US January CPI +6.4% y/y vs +6.2% expected

• Prior was +5.5%
• m/m CPI 0.4% vs +0.0% expected
• Prior m/m reading was +0.1% (it was revised in the benchmark revisions from -0.1%)
• Real weekly earnings +0.7% vs +0.1% prior (revised to 0.0%)

Core inflation:

• Ex food and energy +5.6% vs +5.5% y/y expected
• Prior ex food and energy +5.7%
• Core m/m +0.4% vs +0.4% exp
• Prior core m/m +0.4%

This is on the hot side but not a complete shock with some economists flagging upside risks. The kneejerk reaction was risk-off and US dollar US Dollar The US dollar, (symbol $, code USD) is the fiat currency of the United States of America (USD) and the most widely traded currency globally. It was introduced into the US in the late 18th Century, with paper notes not being distributed until the following century. The US dollar, also informally known as the greenback, is the world’s most foremost reserve currency, due in large part to the importance of the US economy on the world stage. Once backed by gold (in the 1900’s), the USD is now a purel The US dollar, (symbol $, code USD) is the fiat currency of the United States of America (USD) and the most widely traded currency globally. It was introduced into the US in the late 18th Century, with paper notes not being distributed until the following century. The US dollar, also informally known as the greenback, is the world’s most foremost reserve currency, due in large part to the importance of the US economy on the world stage. Once backed by gold (in the 1900’s), the USD is now a purel Read this Term strength but that didn't even last a minute and then revered. It looks as though all the talk of a hot number had everyone leaning in the same direction.

Used cards fell 1.9% while new vehicles rose 0.2%. Shelter and medical care both rose 0.7% m/m and transportation services rose 0.9%. Food rose 0.5% and energy climbed 2.0% with natural gas as a big boost, up 6.7%.

Housing has flattened out and rent is declining while gasoline prices are steady and natural gas has cratered. So there's disinflation in the pipeline. Will that be enough to get inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term back to 2% or will it get stuck at 3-4%? One warning sign is the 0.7% m/m rise in real weekly earnings, it could keep spending high.

Here is a good chart from John Authers showing that goods inflation is now back below 2% but services inflation continues to accelerate. Some of that is the lag from housing and will come out, but will it be enough? And will goods inflation stay low?