Economics

[1/3] Reports and Market Summary.

•Core CPI (ex. food & energy): +0.2% (vs. expected +0.3%)

•Shelter Costs: +0.3%, making up half of the CPI gain but rising at a slower pace than in recent years.


Category-Specific Trends:

•Rising Costs: Medical care, used vehicles, recreation, apparel.

•Declining Costs: Airline fares, new vehicles.

•Travel Demand: Weakness in airfares aligns with recent airline warnings about lower demand.

•Food Inflation: Slowed to 0.2% (from 0.4% in January).

•Egg Prices: +10.4% MoM, +58.8% YoY—a sharp surge.

[2/3] Market Reaction

●Stock Futures:

S&P 500 futures rose 1.1% at 9:03 a.m. (New York time) following the softer inflation data.

●Treasury Yields:
Dropped initially, but rebounded as investors considered potential tariff hikes that could push prices higher.

● Investor Sentiment:

Ian Lyngen (BMO): This is the first time in the cycle where a benign inflation report was overshadowed by broader risks, such as potential inflation from tariffs.

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