• We kick off the day with global equity markets rallying but bonds on tenterhooks ahead of the CPI data. The DXY dollar index, gold and Bitcoin are all on pause mode as well.

Powell Signals Policy Hold

• Jay Powell did hint yesterday that policy is on hold for now, but he also mentioned that the labor market is in balance, so we really just have to wait for two things: core inflation to approach the 2% target and more clarity on U.S. trade and fiscal policy. Keep in mind that the current funds rate is some +130 basis points north of neutral at the moment.