Market’s knee jerk reaction might have been wrong, and second one too
Yesterday’s macro news flow was on the heavy side, and the market’s reaction to it was vibrant and unpredictable. The markets were focused on US inflation, and the reading was closely watched. The headline CPI number bolted up to 7.5% in January, outpacing the 7.3% median consensus and setting a 40-year high. The same index, stripped of highly volatile components (food and energy), grew by 6.0% YoY (vs. 5.9% expected) and 0.6% MoM (vs. 0.5% expected). To complete the picture, it should be noted that the number of initial jobless claims turned out to be lower than expected (223k vs. 230k), while the budget surplus in January, on the contrary, exceeded the median forecast ($119 bln vs. $25 bln projected).